Alberta's population spike is pressuring government to borrow funds to finance the creation of much-needed hospitals, schools and roads, says Finance Minister and Spruce Grove-St. Albert MLA Doug Horner.
He stressed the importance of eliminating the infrastructure deficit when he addressed members of the St. Albert & District Chamber of Commerce Wednesday.
"I think that deferred infrastructure and the infrastructure deficit that we have today – that we will have tomorrow if we don't deal with it – is going to cost you and your kids a lot of money," he said.
Horner said it is better to borrow funds now to build infrastructure as opposed to waiting until cash is in hand, adding an infrastructure deficit is just as costly as a financial deficit.
"We are accepting the challenge of that infrastructure deficit and we're going to deal with it," he said, adding if it isn't dealt with, the province's growth will suffer.
In the last three months, Alberta's population jumped by 31,000, which Horner said reflects positively on the provincial economy. This spike, however, means more demand on infrastructure.
School-aged children, who were unexpected enrolees in the province's school system, accounted for roughly 65 per cent of this growth.
"We already know we're short 50 schools. Twenty thousand new students is 40 more schools, so if you think we're a little crowded now, think about that," Horner said.
The provincial population is expected to reach five million come 2032.
The official opposition is firing back at the PCs' borrowing plan, accusing the party of going back on its campaign promise to remain debt-free, while putting debt on the shoulders of future generations.
Wildrose finance critic Rob Anderson said Premier Alison Redford and her team would have lost the election had they campaigned on putting the province back in debt.
"The PCs did not campaign on running this government back into debt, and it's certainly not what Albertans are asking for," he said. "They should either scrap their debt financing plans or at the very least, put the question to a provincial referendum."
Horner acknowledged the opposition parties' views of cutting budget items, deferring infrastructure, raising taxes and changing royalty rates, but said it is not what Albertans want.
He said Albertans want health and education to be top priorities, which means more hospitals and schools need to be constructed. He pledged to maintain the lowest taxes in Canada and keep them lower than in most U.S. states.
Alberta's triple-A credit rating allows for low borrowing costs, which Horner said offers the province 30-year bonds at three-per-cent interest.
"The math is pretty simple," he said.
Alberta top economy
There are not a lot of great things happening in the global economy, but Horner said Alberta is coming out on top.
He recently travelled to New York where he addressed international delegates – many of whom view Alberta as the world's top economy, he said.
"The reason they wanted to hear from Alberta is because they recognize this is where it's happening," Horner said. "This is the only beacon in the turbulent waters around the globe where people are excited about the future moving forward."
He noted volatile oil revenues are a concern, but said the key to overcoming fluctuating costs – which can shift several dollars during the course of a day – is increasing market access to international buyers.
"If we can close that gap or even eliminate the differential, it will be a huge benefit to the province and to Albertans," he said.
September's first-quarter update projected a $2.3- to $3-billion deficit by year's end, mainly as a result of less-than-expected bitumen royalties, which were down $550 million.
The projected oil revenue was based on $99 per barrel, but prices dropped as low as $77 at the end of June.
The cost projection was adjusted to $93 per barrel for the second quarter. Second-quarter results are expected in the coming weeks.
