CALGARY, Alberta, Oct 26 (Reuters) - Canada’s oil-producing province of Alberta, which has been hammered by falling crude prices, should not use its multibillion dollar savings fund to balance its budget, Premier Rachel Notley said on Monday.
Notley told reporters in Edmonton on the eve of her government’s first provincial budget, expected to include a record deficit as high as C$6.5 billion ($4.94 billion), that it would be better to increase the Heritage Fund.
The left-leaning New Democratic Party government, elected in May ending 44 years of Conservative rule in the western Canadian province, estimated the fund is worth about C$17.7 billion. The fund was created in the 1970s to collect a portion of resource revenues.
But while the fund’s investment income was used in the past to finance some government programs, Notley said it would be better to see it grow for future generations.
“Playing around with that is something that one would have to be very careful with,” Notley said. “So the idea of having it fund operational or specific capital projects is not something that I think aligns with the values of Albertans or the way they see that fund.”
The government is in the middle of a review of royalty rates paid by oil and gas companies and could invest new revenues in the Heritage Fund.
Alberta’s finance minister, Joe Ceci, announced last week that the government was delaying plans to balance the province’s finances by one year until 2019-2020. He said, however, that the new budget to be presented on Tuesday would introduce a plan to achieve that goal.
The NDP government took steps to increase revenues in June when it raised corporate tax rates to 12 percent from 10 percent, fulfilling an election promise.
Notley said the budget would also focus on plans to diversify Alberta’s economy and create jobs, while protecting public services.
$1 = 1.3155 Canadian dollars Reporting By Mike De Souza; editing by Grant McCool