Alberta Finance Minister Doug Horner
Credits: CODIE MCLACHLAN/QMI AGENCY
EDMONTON - Alberta's widening deficit -- projected to grow to the brink of $3 billion thanks to fluctuating energy markets -- makes the province's economy "a bit of a roller coaster," Finance Minister Doug Horner says.
It's the kind of economic environment that makes budget prediction a slippery business.
The bad news: The province's deficit is stubborn, projected to rise to $2-3 billion by next quarter if the economy stays on trend.
That includes the province's revenues down $400 million in first quarter, with almost every blame factor directly related to the oilsands -- volatility of the price of oil and, to a lesser extent, natural gas, uncertainty in the European Union, U.S. economic woes, the US election, lower bitumen royalties, lower lease sales, reduced market availability via pipelines, and pipeline delays.
"As we face lower revenues, we are taking action," Horner said.
"It's very important that we manage the expense side - because that's what we control. The other side of it is highly volatile, and we know that, and that is how we're going to manage in a highly volatile situation."
So what comes under the knife next? Results-based budgeting means evaluating a third of the provincial government each year over a three-year cycle, not just capital projects, but programs, too, Horner said.
"We've asked each minister to review all their capital projects in their department, almost in a results-based budgeting methodology, where what was the original intent, what are the objectives, are we still in line, is it still valid, are we doing the right thing?"
Horner said Wednesday's cancellation of the $122 million police college slated for Fort McLeod was a good example of that.
The public can expect a results-based budgeting report in October. And then there's public sector negotiations.
"There will be no new money for public service sector negotiations until we see improvements -We are tightening our belts, we would expect all others to do the same," he said.
"We're not freezing anything in terms of wage negotiations. What I'm saying is, there is no new money in the operating budget, so if they can accommodate within the operating budget, that's what they'll have to do."
There's good news as well, Horner said. Strong growth in jobs, retail sales, exports and housing starts.
"I don't want to leave this podium saying that there's doom and gloom, " he said. "We are in the best place in the world, bar none, in terms of how we're going to go forward."
Horner may be upbeat, but on Wednesday, Edmonton Mayor Stephen Mandel said building contractors paint a different picture of the economy outside of Fort McMurray.
"They're telling me that there's not a lot of work out there," Mandel said.
"Right now the economy here is OK, but it isn't overly heated up, and when that contractor tells me they're really looking for work and they're short of work, well I know it's a fact.
"So we need to put in a perspective when people talk about how good the economy is here. It isn't as good as people say it is, because the fact of the matter is that it's driven from the Fort McMurray area, moreso than the Edmonton area," Mandel said.
The bubble has popped on the "Alison Wonderland" pre-election budget, Wildrose finance and Treasury Board critic Rob Anderson said following Horner's briefing. Another global economic slowdown will send Alberta's balance sheet off a cliff, Anderson said.
"You can't budget for high oil prices based on hurricanes and Middle Eastern conflicts. These guys used phony numbers to try and boost their fortunes for the election, and now they're asking Albertans to trust them that this is just a temporary blip?" he said.