‘There is no more new money’: Finance Minister with third quarter fiscal update
Published Tuesday, February 19, 2013 2:54PM MST
Last Updated Tuesday, February 19, 2013 6:16PM MST
On Tuesday, the provincial government released its update of the province’s third quarter, which forecast a deficit that could be up to one billion dollars more than expected.
In his announcement Tuesday, Finance Minister Doug Horner toed the party line on the province’s fiscal situation – saying the province has lost billions as a result of falling resource revenue, and spending would be strictly controlled in the upcoming budget.
Horner said in the first nine months of the fiscal year, resource revenue was $2.4 billion lower than expected.
The province collected slightly more revenue from taxes, investment income and gaming and liquor sales, along with a number of other fees – and spent $280 million less than expected due to lower operating costs and capital grants.
However, based on results, the projected deficit for 2012-2013 is up to between $3.5 and $4 billion.
“We’re seeing declining resource revenues in Alberta, and they are for the most part a result of Alberta’s market access problem,” Horner said. “I know you’ve heard me talk a lot about the ‘bitumen bubble’.
“I know you’ve heard the premier talk about it, it is a bubble that’s not going to pop anytime soon and it’s costing us a lot of money.”
Horner claimed the rapidly falling revenue caught the government off-guard, as the 2012 pre-election budget forecast a deficit of more than $800 million.
Government critics didn’t buy that claim, though.
“We warned of this, the [Liberal Party] warned of this, the [New Democrat Party] warned of this,” Wildrose leader Danielle Smith said.
“There were numerous economists as well as advocacy groups that warned that the projections would not pan out, and now we’re seeing that the budget was an absolute farce.”
The update was released on the same day a Fraser Institute report on the province’s financial management was released – the report said the province blew more than $22 billion over eight years.
The report said the province should have kept any spending increases in line with population growth and inflation, which would have saved the extra money the report said the province spent.
This year though, Horner said the province can’t afford a population and inflation increase as it faces a growing deficit.
Also on Tuesday, the province announced further belt-tightening measures they had planned to implement to save money.
The government introduced a three-year management salary freeze, effective April 1 for staff in the public sector, in addition to reducing the number of public sector managers by 10 percent over three years.
The freeze is slated to save taxpayers $54 million.
The province also said officials had identified nearly $600 million in in-year savings across a number of ministries, along with accelerating a results-based budgeting process, meant to challenge government spending.
That announcement came nearly two weeks after the premier announced via Twitter that PC MLAs had decided to freeze their pay and housing allowances – a move that other parties followed soon after.
Minister Horner will table the budget on March 7.
With files from Brenna Rose