Fort Mac fires push Alberta’s deficit deeper

Along with the tons of damage on the ground, the Fort McMurray wildfires have also put a big hole on Alberta’s bottom line.

Finance Minister Joe Ceci announced Tuesday in his 2016-2017 first quarter fiscal update that the blaze’s cost of $500 million dollars has the projected deficit at just under $11 billion, an increase from the $10.4 billion mark in the budget.

That includes recovery costs and lost revenues from paused oil sands activity.

“The oil price collapse continues to reverberate through our economy,” he said from Edmonton. “The Wood Buffalo wildfire has added considerably to the economic impact, reducing revenues and royalties to government.”

Ceci said however that things are expected to improve in 2017 and he doesn’t expect things will get much worse over the next quarter.

“No, I think we’re being prudent and cautious recognizing that oil goes up and down and we want to leave it there for the time being,” he said.

Ceci said the plan to balance the budget by 2024 is still in place and goals of economic diversity, combined with supporting Albertans must continue.

“We’re not going to make knee-jerk cuts, we’re not going to make things worse for Albertans, that would be what the opposition probably would do or would’ve done a long time ago,” he said.

Regarding debt-to-GDP increasing debt-to-GDP ratio, Ceci was asked how far he would go when it came to borrowing limits.

“The plan we have approved and before you is the plan I need to deliver as a finance minister,” he said. “Subsequent hypotheticals are not something I’m prepared to answer.”

Economics professor at the University of Calgary’s School of Public Policy, Ron Kneebone, said however for all the talk of diversification, there doesn’t seem to be an actual plan.

“We are now borrowing $10 billion, there’s no way oil revenues is ever going to fill that gap, so what’s the plan? Are we just going to continue borrowing forever?” Kneebone said. “The plan seems to be to hope and pray for a recovery in oil prices that will allow them to balance the budget.”

Wildrose MLA Glenn Van Dijken said this is the first time in over a decade that Alberta is in a net-debt position.

“If $50 a barrel is what we’re based with, many other provinces do not have any of that revenue and yet they’re working hard to balance their budgets,” he said.