Alberta's projected surplus could vanish in a 'heartbeat:' finance minister
Robin Campbell says government can't fix financial problems in one year
Alberta’s coming financial woes, chiefly caused by falling oil prices, aren’t something the government can fix quickly or with one simple solution, says Finance Minister Robin Campbell.
Campbell told CBC News on Wednesday that people shouldn’t read too much into the fact that third-quarter financial results released this week show the province is still projected to show a surplus for the 2014-2015 budget year.
Though Premier Jim Prentice has repeatedly warned about Alberta ending the year with a $500-million deficit, Tuesday's third-quarter suggests the province is now forecast to end the year with a $465 million surplus.
“That could disappear in a heartbeat,” Campbell said.
The projected surplus, he said, is due to a low Canadian dollar, better-than-expected investment returns and higher corporate tax returns.
But those third-quarter projections can be misleading, Campbell said, because during the first six months of last year, oil hit a high of $108 a barrel, while during the last six months the price has averaged $44 a barrel.
The province based its 2014-15 budget on a $95.22 price for West Texas Intermediate crude oil. That price has now been adjusted to $79.24.
So most of the pain from tumbling oil prices is yet to be felt. The province still expects that revenues for the next budget year will be down $7 billion from 2014.
The government is using an online survey to gather input from people across the province. So far, more than 36,000 respondents have offered their opinions.
“People have talked about everything from progressive tax to sales tax, to fuel tax (and) sin taxes,” Campbell said. “People have said no taxes.”
The province is looking at three options, he said: cuts to government spending; raising new or more revenue, and taking money from the contingency fund.
“This is a situation we can’t resolve in one year,” Campbell said. “To do so would put the province into a recession, and we’re not about to do that.”
Campbell said earlier this week the full impact of dropping oil prices won't be known until the spring budget is tabled.
"There are significant challenges ahead," Campbell said Tuesday. "There's no question energy prices are driving Alberta's fiscal story right now."
GDP is projected to grow by just 0.6 per cent in 2015.
Campbell has said that slight growth does not mean Alberta is slipping into a recession.