'Perfect storm' ready to hit Alberta economy: Finance Minister

Alberta's Finance Minister Doug Horner speaks at a Calgary Chamber of Commerce luncheon.



CALGARY -- Calling it a "perfect storm" of negative economic factors facing Alberta, Finance Minister Doug Horner said much belt-tightening will have to be done ahead of the March 7 budget.

Speaking at a Calgary Chamber of Commerce luncheon Monday at the Hyatt Hotel, Horner said the low price of Alberta oil -- currently sitting about $30 a barrel below the North American price, thanks largely to access issues in getting it to market -- is costing the province billions in revenues.

That, coupled with the fact Alberta currently only has one customer buying its oil -- the U.S., which is ramping up its own production -- means provincial revenues will be much lower than projected in coming years.

"No storm is good, but this one is going to be severe," Horner told reporters following his speech.

"It's a perfect storm in the fact we only have one customer and the things we've always been concerned about are coming home to roost in a very quick fashion.

"The other part of that perfect storm is the market has figured out how to ... get that product to market quicker than anyone anticipated, plus, the technology that everyone thought would take some time to develop happened a lot faster, so the production levels have doubled in that area -- that's a very serious concern for us."

As a result, Horner said all provincial ministries have been told to aggressively curb spending.

"Departments have been told to live within their means and to be very aggressive in terms of reining in their spending," he said. "We're looking at every dollar we spend to make sure it is being spent effectively through results-based budgeting.

"And in light of our situation, we're accelerating that process."

Horner's office also released Monday the report, called "Dollars and Sense," the result of a two-month consultation with some 6,000 Albertans on the province's fiscal framework.

"A few key themes emerged," he said. "Albertans told us they support savings in the good times and the bad.

"They want a capital plan that provides important infrastructure when it's needed and responsible and efficient government spending, and they want a plan that ultimately reduces the province's reliance on non-renewable resource revenue."

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