The Edmonton Sun sat down with Alberta Premier Rachel Notley for an exclusive interview in her office this week. The premier addresses how the NDP government is approaching the provincial budget, what will be included in its job creation plan, why Notley thinks “folks need to settle down a bit” on the government’s royalty review and how Alberta will bend the curve on CO2 emissions.

Q: It’s been four and a half months since you’ve formed government. You’re dealing with contentious policy reviews, attacks from critics on all sides, and an economy that’s seemingly getting worse every day. How are things going so far?

A: Well, I felt better about it before your introduction (laughs). Obviously, it’s challenging but it’s also been exciting. I feel like we’ve been able to achieve some very good things. It’s a tremendous amount of work. I know that our biggest challenge now is ensuring Albertans understand and agree that we are working with them to deal with some of the fiscal challenges that we have in front of us now. That’s our focus and it’s not a snap of a finger thing, but it does drive what we do every day.

Q: Obviously, a big part of that is the budget. The former premier used to explain the budget in terms of three levers, cutting spending, raising revenues and using savings. How is the NDP approaching the budget?

A: Apparently, all politicians speak in threes. There’s three priorities we have with this.

First of all, we’ve talked with Albertans during the spring election (about) the issue of cuts versus services. One of the things that we think is very important is to preserve front-line services in a responsible way. That doesn’t mean that you don’t look at how those services are being delivered but that you still maintain those front-line services that are critical to the resiliency of Albertans as we collectively work through the economic slowdown that we’re faced with right now.

The second thing is that we need to map out a path to balance the budget. That’s really critical. It has to be one that’s realistic, that is based on cautious and careful projections that stand the test of expert oversight and that Albertans can be confident that the path they’re on will get them to balance and to fiscal security. That’s important to me because as a person who believes in the value of the front-line services provided by government to communities, I know that they remain effective as long as we don’t get held hostage by unreasonable debt.

The third thing, particularly this time, is what can we do to stimulate economic growth at a time when one of the biggest players on our economic team is shrinking somewhat. What can we do to incite diversification and job stimulation?

Q: There’s pressure for annual increases in health and education just because of the province’s population growth. Is that sustainable to you?

A: I think we have to look at the pace of growth within them. We’ve all talked about the rate at which our health care budget has grown over the last few years. It has been, I think, unsustainable. Obviously the population is growing so we’re not going to freeze it and we want to make improvements within that context so we’re going to have to challenge the administration of our health system to meet those objectives...but we can’t continue the six per cent rate of increase.

In our platform, we ran on essentially two per cent annual increases for health care, education, human services, post-secondary and that was mapped out in our four-year plan and that’s roughly where we’re going to stay but you’re not going to see that for most of the rest of government.

Q: The former PC government said spending on services was 20 per cent above the national average in Alberta. We haven’t we heard much talk from you on the government cutting spending in any way. Why is that?

A: I think with the population growing, by holding the rate of growth between zero and two per cent what we’re doing is actually already reducing some of those expenditures. Unfortunately, a lot of the cost pressures are cost pressures agreed to by previous governments so we’re constantly finding ourselves dealing with commitments the previous government made. But at a time when the economy is slowing, the fact of the matter is this is not the time to dramatically err in a draconian way and shrink or lay off people and cut important front-line services. That will exacerbate the important economic challenges we face right now, not fix them. It’s counter-intuitive, it’s counter cyclical, it doesn’t help. We’re not going to do it.

Q: You’re still facing the same oil revenue shortfall faced by the previous government. Finance Minister Joe Ceci is pegging a deficit in the $6.5-billion range. How are you approaching this problem and are more taxes part of the solution?

A: The issue that we have to talk about is, in the long term, do we want to have 30 per cent of our annual operating budget funded by oil and gas revenue? That’s essentially like selling off an acre of land every year, for all intents and purposes. Oil and gas revenue is not a renewable source of revenue. Those are the kinds of challenges we’re facing but it’s all done in the context of not wanting to do anything that’s going to slow down economic recovery right now. Major tax changes, major cuts to services, those things will do that.

Q: So no more tax changes right now?

A: It’s really too early to speculate. We have a lot of decisions to make. What we’re going to do is provide Albertans with a clear plan to balance the budget where they can measure how well we perform against that.

Q: There is apprehension among Albertans with the state of the economy. We’ve seen job losses, especially in the energy sector in Calgary. How are you assuring Albertans that your government has a plan and do you think you’ve done enough?

A: Certainly what we’ve been doing is working furiously on a plan to incent the kind of economic growth that will counteract the losses that we’ve seen in Calgary and other parts of the province. I’ve been as open as I can by telling people we’re working on this and you will see it soon. That being said, I’m not going to just pull some notional thing out of my back pocket for the sake of talking to people. We’re taking the time to put together something that is affordable, that is reasonable, that economists and experts tell us will have some measurable success.

Q: Will the plan include subsidies for new hires as the NDP spoke about during its campaign?

A: That piece will be there. It’s a job creator’s tax credit. That’s a process where basically small and medium-sized businesses (are) given a tax credit for new hires. It’s worked in other jurisdictions. That’s something that we’ll roll out but we know that’s not enough so we’re looking for other mechanisms that we can put in place to incent additional growth and to ensure that Alberta retains its place as a good place for people to invest.

Q: You’ve said you don’t want to prejudge the outcome of the royalty review but in the past, you’ve said you personally believe the royalty rates have been too low. A lot of premiers have said they will get us off the energy roller coaster. Is it your expectation that this review will help Alberta stabilize its revenue stream?

A: I think it’s going to modernize and make it more transparent. One of the things that I’ve learned in this process very early on (is that) under (former premier Peter) Lougheed’s regime there was a royalty review once every 18 months so I think that folks need to settle down a bit. That being said, the energy industry is going through great changes right now so as much as we want to restore stability and predictability, we’re trying to do that in a context where the price of oil is incredibly volatile. What we did was appoint some very knowledgeable people to engage in this process. I’m not pre-judging, I’m waiting for them to come back to me to give me some recommendations about the way forward.

Q: There’s also aclimate change panel review. You’ve said you want something to take to December’s COP22 conference in Paris. How do you hope the world will react, given you’ve said Alberta’s environmental regime is an embarrassment?

A: What I’m hoping is that they’ll see there is for the first time a genuine commitment to bending the curve in terms of the contribution that our province makes to the greenhouse gas emissions challenge that the world faces as a whole. I want them to see that our plan is realistic and is one that is achievable and is one that will make a difference. It’s about bending the curve but it’s doing it within the context that we are an energy-producing province. Albertans rely on and need the prosperity that generates. We need to change the direction that we’ve been going in. We need to honestly identify the failures that we’ve had in the past and then we need to have an honest conversation about the rate which we can go about fixing that.

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