Alberta’s fiscal picture brightens

衣食住行 · 发表于 2010-6-27 05:51

When a deficit is 80% lower than projected, it’s a very big deal
EDMONTON / I know this will be hard, people, but can you stomach some good news for a change?
Alberta’s 2009-10 budget deficit, announced Thursday, came in at just $1 billion.
That’s nearly 80 per cent below the massive $4.7-billion hole the province initially projected in the spring of 2009.
With world leaders gathered in Ontario for the G-8 and G-20 summits, and the Oilers’ Taylor-versus-Tyler debate heading into its dramatic final chapter Friday evening, it’s no wonder the deficit news got short shrift in the media.
Still, this is a very big deal. It means the province’s finances — unlike those of much of the rest of the western world, from Greece to Quebec to California — aren’t going to hell in a hand basket after all.
That’s disappointing for local headline writers, perhaps, but good news for Alberta taxpayers.
As of March 31, Alberta was still sitting on roughly $15 billion in its Sustainability Fund — a fund some critics once predicted could run dry in just a year or two. Barring another global economic collapse, that dire forecast seems pretty far-fetched now.
Of course, red ink is still red ink, and so far at least, the province hasn’t budged from the hefty $4.7-billion deficit it’s predicting for the current fiscal year.
But (nudge nudge, wink wink) we all know how the budgetary game is played. Any savvy politician or corporate CEO (except for Tony Hayward, BP’s bumbler-in-chief) knows it’s best to under-promise, and over-deliver.
I’m betting that’s just what the Stelmach government’s playbook calls for this year, too. Indeed, if oil prices stay above $70 US, and natural gas recovers to $6 or more by winter, Alberta could be back in the black soon.
In a world awash in red ink — the U.S. is facing the largest deficit in its history, Europe is grappling with a full-blown sovereign debt crisis, and Ontario’s projected deficit is nearly $20 billion Cdn — that would qualify as a singularly remarkable turnaround.
Moreover, with Alberta’s royalty wars officially ended, oil and gas drilling activity on the rebound, land sales surging, oilsands production (and royalties) trending higher, housing starts on the upswing, unemployment falling and retail sales ticking higher, some economists expect Alberta to soon regain top spot in the provincial growth rankings, topping Saskatchewan.
In a report issued last week, Scotia bank Group economist Alex Koustas forecasts GDP growth of 4.1 per cent for Alberta this year. That’s slightly above the 3.9-per-cent growth expected for Saskatchewan, and the 3.8-per-cent uptick forecast for British Columbia.
“Investment has perked up in the oilsands, as easing costs and higher oil prices revived investment intentions in late 2009, with $2.2 billion in (additional) outlays scheduled for 2010 alone,” Koustas says.
“Renewed activity in the industry will lead to significant benefits flowing through the economy, with manufacturing and services all heavily tied to conditions in the energy sector. While the bulk of investment will stem from oilsands development and tight-oil plays, recent revisions to the province’s royalty framework are (also) a major positive for the natural gas industry.”
Mike Drotar, VP Treasury for Servus, the Edmonton-based credit union, is also increasingly upbeat about the province’s economic prospects. In a forecast issued Friday, he sees provincial GDP growth of 3.5 per cent this year and 3.6 per cent for 2011.
Drotar predicts global oil prices will reach $95 US a barrel within two years, and he expects natural gas to reach the $6-to-$8 per MMBtu (million British thermal units) range by 2011-12.
“I’m leaning toward the optimistic side of things, and I’m very bullish on the province’s energy sector,” he says.
“I think oil supply will be an issue, and with the (BP) disaster in the Gulf, that will just add to it. In discussing (the outlook) with people in the energy industry, it really looks like this fall they will be hiring and drilling will be up significantly, so there’s a lot more optimism.”
Todd Hirsch, ATB Financial’s senior economist, is also feeling more upbeat about the provincial economic outlook.
“Definitely the mood in Alberta is much, much better than what it was a year ago. Almost all the indicators we’re tracking are trending higher,” he says.
“The only one lagging still is the employment number. We’ve seen about two months’ worth of growth on the jobs front, so to me that’s not enough of a trend yet to indicate that things are improving.
“But without question Alberta’s economy is in much better shape than it has been, and the growing optimism reflects that.”
Hirsch doesn’t see the province bouncing back to the top of the provincial growth rankings as quickly as Scotia bank does, however.
“I’ve been looking at these bank forecasts and I can’t help but think they might be a little bit high when it comes to Alberta’s growth.
“I think we’re going to get a little bit of softness in the real estate market in the second half, and we haven’t seen a huge burst in job creation yet, so 4.1 per cent might be a little optimistic. I think something closer to the 2.5-per-cent to three per-cent range would be more reasonable.”

094 · 发表于 2010-7-11 20:47

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[亚省新闻] Alberta’s fiscal picture brightens