EDMONTON – Alberta Premier Alison Redford, in her first TV address as premier, warned Thursday of tough fiscal times and multibillion-dollar revenue shortfalls ahead due to the “bitumen bubble.”
She said the bubble — the difference between the benchmark price for oil in North America versus Alberta’s oilsands bitumen — has grown so wide it will take a $1-billion bite out of this year’s budget and $6 billion the next.
“As we prepare this year’s budget, it means we have to make some very difficult choices,” Redford said in the eight-minute TV spot aired around the province.
“In this year’s budget we’ll hold the line on spending and we’ll live within our means.”
The budget is to be delivered March 7.
Redford said there will be changes to programs and services, but wasn’t more specific.
“Some programs and services will change — especially those that are not sustainable over the long term,” she said.
Redford has said in the past she won’t balance the budget by sacrificing core service delivery in health and education or by shortchanging municipalities.
In the speech, Redford reiterated her pledge not to hike taxes or introduce new levies.
“It is not good enough to take the easy way out and raise taxes,” she said in the video, which was shot last Friday at her Calgary home.
She also said that despite the financial austerity, the plan is still to invest some energy revenue in the Heritage Savings Fund in the next budget.
Redford echoed the recent comments of Finance Minister Doug Horner that Alberta is getting hit why a double whammy in the oil markets.
The vast majority of Alberta’s oil comes from bitumen in the oilsands.
She said the price of that oil has always been slightly below the benchmark West Texas Intermediate price per barrel.
But she said oil production is growing south of the border and that, combined with the fact Alberta has virtually nowhere else to sell its oil, means the price spread has expanded to just over $50 a barrel.
“That gap has grown considerably and the trend is getting worse for the foreseeable future,” said Redford.
She said the government plans to speed up a review of her results-based budgeting process. That process essentially strips budgets to the bare bones and builds them back up again to make sure there is value for money.
She said she will continue her efforts to get pipelines built to the U.S. Gulf Coast and gain access to emerging markets in Asia.
Redford also announced the government will hold its first ever Alberta Economic Summit next month.
The one-day summit of business and industry leaders and academics will seek solutions to Alberta’s economic challenges.
An exact date has not been set.
“The summit will not solve everything in one day, but it will allow us to continue the conversation,” said Redford.
The house resumes sitting on March 5.