Alberta's Premier Alison Redford gave a grim outlook on Alberta's finances after a Progressive Conservative Party caucus meeting on Monday. Addressing the press, Redford said that the province is losing $75 million a day.
Shortly after being elected leader of the Progressive Conservative Party of Alberta (PC) and thus Premier of the province, Redford released the 2012 Alberta budget. The budget, released before the provincial election. was based on revenues of $40.3 billion. Almost one third was based on non-renewable sources, while personal and corporate income tax made up just under one quarter. Source: Alberta 2012 budget
Since Alberta relies heavily on renewable resource revenue, Redford had to make a rare admission yesterday. In an address to the press, after a Progressive Conservative party meeting, she acknowledged that Alberta was losing $75 million a day in resource revenue. The province's budget used an estimate of $100 a barrel of oil. While Redford claimed that this was also the estimate of experts, it falls into the face of past history of volatile oil prices, which are influenced by many factors. Add to that the weak global economy and it is no surprise that world oil prices would not meet that estimate. In fact oil prices have been closer to the $90 a barrel mark during the past year.
Alberta bitumen, known as Western Canada Select is currently priced at $51 a barrel, while West Texas Intermediate sells at $40 more. With increased oil production in the US, Redford says a pipeline to bring oil to the West coast for expanding Asian markets is needed more than ever. The current decreased value of Alberta oil is costing the Alberta economy approximately $30 billion a year.
Opposition party critics have said for sometime that this price difference is not a new phenomena, but that the government should have planned for that eventuality in its budget. The Alberta 2012 budget came with a lot of perks in social spending along with promises, which will be hard to keep. Nonetheless Redford says she is committed to to supporting families and communities, to ensuring that healthcare and education are priorities,
“We’re committed to supporting families and communities, to ensuring that healthcare and education are priorities,” Redford said.
Having vowed that she would not increase taxes, Redford is between a rock and a hard place. She either has to somehow increase revenues with a tax increase or cut program spending for the 2013 budget. The idea of increasing taxes has already been floated, but will most certainly be rejected by Albertans.
New pipelines into the United States and to the West coast are in jeopardy. President Obama rejected the XL Keystone pipeline last year, while Alberta is in a dispute with British Columbia's Premier, who wants some revenue sharing. Add to that the Idle no more aboriginal movement and the likelihood of the construction of the Northern Gateway Pipeline, which would transport oil from Alberta to Kitimat, B.C., fades away.
Premier Alison Redford made a lot of promises, based on flawed estimates. Now that fantasy has been met by reality it will be interesting to see her next move on the Alberta budget. Pipelines will not be available anytime soon. Is a hike in taxes the next move? Regardless of how Redford and her government decide to go, she will be providing lots of fodder for the official opposition Wild Rose Party.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com