Alberta’s bottom line is being affected by a reduction in revenue from falling oil prices and the premier says a ten-year plan is in the works to minimize the impact on programs and services in the future.

Premier Jim Prentice addressed business leaders at the Canadian Club of Calgary on Thursday and spoke about the need to restore the fiscal foundation.

“This time we have to not just get through this but we have to seize the opportunity that comes along once in a generation, not just to manage this cycle but to right the balance once and for all in this province. We must never again be required to watch OPEC meetings to determine, to find out how many schools we can build for our children, what we can afford to pay our public employees or whether we should stop, start, expand, contract the construction of public facilities,” said Prentice.

Prentice was sworn in as Premier on September 15, 2014 and says the price of oil has been dropping ever since and that has had a major impact on public finances.

“We cannot just cut back to weather the storm until the good times come again. I have a different goal and that is to move Alberta off of this rollercoaster once and for all,” said the premier. “And when prices go up again, and they will eventually go up again, we must look to those revenues as the source of savings and investment instead of using them to fund programs and services for this generation of Albertans.”

He says he will be evaluating some of the built-in cost escalators that he says are driving government expenses to a new high.

 “It will include a cultural change in how governments collect revenue, how governments budget for and spend their revenues in this province and that I would say to you may actually be the biggest challenge of all.”

He says there is a $7B gap in government revenues and that the small surplus does not change the reality of the problem going forward.

“A $7B hole is not a simple problem,” he said. “And it cannot be eliminated by cutting staff, by eliminating severance or by buying few paper clips. This is a big problem and as I have said before we could eliminate all of the staff who work for the Government of Alberta, it wouldn’t come close to fixing a $7B problem.”

Prentice says the drop in energy prices did not cause the fiscal problems, it just revealed them, and that he will work to contain costs and still ensure excellence in public services.

“We must all work together. All of us must shoulder some share of the responsibility to manage the cost legacy of decisions that were made by previous governments, one-by-one, that brought us to this point.”

He says one of the first priorities was to sell the government’s fleet of planes and announced that three of the four were sold to a North Dakota company for $6.1M.

The three planes that sold were:

  • A 2006 Beechcraft King Air B200;
  • A 2006 Beechcraft King Air B200; and
  • A 1997 Beechcraft King Air 350.

Prentice says he doesn’t expect a recession in 2015 but that the slower economy is taking a bite out of corporate and personal taxes through which services are funded and that his team is planning ahead.

“We are developing a long-term plan that will deal with the situation that looks beyond short-term revenue fluctuations to create a steadier future for our province.”

He says it will be a ten-year plan and will minimize the effect of volatile energy prices and provide for predictable and sustainable funding for programs and services in the future.

He says the plan is underway and will reflect input from Albertans.