Alberta Sees C$1.1 Billion Surplus as Royalties Rise With TaxesChris Fournier
Alberta expects to post a surplus in the 2014-15 fiscal year on higher revenue from resource royalties and personal and corporate taxes.
The consolidated surplus in Canada’s fourth-most populous province will be C$1.09 billion in the year beginning April 1, Finance Minister Doug Horner said today from the Alberta Legislature in Edmonton. Horner revised the shortfall for the current fiscal year to C$335 million from the C$1.98 billion he forecast in the previous budget.
Growth in Alberta, home of Canada’s oil sands, is outstripping the rest of Canada, attracting people into the province to fill jobs, Horner told reporters today during a budget lockup. Alberta will tap the bond market for C$8.37 billion in 2014-15, about in line with C$8.33 billion in 2013-14, budget documents show.
“There is no question things are looking good in Alberta today,” Horner said. “In light of some very positive economic indicators, we’re in a better position than most to address our challenges,” including volatility in energy markets, he said.
Alberta relies on non-renewable resources such as crude oil for almost one-fifth of its revenue.
Canada’s third-largest economy after Ontario and Quebec will expand 3.7 percent in 2014 and 3.0 percent in 2015, budget documents show. That compares with average national growth of 2.3 percent and 2.5 percent, according to median forecasts in a Bloomberg News survey of economists.
Horner predicted unemployment would fall to 4.4 percent in 2014, from 4.6 percent this year. Canada’s jobless rate remained at 7 percent last month, the nation’s statistics agency is forecast to report tomorrow, and will be at least 6.6 percent through 2015, Bloomberg economist surveys showed.
Alberta, one of only two provinces with AAA ratings from Moody’s Investors Service and Standard & Poor’s, has C$22.3 billion of outstanding debt.
Western Canada Select crude will average C$77.18 a barrel in 2014-15, compared with $98.16 for West Texas Intermediate, according to budget projections.
The price differential between WTI and WCS, which Alberta Premier Alison Redford dubbed the “bitumen bubble,” narrowed to $22.90 today from $42 in November. Every 1 percent increase in the differential reduces government revenue by C$274 million, budget documents show.
Revenue from taxes is forecast to increase 5.0 percent to C$21.1 billion in the next fiscal year from an estimated C$20.0 billion in 2013-14, the documents show. Royalty revenue will climb 6.7 percent to C$9.2 billion, as the government receives C$5.6 billion from bitumen royalties, almost two-thirds more than it predicted in the 2013 budget.
Horner’s fiscal plan forecast the Canadian dollar would average 91 U.S. cents in 2014-15. Every 1 cent increase in the exchange rate cuts C$241 million from provincial revenues, the documents show.