Financial experts support NDP approach to downturn, Joe Ceci says
Surrounded by some of the top financial minds in Canada, Finance Minister Joe Ceci said his meeting with top bankers today confirms his expectations and approach to the 2017 budget.
"As I prepare for budget 2017, I've heard the messages from these economists and reinforces some of the things we're thinking, so that's really great."
Economists from Canada's major banks and financial institutions were in Edmonton to advise the minister as the Department of Finance prepares the next provincial budget.
The minister said the consensus was that things are looking up, but Alberta is not on the cusp of robust growth just yet.
The Government of Alberta is forecasting 2.3 per cent growth in GDP next year, but Ceci says returning the economy to pre-2015 levels is still more than a year away.
"We see some green shoots, but it's still tough times," said Ceci, adding he feels better about the future than he did a year ago.
"Of course market access is critical for us in this province, and we need to move forward with that in deliberate ways as a nation."
The economists echo the provincial government's prediction the economy will improve in 2017, but Avery Shenfeld, managing director and chief economist at CIBC Capital Markets, warns the recovery won't be anything like it was when oil was $100 a barrel.
How good is the best?
"There's general agreement the worst is over, but there's some discussion: Is the best yet to come, and how good is the best?"
Shenfeld said it could be argued that anytime a new tax is imposed, some economic activity slows down. But he said the impending carbon tax, set to begin in January has to be viewed in context.
"Did we exchange some action on carbon, in exchange for a green light on a couple of pipelines that are obviously positive for the longer term outlook?"
Shenfeld added that relative to "some of the alternatives that were out there" such as larger taxes on oil producers, the carbon tax can be viewed as a "softer alternative" in terms of the economic impact in Alberta.
Mary Webb, director of economic and fiscal policy at Scotiabank Economics, says she credits the government for its handling of the economy by addressing growth pressure points such as the need for new schools and for developing its own carbon-pricing system.
"There was a need for stimulus, they've provided it, and now looking forward over the next three to four years, how do you balance that stimulus with private-sector recovery? We're hopeful that private-sector recovery will be gaining traction as we look through to 2018."
But Wildrose Leader Brian Jean isn't quite so glowing in his assessment of the government or the praise given by economists.
"If you go talk to everyday Albertans right across the province wherever they are, they're suffering, and there's over a hundred thousand that are unemployed."
Jean said it's one thing to talk about the global economy, and quite another to address needs of people on the ground "who are suffering as a result of these dramatic ideological moves by the NDP government."
Shenfeld said one of the big challenges ahead is how the Alberta government reins in its predicted $10.8-billion deficit.
It's inevitable that placing wage restraints on the public sector and reducing capital spending will "take a bite out of the pace of the ultimate rebound," he said.
"At least going into deficit initially," adds Shenfeld, " was something that was probably necessary to keep the economy from an even deeper recession that we've already been in."
