AB Today – Daily Report February 28, 2019

Quotation of the day

“Ottawa is in a tizzy about SNC-Lavalin … It would be nice if they spent some of that energy on a much bigger job issue right here in this province.”

Treasury Board President and Finance Minister Joe Ceci says the Q3 fiscal update reflects the impact of pipeline bottlenecks on the province’s coffers.

Today in AB

On the schedule Premier Rachel Notley will be in Ottawa Thursday morning to appear before the Standing Senate Committee on Energy, the Environment and Natural Resources. The premier will provide testimony on the federal government's controversial Bill C-69, Impact Assessment Act, which overhauls the environmental assessment process for energy, mining and infrastructure projects.

Newfoundland Premier Dwight Ball will also appear before the committee Thursday morning.

The legislature will reconvene on March 18 for the government’s final throne speech before the spring election.

Finance minister touts lower-than-forecast deficit but warns of continued oil export woes in 2019

Despite lagging oil prices, Alberta’s deficit is down and the province is still on track to balance the budget by 2024.

That was the message from Finance Minister Joe Ceci, who tabled the province’s Q3 financial update Wednesday. Ceci says the 2018-19 deficit is now forecast at $6.9 billion, down from the $8.8 billion projected in last spring’s budget. The NDP has reduced the provincial deficit by nearly $4 billion since its 2016-17 high of almost $11 billion.

“The deficit is down and the path to balance is on track,” Ceci said. “Alberta has the strongest balance sheet in the country, and that will not change. But there is more work to do.”

Despite the punishing oil price differential, the province is still forecasting higher than projected bitumen and crude royalties in 2018-19. Annual royalties are projected to be up by $1.6 billion and $118 million compared to the spring budget, respectively, thanks to “robust” oil revenues in the first half of the year.

Ceci warned of slower growth in 2019 thanks to the ongoing oil production curtailments, but said he expects a turnaround in the latter half of the year. While Budget 2018 crystal balled 2.5 per cent GDP growth in 2019, Ceci has revised his growth forecast to 1.6 per cent.

A new report from the Conference Board of Canada forecasts Alberta’s 2019 GDP growth at 1.3 per cent.

The finance ministry’s deficit elimination plan does not assume full pipeline access and recognizes shipping by rail will not be fully implemented until 2022. It also does not assume the federal government’s schedule to increase the carbon price to $50 per tonne by 2022.

“We’re prudent on our differential forecast; we’re prudent on our assumptions on full market access; and we’ve been prudent on our revenue projections,” Ceci said.

However, with oil prices expected to drop from an average of $64.01 USD per barrel during the first 10 months of the fiscal year to $52.26 USD per barrel in February and March, the impact of the differential will continue to be felt.

“They’re absolutely in the lower-for-longer frame,” Ceci said.

Natural gas royalties are expected to be $95 million less than projected in the spring budget, down from $541 million to $446 million, mainly due to lower natural gas prices.

The province is spending $132 million less on its Climate Leadership Plan. The plan’s operating expenses are now projected at $903 million, rather than the $1.04 billion projected in the budget.

Operating expenses are up by $228 million, which the government says reflects the cost of its Trans Mountain pipeline advocacy, the Lubicon Lake First Nation settlement and caseload growth in social programs.

Overall operating spending growth is forecast to track below population growth and inflation.

“We’re on a path to balance, and we’re doing a great job of getting there without blowing up programs and services and hospitals and those things that previous governments did to get to balance,” Ceci said.

The NDP’s inclusion of a “path to balance” in the update is more typical of a spring budget than a quarterly report. Asked by reporters if a spring budget was part of the NDP’s pre-election plan, Ceci would not say.

“You’ll have to ask the premier about all of that. I’m preparing the budget, of course,” Ceci told reporters. “There will be a Budget 2019, I can assure you. It will either be before the writ drop or after.”

Opposition says NDP fiscal forecast is “out of touch” UCP finance critic Drew Barnes said the NDP’s spending plans are out of touch with the reality facing Alberta families.

“Today’s third-quarter fiscal update does nothing to inspire confidence from Albertans in a free-spending NDP government that is burying Albertans in a sea of red ink,” Barnes told reporters at a news conference responding to the update on Tuesday.

Barnes also disputed the government’s path to balance numbers.

“The NDP’s supposed plan still puts Albertans on track to nearly $100 billion in debt by 2023,” Barnes said.

(The province’s debt is currently estimated at $28.1 billion, but the spring budget projected it to grow to $96 billion by 2023. Debt servicing costs were down $48 million in the third quarter but are still costing the province nearly $1 billion per year.)

Alberta Party finance critic Greg Clark said the NDP government is “using the power of their imagination” to magically predict a balanced budget in 2023-24.

“The update on that plan they provided today, an overtly political pamphlet tacked on to the actual Q3 numbers, confirms how unrealistic it is,” Clark said, referencing the fiscal update’s use of NDP campaign catchphrases such as "the recovery isn't being felt at every kitchen table."

Alberta Liberal Party Leader David Khan called the significant drop in the province’s GDP growth forecast “gloomy.”

Topics of conversation

● Deputy Premier Sarah Hoffman says UCP Leader Jason Kenney must provide answers about his leadership campaign team’s relationship with Cam Davies. ● Hoffman demanded answers to three questions about Kenney’s connection to Davies’ alleged “kamikaze” leadership campaign scheme for Jeff Callaway: 1) Why did Davies campaign for Kenney’s team while he was also co-managing Callaway’s campaign? 2) Kenney’s campaign team has admitted they met with Callaway in the leadership race. Was Kenney aware of any money flowing between his campaign, a political action committee and Callaway’s team? 3) Is Kenney going to let these allegations and penalties trickle out, or is he going to come clean with Albertans about what really happened during his leadership race? ○ The UCP hired Davies as an independent contractor last November but fired him Wednesday after the party was informed of the election commissioner’s recent $15,000 fine against him for obstructing an investigation. The party says it knows nothing more about the investigation.

● UCP House Leader Jason Nixon said his party will not take a position on conversion therapy until the results of an examination into the practice are made available, the Mountainview Gazette reports. ○ The NDP government formed a working group to come up with the best way to ban the practice, which is defined as a treatment or therapy designed to change a person’s sexual orientation or gender identity.

● The province is preparing for the 2019 wildfire season, which officially runs from March 1 to October 31. Beginning March 1, all fires other than campfires require a burning permit.

● The NDP government points to new Statistics Canada numbers that show Alberta’s child poverty rate was cut in half between 2015 and 2017 as proof that their policies work. ○ Child poverty rates dropped from 10 per cent to five per cent, something the government said is due to the Alberta Child Benefit and the Alberta Family Employment Tax Credit, both introduced in late 2015.

Today’s events

February 28 at 7 p.m. – Calgary NDP Culture and Tourism Minister Ricardo Miranda and NDP Calgary—Klein MLA Craig Coolahan will host a wine and cheese fundraiser at Prairie Sky Cohousing.

February 28 at 7:30 p.m. – Calgary Chris Nowell, Alberta Party candidate for Calgary—Hays, will host a coffee fundraiser in Second Cup.

February 28 at 8 p.m. – Calgary The UCP is hosting a $150 per ticket candidate fundraiser at the Atlantic Trap and Gill in Calgary.

New briefs — Governmental

Office of the Premier Premier Rachel Notley teased the formal arguments she plans to provide to Senate committee members this morning in favour of amending Bill C-69.

“Ottawa just doesn’t get it. They don’t understand Alberta — and what this province contributes to the national economy,” Notley said in a news release yesterday. “I will make the case as clearly as I can that Bill C-69, in its current form, doesn’t work for Alberta. And, therefore, it does not work for Canada.”

Notley is expected to seek changes to ensure the bill: ● Does not increase oversight of existing projects, pipelines or in-situ facilities; ● Provides “legislative certainty” around the factors that go into assessing a project; ● Exempts projects already approved under Alberta’s Climate Leadership Plan from further environmental assessment; ● Ensures socio-economic benefits are considered in the evaluation of a project; and ● Limits the federal government’s power to add projects to its existing project list.

Nominations

NDP ● Robyn O’Brien was acclaimed as the NDP candidate for Innisfail—Sylvan Lake. ● Doug Hart was acclaimed as the NDP candidate for Lacombe—Ponoka.

AB Today is written by Catherine Griwkowsky, reporting from Alberta's legislative press gallery.

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