EDMONTON — Alberta Premier Rachel Notley defended her NDP government's spending plans on Friday by saying anyone who claims the province can balance its budget in two or three years is talking about thousands of layoffs.
Notley was speaking at an Edmonton school a day after her NDP government delivered a budget that forecasts a $10.3-billion deficit, which puts Alberta on track to rack up $45 billion in debt by the end of the 2017-18 fiscal year.
Notley said the province has a plan to return to balanced budgets and the government should be able to quickly make progress paying down the debt.
"Anyone who says you can get to balance in two years or three years is talking about laying off thousands and thousands of teachers, not moving ahead with school construction, cancelling hospital projects, laying off nurses — that's the only way you balance the budget in the next couple of years," she said.
"We are definitely moving towards balance. We have a plan to get to balance."
Notley said she knows Albertans are worried about the growing size of the debt, but added it is "absolutely manageable." She noted that there's a huge backlog of unfunded infrastructure as well.
"When you don't build schools and hospitals to keep up with your population growth, you are creating a deficit, you are creating debt. And, quite frankly, getting out of that deficit and debt is more expensive than paying off debt," the premier said.
Opposition leaders have called for the government to curb spending and have argued that crushing future debt loads will threaten front-line services.
Former federal cabinet minister Jason Kenney, who is running for the leadership of the Alberta Progressive Conservative Party on a promise to work toward uniting with the Opposition Wildrose, said the budget jeopardizes the economy by doubling the provincial debt.
The deficit budget underscores the urgent need to unite right-wing parties in Alberta to defeat the NDP in the next election, he said.
"We cannot afford to risk the future of our province on a second NDP term," he said Friday on the eve of the leadership vote in Calgary.
The province anticipates its debt will hit $71 billion by 2020. Servicing costs will be $1.4 billion this year and $2.3 billion by the end of the decade.
Analysts with credit rating agency DBRS warned in a preliminary assessment Friday that while the debt burden is still low and the economy is expected to recover, it may not be enough to protect Alberta's AA rating and stable trend.
"In the absence of meaningful action to address the budget deficit and to slow down debt growth, Alberta's debt may exceed levels acceptable for the current ratings," DBRS said.
The budget projects a gradual reduction in the deficit to $9.7 billion in 2018-19 and $7.2 billion by 2020.
Last April, DBRS downgraded Alberta's top-grade rating, as did Moody's Investor Service, due to concerns about debt in the 2016 budget.
The following month, Standard & Poor's changed the province's rating from AA-plus to AA. It had already taken away Alberta's AAA rating in December 2015.
Friday's assessment from DBRS said the medium-term outlook for Alberta is the same as last year, but "key financial risk metrics have deteriorated relative to DBRS's expectations at the time of its last review."
It said debt is projected to approach 18.4 per cent of GDP in 2017-18 and almost 24 per cent by 2019-20.
"This erodes Alberta's low-debt advantage relative to provincial peers."