Albertans should not be surprised if the province doesn't present a balanced budget by 2012-2013, a goal stated repeatedly by members of the Conservative party in 2010.
In a year-end interview with the Edmonton Journal last week, Premier Ed Stelmach revealed the province might not be back in the black by next year because of "external economic factors."
He cited very low natural gas prices, an increase in value in the Canadian dollar and a United States' economy still reeling from the recession as reasons for the government's about-face on balancing its books.
"We will definitely show a trend toward balancing (by 2012/13). Will it be absolutely balanced? If there is no recovery on the revenue side, we will be very close to balancing," Stelmach said.
Financial troubles in Europe and a possibility the federal government might decide to cut funding to the provinces as a way of stemming its own shortfall are also to blame, said Stelmach.
"Sometimes you can't keep your promises because there are a number of things you don't have any control over, such as what's happened in the energy industry," said St. Albert MLA Ken Allred.
"I guess we certainly tried and we're going to be close but this recession, unless it really turns around in the next year, seems to be causing some further problems," said Allred.
In particular, Allred said the province has been impacted by low natural gas prices, a result of a 200-year supply of shale gas unleashed in the United States through horizontal drilling and multiple fracking.
"The whole gas situation in the last year has imploded with the shale gas in the eastern seaboard there," he said.
"It's really just liquidating the Alberta market and it just seems to be getting worse and worse because at first it was a little bit unsettled as to whether they were going to be able to get that gas out and then there were environmental concerns but they seemed to be going full steam ahead now," said Allred.
As a result, he said revenues have plummeted from $12 billion to $8 billion.
"There was always the anticipation that this might turn around a little bit but it doesn't seem to be turning around," Allred said.
According to Stelmach, getting Albertans back to work is a priority for the government in 2011. Allred said a project by North West Upgrading in Sturgeon County announced earlier this year, and potentially one more, should help create jobs in the area.
"Those are really good because the Scotford Refinery will be grinding down, in fact it probably is right at the moment so there will be a large number of skilled trades people on the market and something like the upgraders will really be good for them," Allred said.
"There are also a number of projects in Fort McMurray that are advancing so that helps."
The premier's comments came one day before provincial and territorial finance ministers wrapped up a meeting in Kananaskis where they discussed eliminating deficits and lowering debts as the country moves towards sustained economic growth.
"In particular, we agreed on the need to move decisively to get back to sustainable budget balance," federal finance minister Jim Flaherty said in a statement last week.
Federal transfer payments up
Flaherty said federal transfer payments to the provinces in 2011/12 will reach "a new all-time high" of $56 billion, $2.2 billion more than last year.
"This unsurpassed level of financing reflects the Government of Canada's commitment to support the provinces and territories in their front-line delivery of health care and social programs for Canadians," Flaherty said.
According to him, the Canada Health Transfer (CHT) will grow to $27 billion in 2011/12, an increase of $1.5 billion that is in line with an annual six per cent increase.
The Canada Social Transfer (CST) will reach $11.5 billion, an increase of $335 million while equalization for 2011/12 will reach $14.7 billion.
"Provinces as a whole can count on growing CHT and CST support as we continue to work towards balanced budgets. Equalization will grow in line with the economy, with provincial amounts reflecting their relative economic performance," Flaherty said.
Flaherty said none of the provinces will see a major transfer decline in 2011/12.
