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The Globe and Mail

Redford offers long-term vision for budget crisis

Alberta Premier Alison Redford answers questions during an interview in her Alberta Legislature office in Edmonton Alberta December 20, 2012. Jason Franson for The Globe and Mail.

Jason Franson/The Globe and Mail

With Alberta's bottom line being gutted by falling oil revenue, the March 7 budget will embody a "once in a generation" transformation in how the province builds and sustains its spending, Premier Alison Redford says.

"It's about this being a new reality and us having to face that," Ms. Redford said in an interview on Friday.

"[It's a plan to] think about what kind of a province we want to live in, how we're going to plan long-term and not sort of sit back and cross our fingers and hope the price of oil goes up.

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"You don't do that every year. You do it once in a generation. And this is the time for us to do it now."

Ms. Redford made the comments one day after telling Albertans in a provincewide TV address that soft energy prices will slash the expected oil and natural gas revenue in the 2013-14 budget to $7-billion from $13-billion.

She said Alberta is caught in a price vise: growing oil production in the United States, and Alberta's output tied to markets south of the border means a yawning gap in the benchmark North American price for oil versus what Alberta's oilsands bitumen is fetching.

That won't change, she said, until pipelines are extended to refineries on the U.S. Gulf Coast and to B.C. for shipment to Asia.

The current budget pegs spending at a record $41-billion. Ms. Redford said she will hold that line while making changes to programs and services to improve value for money while not sacrificing priorities.

"If you don't have a long-term vision, then you end up being shortsighted and getting into pitfalls," she said.

Ms. Redford declined to get into specifics of what projects or programs could be on the chopping block. She said capital projects will proceed depending on their priority and how much work has already been invested.

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"If they make sense for Albertans and they fit within the priorities that Albertans set for us in the last election, we're going to continue to invest in those things," she said. "If they're so far along that it would be silly to pull back on them, then we're not going to slow down."

Opposition critics say Ms. Redford's budgetary call to arms is cynical misdirection by a premier who was warned last year about the oil revenue problem, but forged ahead with grand plans for spending on schools, health clinics, and social programs.

"She was attempting [in the TV address] to deflect responsibility for the desperate financial situation that we find ourselves in," said NDP Leader Brian Mason. "I think that's unacceptable and I don't think we can let her get away with it."

Mr. Mason said Ms. Redford ignored advice from experts to reduce dependence on royalties, failed to have more bitumen refined in-house, and turned a blind eye to the growing bitumen differential problem.

Wildrose Leader Danielle Smith said Ms. Redford is being disingenuous by suggesting she was sideswiped like everyone else by the price differential.

Ms. Smith said the price gap is comparable to what it was when Ms. Redford made big spending promises en route to a majority victory in last April's provincial election.

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She said the premier now needs to paint a doomsday scenario to cover up her government's incompetence.

"We do need to make a once-in-a-generation change in how the budget is done in this province," said Ms. Smith. "But the change needs to come on looking at ways to streamline how we do our spending, having a long-term capital plan and cutting wasteful spending."

Disaster, Ms. Smith added, is in the eye of the beholder.

She said $7.5-billion worth of resource revenue is an enormous amount of windfall revenue.

"There's no other province that enjoys that."

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