Skip to content Skip to site navigation Skip to search

Leading by example: Salary freeze introduced after challenging third quarter

Alberta’s third quarter update shows a multi-billion dollar drop in non-renewable resource revenue.

As a result, the Government of Alberta today introduced a three-year management salary freeze, effective April 1st, which will save taxpayers $54 million. The government also announced that it will reduce the number of public sector managers by 10 per cent over the same time period.

“Alberta is dealing with rapidly falling resource revenues and it means we’re making some tough decisions,” said President of Treasury Board and Minister of Finance Doug Horner. “Our government is leading by example - with a slimmed down cabinet; an eight per cent MLA pay cut and a pay freeze for MLAs; today we're taking action on management salaries.”

The management salary freeze also covers opted out and excluded government employees.

In addition, the province has identified nearly $600 million in in-year savings across ministries. The Redford government has also accelerated the results-based budgeting process, which challenges every dollar government spends.

“Our government is thankful for our partners in the public sector for working with us to hold the line on spending and reduce costs in this critical time,” said Horner. "We will remain focused on delivering the change Albertans voted for while ensuring we're doing so as efficiently as possible."

In the first nine months of the fiscal year, resource revenue was $2.4 billion lower than expected. This was due to global economic uncertainty, a growing discount on Alberta bitumen prices, a higher exchange rate and lower land lease sales. These factors were partially offset by higher than expected corporate income tax, stronger investment income, and increased revenue from gaming and liquor sales. Greater revenue also came from a higher demand for motor vehicle licences, agriculture insurance and other fees that are driven by volume.

Expense for the first nine months was $280 million less than expected due mainly to lower operating expense and capital grants. This was partially offset by funding for in-year disaster and emergency assistance. Based on results so far this fiscal year, Alberta is now forecasting a deficit for 2012-13 of between $3.5 and $4 billion.

“As a landlocked province with limited access to markets for our oil resources, Alberta is continuing to face serious challenges to our bottom line,” said Horner. “The upcoming provincial budget focuses on making the tough but thoughtful decisions necessary to allow the province to continue to deliver on its priorities. It will include an operating plan, a savings plan and a fully-funded capital plan that will ensure we meet the needs of today’s Albertans as well as a new generation of Albertans 20 years from now.”

Minister Horner will deliver Budget 2013 on March 7.

2012-13 Third Quarter Actuals for the nine months ended December 31 ($ millions

Backgrounder: Economic growth moderates; fiscal challenges continue due to differential

Media inquiries may be directed to:
Robyn Cochrane
Press Secretary
Treasury Board and Finance
780-415-1541
780-668-2256 (cell)
robyn.cochrane@gov.ab.ca

To call toll free within Alberta dial 310-0000.

February 19, 2012

Economic growth moderates; fiscal challenges continue due to differential

The deep discounts on Alberta’s oil relate to the lack of pipeline capacity and rising production in the United States, particularly North Dakota and Texas. Transportation infrastructure from these growth regions has not kept pace with production growth, resulting in pipeline bottlenecks and large increases in crude inventories along North American major pipeline systems. The situation of over-supply, combined with few transportation options, has led to increased price volatility and deep discounts for landlocked crudes, including oil coming from Alberta. Figure 1 captures the price discounts Alberta faces compared to other North America oil that can get to tidewater.

Figure 1: Crude Oil Price Discount Map
http://finance.alberta.ca/whatsnew/newsrel/2013/3rd-quarter-chart-crude-oil-price-discount-map.jpg

These issues will continue to lend themselves to increased price volatility (Figure 2) which directly impact Alberta’s bottom line - resource revenue was $2.4 billion lower for the first nine months of 2012-13. More information about the fiscal impact of the oil differential can be found at www.alberta.ca/Fiscal-Challenge.cfm.

Figure 2: Benchmark crude oil prices
http://finance.alberta.ca/whatsnew/newsrel/2013/3rd-quarter-chart-benchmark-crude-oil-prices.jpg
Economic activity in Alberta has shifted from businesses to households heading into 2013. Strong population growth, a robust labour market and rising retail sales all supported this trend. 

  • Population growth continued to far outpace the rest of Canada at 2.5% in census year 2012, with a 2.6% gain expected for 2013 (Figure 3).
  • A strong labour market has attracted people from other provinces and countries: net migration soared to levels not seen since the early 1980s. Alberta added close to 25,000 net migrants in the third quarter of 2012.
  • Both population growth and a strong labour market were behind higher levels of consumer spending, with retail sales rising an estimated 8.2% in 2012. Another strong increase in consumer spending is expected in 2013.
  • Alberta created 55,500 net jobs in 2012, more than any other province. The 2.7% increase in employment was exactly in line with the Budget 2012 forecast.
  • Housing starts are expected to remain strong in 2013, supported by large inflows of migrants.
  • As job growth moderates, total primary household income is expected to ease to a still healthy pace of 5.5% in 2013 after an estimated gain of 7.3% last year.

Figure 3: Population growth
http://finance.alberta.ca/whatsnew/newsrel/2013/3rd-quarter-chart-population-growth.jpg

For more detailed information, a copy of the 2012-2013 Third Quarter Fiscal Update and Economic Statement  is available at www.finance.alberta.ca.

Media inquiries may be directed to:
Robyn Cochrane
Press Secretary
Treasury Board and Finance
780-415-1541
780-668-2256 (cell)
robyn.cochrane@gov.ab.ca

To call toll free within Alberta dial 310-0000.

Backgrounder

February 19, 2012

Economic growth moderates; fiscal challenges continue due to differential

The deep discounts on Alberta’s oil relate to the lack of pipeline capacity and rising production in the United States, particularly North Dakota and Texas. Transportation infrastructure from these growth regions has not kept pace with production growth, resulting in pipeline bottlenecks and large increases in crude inventories along North American major pipeline systems. The situation of over-supply, combined with few transportation options, has led to increased price volatility and deep discounts for landlocked crudes, including oil coming from Alberta. Figure 1 captures the price discounts Alberta faces compared to other North America oil that can get to tidewater.

Figure 1: Crude Oil Price Discount Map
http://finance.alberta.ca/whatsnew/newsrel/2013/3rd-quarter-chart-crude-oil-price-discount-map.jpg

These issues will continue to lend themselves to increased price volatility (Figure 2) which directly impact Alberta’s bottom line - resource revenue was $2.4 billion lower for the first nine months of 2012-13. More information about the fiscal impact of the oil differential can be found at www.alberta.ca/Fiscal-Challenge.cfm.

Figure 2: Benchmark crude oil prices
http://finance.alberta.ca/whatsnew/newsrel/2013/3rd-quarter-chart-benchmark-crude-oil-prices.jpg
Economic activity in Alberta has shifted from businesses to households heading into 2013. Strong population growth, a robust labour market and rising retail sales all supported this trend. 

  • Population growth continued to far outpace the rest of Canada at 2.5% in census year 2012, with a 2.6% gain expected for 2013 (Figure 3).
  • A strong labour market has attracted people from other provinces and countries: net migration soared to levels not seen since the early 1980s. Alberta added close to 25,000 net migrants in the third quarter of 2012.
  • Both population growth and a strong labour market were behind higher levels of consumer spending, with retail sales rising an estimated 8.2% in 2012. Another strong increase in consumer spending is expected in 2013.
  • Alberta created 55,500 net jobs in 2012, more than any other province. The 2.7% increase in employment was exactly in line with the Budget 2012 forecast.
  • Housing starts are expected to remain strong in 2013, supported by large inflows of migrants.
  • As job growth moderates, total primary household income is expected to ease to a still healthy pace of 5.5% in 2013 after an estimated gain of 7.3% last year.

Figure 3: Population growth
http://finance.alberta.ca/whatsnew/newsrel/2013/3rd-quarter-chart-population-growth.jpg

For more detailed information, a copy of the 2012-2013 Third Quarter Fiscal Update and Economic Statement  is available at www.finance.alberta.ca.

-30-

Media inquiries may be directed to:
Robyn Cochrane
Press Secretary
Treasury Board and Finance
780-415-1541
780-668-2256 (cell)
robyn.cochrane@gov.ab.ca

To call toll free within Alberta dial 310-0000.