Alberta faces up to $3 billion in deficit, province to review spending
Published Thursday, August 30, 2012 12:09PM MDT
Last Updated Thursday, August 30, 2012 6:29PM MDT
Results from the first quarter fiscal update were announced Thursday and shows that the province is facing a deficit of up to $3 billion.
The update says Alberta could see a deficit of between $2.3 to $3 billion if revenue remains low and spending is not tightened.
The government says a volatile and uncertain global market and lower energy revenue is impacting the province’s fiscal picture.
“These fluctuating quarterly reports tell a story. It shows how global economic uncertainty and volatility in energy prices can affect Alberta’s bottom line,” said Finance Minister Doug Horner.
“Forecasting revenues based on fluctuating market prices is not an exact science. It has always been challenging.”
Revenue decreased by $400 million in first quarter because of lower bitumen royalties, lower conventional oil royalties and lower Crown land lease sales.
Expenses increased by $5 million due to disaster funding.
Horner said the government will now cap overall operating spending, increase in-year savings to at least half a billion and review capital spending for 2012-2013.
"We are tightening our belts. We will cap overall operation spending to budget allocations and we've asked departments to operate lower than budget," Horner said.
"Among other things there will be no new money for public sector negotiations until we see improvement increase in year, saving half a billion dollar."
Horner added that a number of economic indicators are showing Alberta to have a "very promising future."
"So far this year we have seen strong growth in the number of jobs created, retail sales, exports and housing starts,” Horner said.
The budget was put out before the election, which has some critics saying the numbers were never accurate to begin with.
"This government's inflated pre-election numbers are now exposed for what they were, a pre-election scheme to deceive Albertans and hide the true extend of their fiscal incompetence and mismanagement," said Wildrose MLA Kerry Towle.
Scott Hennig with the Canadian Taxpayers Federation says the government did not provide enough details on the deficit during Thursday's announcement.
"This is not a budget update. This is a brochure. I've been doing this for seven years. This is the most ridiculous thing I've seen handed out at a quarterly budget update," Hennig said.
"I found it absolutley stunning that the finance minister would stand there and say that he is not doing a technical briefing becasue you guys are too stupid to understand it? Albertans are too stupid to understand it? This is one of the most disrespectful things I've ever seen this government do. This is not open, not transparent, this is a brochure -not a quarterly budget update. They dont want to show the numbers because the numbers are not good."
Pre-election voter-friendly budgets are not new and is often considered smart politics, but according to political scientist Lori Williams, this time, it’s different.
“So what if it’s typical? So what if it’s politics as usual?” said Mount Royal University political scientist Lori Williams.
“The whole point of the Alison Redford government is not to conduct politics as usual, so this is a taint on that vision, on that promise.”
Alberta Liberal Leader Raj Sherman said the fiscal update is "basically an admission that all government initiatives are now potentially on hold" for the sake of achieving a balanced budget in 2013-14.
"People are sick and tired of having their government announce new initiatives, only to see them delayed or shelved indefinitely because the cupboard is bare. There has to be a better way, Redford needs to take some personal responsibility and apologize to Albertans for getting them into this financial mess," Sherman said in a statement.
The province says it will continue to invest in key priorities including health, education and social programs.
With files from Kevin Armstrong