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Good evening.
In the last election, I made a commitment to speak directly with Albertans
when important issues arise and to listen carefully to your advice
Tonight
I want to start one of those conversations.
As Premier, I'm proud to lead a province that has achieved so much.
We're creating jobs and attracting thousands of new Albertans each year,
in part, because our taxes are the lowest in Canada.
We live in safe communities
and we're able to provide world-class health care for people like my dad and
quality education for our kids, like my daughter Sarah.
Alberta has been a steady star in turbulent waters,
but even wer'e not immune to economic forces beyond our borders.
Today,
30 per cent of our budget is funded by revenues from oil and gas.
This means that we are vulnerable to swings in resource prices -- as we have seen
with natural gas prices in the past, and now the price that we receive for
Alberta oil.
This time last year,
private sector economists,
industry experts and banks forecasted that West Texas Intermediate oil —
the benchmark price for oil in North America —
would average 100 dollars a barrel
in 2012.
The federal Conservatives,
our neighbors and Saskatchewan
and our government used that benchmark as the basis for our budget
forecasts. In fact we forecasted the price to be slightly lower just to be
safe.
But now
Texas oil ended up averaging 94 dollars last year —
and that difference in price alone,
has cost the province almost 1 billion dollars in royalty revenue since April.
But, it isn't the price of oil in Texas that's causing the real problem.
Historically, the price that we receive for our oil
has been a few dollars lower than Texas oil,
and that differential had been manageable.
But since September, that gap has grown considerably
and the trend is getting worse for the foreseeable future.
The vast majority of our own oil is now bitumen from the oil sands.
And because of rapidly growing levels of oil production in the United States, and
the fact that we have virtually nowhere else to sell our oil but to the U.S. market,
Alberta is getting just over 50 dollars a barrel for our oil.
This "bitumen bubble" means that the Alberta Government will collect about
6 billion dollars less in revenue,
this year alone.
To put that in context,
that's equivalent
to all of our government's spending on Education each year.
So as we prepare this year's budget,
it means we have to make
some very difficult choices.
When Albertans elected our government last April,
you placed your trust in us to manage in both good
and challenging times,
to protect Alberta's gains, while building for the future.
You gave our government a clear mandate to keep investing in services that
support our families and our communities —
the communities where we live.
You told us to continue building the new roads, schools and health facilities that
we need.
And we are listening.
Despite falling oil revenues, I give you my commitment
that as we deliver long-term economic plan for Alberta,
we will be thoughtful
in our approach and we will deliver
on these priorities.
It's not good enough to simply take an axe to government spending across the board.
That would mean that vulnerable Albertans get hit the hardest.
And it's not good enough to take the easy way out and raise taxes.
Last year, we initiated a Results-Based Budgeting process — a process that
challenges every dollar that the government spends, while making sure that
the programs and services we provide
are getting results for Albertans.
And I've instructed every one of my ministers to speed up this review.
In this year's budget,
we'll hold the line on our spending
and we'll live within our means.
But our population is growing quickly.
We know that living in this province.
Last year alone, we welcomed 95 thousand new Albertans —
that's equal to adding a new city the size of Red Deer in just a single year.
So while it may sound relatively painless to hold our overall spending
levels,
it's not.
As a result, some programs and services will change —
especially those that are not sustainable over the long term
Quite simply, we have to put Alberta's finances on a more stable footing.
A province as prosperous as Alberta should not be as susceptible as we are to swings
in the price of oil and gas.
It's why I will continue to fight for a Canadian Energy Strategy that gets our
oil both to the West and the East coast in Canada, to the refineries in the U.S.
Gulf Coast
and to markets overseas —
particularly growing economies in Asia.
We have a duty to ensure that our resources — especially Alberta oil and gas —
get to new markets at a much fairer price.
These are our assets and we need to sell them for the highest price possible.
And that means we absolutely must find ways to get Alberta oil to multiple
customers around the world and get a competitive price
But this won't happen overnight.
It will take focus and determination over the next several years to open new
markets.
And that's job one for my government.
And through all of this, as we make the tough, but thoughtful decisions to live
within our means,
we have a plan to once again begin investing a portion of our resource
revenue in the Heritage Fund —
the first time that will have happened
in over 25 years.
We will build on the legacy that Premier Lougheed laid down for us —
a legacy premised on fiscal conservatism with a strong social conscience
that has built Alberta into the greatest place in Canada to live, bar none.
Working together, and with your support —
we'll work through the effects of the bitumen bubble and put Alberta on a
more secure footing.
But make no mistake about it —
our government was elected to keep building Alberta.
To focus our spending on the priorities that you told me were important.
And that's exactly what we'll do.
I look forward to continuing our conversation directly with you in the
weeks ahead.
We will listen and we will act.
Next month, I'll lead the first annual Alberta Economic Summit
that will bring together leading thinkers from across Alberta.
We'll hear from industry experts, from business and not-for-profit sector
leaders
and academics from our colleges and universities.
But most importantly, we'll hear from people like you,
who are passionate about sharing ideas and finding solutions.
This summit will not solve everything in one day,
but it will allow us to continue our conversation.
I don't expect your advice to be unanimous.
It usually isn't in most families.
But I'm prepared to make the tough decisions that must be made to protect
all that we've achieved together,
while not losing sight of our duty to future generations.
Thank you for spending a few minutes with me this evening.