Alberta Premier Alison Redford warned that declining oil prices are affecting government revenue, adding billions of dollars to the province's deficit
The Alberta government will have to make some "very difficult choices" because falling oil revenues have taken billions out of provincial coffers, Premier Alison Redford said in a televised address Thursday.
However, she said that her government isn't planning to "take the easy way out" by raising taxes and would instead hold the line on spending and find new markets for Alberta oil.
"Some programs and services will change, especially those that are not sustainable over the long term," she said in an eight-minute pre-recorded speech.
"Quite simply, we have to put Alberta's finances on more stable footing. A province as prosperous as Alberta should not be as susceptible as we are to swings in the price of oil and gas."
Redford spent the first part of her address explaining how a drop in oil prices has curbed the royalties that fund 30 per cent of the province's budget.
She blamed a lower-than-forecast price for West Texas Intermediate oil — she claimed Ottawa and the Saskatchewan government used the same figure as Alberta in their budgets — as well as a bitumen price of just over $50 a barrel caused by increased production in the United States.
"This bitumen bubble means that the Alberta government will collect about $6 billion less in revenue this year alone," Redford said, adding that amount represents how much the province spends on education each year.
Redford pledged her government would hold the line on spending — without cutting programs across the board — while exploring new markets to make Alberta less dependent on sales to the U.S.
She said that her government has a plan to start putting resource revenue back into the Heritage Fund for the first time in more than 25 years.
However, she noted that it may be challenging not to increase spending as 95,000 people moved to Alberta last year.
Redford also plans to bring together representatives from business, academia and the non-profit sector next month for an Alberta Economic Summit, which she hopes will become an annual event.
No answers, opposition says
Wildrose Leader Danielle Smith said Redford provided no solutions for the province's financial problems.
"Instead we got a promise of a conversation to start another conversation," Smith said.
"I think what we're seeing with the premier is she really doesn't have a plan for how to meet her budget promises."
Smith said her party warned last year that the revenue projections in the February 2012 budget were too generous.
She said the differential — the difference in between Canadian and American oil prices —has existed for years.
"They had rosy projections, they did not pan out. They have constantly relied on energy prices to try to bail them out of a problem of overspending," Smith said.
"Now they're trying to blame the revenue side? It's not a problem on the revenue side; it's a problem on the spending side."
Provincial NDP leader Brian Mason blamed Redford for making promises in last year's election that she knew she could not keep, including building 50 schools and setting up 140 family health care clinics.
"Tonight's address is to prepare Albertans, blaming others, but in fact, the responsibility is clearly on the Progressive Conservative government for misestimating revenue from oil," he said.
Mason said that news about cuts to health and seniors care are already being revealed.
Like his NDP counterpart, Liberal leader Raj Sherman accused Redford of misleading Albertans last year and says the province should look at implementing a progressive taxation system.
"It's clear that the premier bluffed Albertans before the election, they made up irresponsible predictions with respect to oil revenue, and it's now doom and gloom and she's making excuses," he said.
"The premier has to do what a leader does. Be honest with the people and say, 'You know what? The wealthiest in our province … have to pay their fair share of tax.'"
The province is unveiling the budget on March 7.