EDMONTON - Alberta Premier Alison Redford admitted Thursday that while her party didn't campaign in the April election on running up debt, the economy has worsened since then and now they must adapt.

"It (borrowing money) is not something that we talked about during the campaign because that wasn't the fiscal reality during the campaign," Redford told reporters.

But she pointed to Tuesday's announcement by federal Finance Minister Jim Flaherty that a weak global economy means the federal deficit will hit $26 billion this year, $5 billion more than predicted.

"The economic downturn has gone in a way that no one expected it to, the federal government has said that," said Redford.

"What we will do is manage our government and manage our budget in tune with the times.

"We always said we would build infrastructure for the future."

Her comments follow a weekend announcement by Finance Minister Doug Horner that the province will now begin taking out loans to pay for infrastructure while keeping the $40-billion day-to-day operating budget balanced.

Earlier Thursday, in a speech to rural and county politicians, Redford expounded on that theme.

"We will ensure that we put in place the right progress that we need to make on infrastructure so that the schools, the hospitals, clinics, water systems and roads are in place in your communities.

"There are lots of different ways to talk about deficit, but the one thing we can't have is an infrastructure deficit."

She said the time is right.

"Our Triple-A credit rating allows us low borrowing costs, and if we pay for capital over time, just like we do in our lives, and not put off projects, we will pay less in the long run — socially and financially."

Opposition Wildrose leader Danielle Smith accused Redford of manipulating Albertans in a cynical political shell game by delivering a set of rosy oil price and corporate growth projections in February's pre-election budget knowing they wouldn't be met.

The budget predicted an $886-million deficit but a return to surplus budgets in 2013-14.

But after the election, in August, Horner announced a revised budget deficit forecast to be as high as $3 billion.

"This is fairly typical of a premier who talks out of both sides of her mouth," said Smith.

"They didn't want to go to the public and face the electorate saying, 'Hey vote for us and we'll go back into debt again.'

"So now they feel safely into another majority mandate, they don't really care what their promises are. This is sort of a pattern for this premier. She'll say anything to get elected."

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Smith noted when Horner announced the $3-billion deficit in August he stressed the budget numbers vary widely as oil prices fluctuate, and stressed they weren't going to radically alter course based on one set of bad numbers.

However Redford told reporters Thursday the bad first-quarter was one of the reasons for the policy shift.

"I think that you've clearly seen through our first-quarter update and what's going on in the world that the world has changed," said Redford.

Smith said regardless of the rhetoric, a province of under four million people with resource revenues at $10 billion a year should not be going hat in hand to the capital markets.

"The world has not changed so much (in the past six months) that we need to go into debt. We have a government that needs to get its spending under control," said Smith.

Debt freedom has been a point of pride for the Tories since they retired the $23-billion debt under former premier Ralph Klein.

The issue has become the clear ideological dividing line between the Tories and the Wildrose, both of which are right-centre parties.

The verbal sparring has been bitter.

Tory cabinet minister Doug Griffiths labelled the 17 Wildrose MLAs "hypocrites" on Tuesday for pushing lower spending overall but higher spending on pet projects in their constituencies.

Without calling out the Wildrose by name, Redford made the same point in her speech.

"It's pretty easy to travel around the province and say, 'You know, when that budget is balanced, we'll invest in infrastructure,' and (say) 'You know what, we need a school here,' when you're in one part of the province and then you go to another part of the province and say something different," said Redford.

"Responsible provincial governments don't have the luxury of being able to do that."

Smith said her party does have a plan, one that doesn't involve taking on debt.

She said the Wildrose would install a $4-billion base of funding every year for infrastructure, which is comparable on a per capita basis to big provinces like Ontario and B.C.

Hikes to that $4 billion would be tied to inflation, she said.

Add to that she said, there would be increased funding for municipalities for infrastructure needs equal to 10 per cent of overall provincial revenues, starting at $1.6 billion this year.

"Over a 10-year period, our balanced budget plan calls for $75 billion in infrastructure spending," said Smith.

"So for a premier to say that somehow $75 billion in new infrastructure funding on a pay-as-you-go basis is not going to be enough to meet the needs of our growing economy, I have to scratch my head and say 'What would be enough?'"

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  • Here's a breakdown of how the Alberta government parceled out spending last year. Information provided is <a href="http://finance.alberta.ca/business/budget/2012-13-Expense-by-Function.pdf">Expense by Function estimates</a> provided by the Alberta government.

  • General Government

    7.1 per cent of the budget went to General Government - Includes a broad range of additional services including funding for parks and recreation, cultural activities, housing initiatives, economic development, costs to run government and debt servicing expenses (interest payments).

  • Environment

    1 per cent of the budget went to Environmental funding - Provides for environmental monitoring and protection, including pollution control, water supply management, air quality control, garbage collection and waste disposal and a host of other environmental programs and initiatives.

  • Regional Planning and Development

    2.7 per cent of the budget went to Regional Planning and Development - Includes amounts for planning and regional development and a portion of the grants made directly to municipalities, including the Municipal Sustainability Initiative.

  • Protections of Persons and Property

    3.9 per cent of the budget went to Protections of Persons and Property - Includes amounts for the protection of persons and property, including amounts for policing and security, the provincial court system, correctional and rehabilitation services, firefighting, labour relations and a host of other regulatory measures.

  • Transportation, Communications and Utilities

    4. 6 per cent of the budget went to Transportation, Communications and Utilities - Includes amounts related to road, rail and air transport and maintenance, public transit grants, as well as pipelines, utilities and telecommunications networks.

  • Agriculture, Resource Management and Economic Development

    5.4 per cent of the budget went to Agriculture, Resource Management and Economic Development - Includes amounts for farming support programs, food supply quality monitoring and protection, weed and pest control, crop insurance programs, natural resource management, economic and rural development, irrigation and veterinary care.

  • Social Services

    11.5 of the budget went to Social Services - Includes social assistance (e.g. AISH), pension benefits, and care for children, seniors and other vulnerable Albertans.

  • Education

    22.9 per cent of the budget went to Education - Includes Early Childhood Services to Grade 12, as well as post-secondary education, skills training and the construction and maintenance of educational facilities.

  • Health

    40.9 per cent of the budget went to Health - Consists of expenses incurred to ensure necessary health services are available to Albertans and includes funding for hospitals, medical and preventative care and the construction and maintenance of provincial health facilities.


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