President of the Treasury Board and Minister of Finance Robin Campbell gave details on the 2014-15 third quarter fiscal update and economic statement, reminding people that the results are just “one chapter of a very long story.”
He said the revised forecast of 2014-15 shows falling resource revenue because of declining oil prices, though the full impact won’t be felt for the current fiscal year, but instead will be felt for budget 2015.
“Despite declining energy prices we ended the third quarter with a surplus,” said Campbell. “(And) despite the fiscal circumstances we find ourselves in today, Alberta remains on track for a balanced budget at the end of this fiscal year.”
The province expects to end the fiscal year with a $465-million surplus and because energy prices were higher at the beginning of the fiscal year, along with improved revenue forecast in other areas, the budget should be balanced for 2014-15.
Regardless of the 2014-15 balanced budget, he said there are serious challenges ahead, as the price of oil has dropped over 50 per cent since last June and may still have not hit bottom.
“As a result we’ve lowered the WTI forecast to an average of $79 US for 2014-15, significantly down from the $95 US average forecasted budget,” he said.
“Alberta is no stranger to the volatility of energy prices and there’s been a substantial downward slide in crude oil prices than we had in the next fiscal year and relying on volatile resource revenue to fund government programs and services is not prudent fiscal management.”
Operational expenses are also up this quarter, forecasted at $41.2 billion, which is roughly $800 million more than originally forecasted, and Campbell said this is due mostly to forest fires, mountain pine beetle, the Alberta job fund and agriculture and flood assistance.
Negotiated settlements made by former admin - istrations, including several compensation agree - ments reached after the release of last year’s budget, also pushed up the projected spending by $2.6 billion over the next few years.
“This is causing added pressure at a time when current government is dealing with a significant revenue shortfall,“said Campbell.
In the face of all this fiscal adversity, he said public infrastructure is still a priority. Alberta’s growing population is causing infrastructure pressure and even though the prices of oil are low, the government needs to build schools, roads and hospitals or risk falling behind on the services Albertans need.
“No projects have been cancelled and we are continuing to invest in central infrastructure even when we need to borrow to do so,” said Campbell.
He said the third quarter results show how quickly and largely things can change and that we have to get off of the, “energy price roller coaster”.
“It won’t be easy, it won’t be overnight and it won’t be painless,” he said. “You’ll hear more about the decisions ahead when budget 2015 is released next month.”