'Trough' in oil prices will hurt Alberta finances, premier says

Premier Jim Prentice again warned Tuesday of the consequences of low crude oil prices on the Albertas finances, without specifying what measures his government is prepared to take.

In a lunch address to the Edmonton Chamber of Commerce, Prentice said Alberta is facing an price trough...of uncertain duration"due to overproduction by OPEC member countries.He said his government will base the next provincial budget on oil in the $65 to $75 per barrel range and take measures to deal with changes that have been so deep and so dramatic.

Those changes will not include a provincial sales tax. Prentice said the provinces corporate and personal tax rates would stay the most competitive in Canada, but he did not say whether they would stay the same.

Instead, the government will make tough choices, and keep spendingbelow population growth and inflation, he said.

Albertans will feel it. It wont be easy, not on government and not on Albertans. Tough choices will have to be made and they will be made.

When asked by reporters whether he was laying the groundwork for a possible tax increase, Prentice would not give a straightanswer nor would he say what the government is considering.

Ive been very clear about the scale of the financial challenges that we face and we are in the budgeting process now, he said.

Once we have wrestled it to the ground and have dealt with the implications and the recommended changes, Ill be very clear about that.

Over the past few weeks, WildroseLeader Danielle Smith has questioned Prentice about his plans for dealing with lower oil prices. She is also looking for answers.

There are some very serious decisions that going to need to be made," Smithsaid. "We dont have a clear idea yet from the government about what direction they intend to go.

Pressure of population growth

Prentice used his speech to the Edmonton business community to lay out his governments challenges.

In a province that earned $9 billion or 21 per cent of its revenue from royalties last year, a $32 drop in the price of oil means the province loses between $6 to $7 billion in a year

Our forecasters are telling us that the lower price environment that were currently in will not be short-term, Prentice said.

So we must tackle what we can control and spending must align with a realistic assessment of financial capacity.

Prentice outlined the pressures of having 840,000 new residents in Alberta over the next decade.

In 2013, Alberta had 665,000 school-aged children. That number is expected to reach 829,000 by 2023, an increase of 25 per cent. The number of retirement-aged people will increase by 60 per cent in that same time period.

The provinces infrastructure needs to keep up with a population he says will reach 5 million by 2025.

Population growth and the pressures that come with it is one of the most significant long-term challenges facing this province , he said.