2014-15 Third Quarter Fiscal Update and Economic Statement February 24, 2015
Fiscal plan surplus • Smaller surplus Consolidated Financial Statements surplus Fiscal Plan surplus (incl. SUCH sector) (change in net assets) Budget 2014 Q3 Actual Q3 Estimate Forecast 2013/14 Forecast $1.1B $465M ($302M) $361M surplus surplus deficit surplus
Decline in oil prices • Oil dropped from $108/barrel in June to under $50/barrel in January • 50%+ reduction • WTI oil price forecast revised to $79 US, down from $95 US at budget
Energy volatility $US/bbl 120 2014-15 Fiscal Year 110 100 90 80 Average: $79/bbl WTI (US$/bbl) 70 Budget 2014 Forecast 60 Second Quarter Forecast 50 Third Quarter Forecast 40
Revenue • Revenue forecast $397M higher than Budget 2014 estimate • Resource revenue forecast down $503M Revenue (full year forecast) Budget 2014 Q3 Estimate Forecast $44.4B $44.8B
Operational spending • Operational expense is $802 million higher than forecast for: • forest-fires • agriculture and flood assistance • public sector compensation settlements
Capital Plan • Revised Capital Plan forecast at $6.5B • Direct borrowing for infrastructure is $3B • reduced $1.9B from budget
Economic forecast % Change 2013 2014 Estimate 2015 Forecast 4 3.8 3.6 3 2.9 3 2.6 2.5 2.2 2 2 1.4 1 1 1 0.6 0
$7 billion challenge • $7 billion projected revenue shortfall in 2015
Public sector wages 12% Public Sector Compensation, 2013-14: $22.5 billion 31% Alberta Health Services 15% Physicians Education Post-secondary Education Alberta Public Service 24% 18%
Actions to date • Closing international offices • Hiring restraint • Restricted spending on goods, services and travel • All departments to look for cost savings • 5% wage rollback for all MLAs
We are listening • Met 1,500 Albertans in 20 communities • 36,000+ responses to online survey • Input will guide government decisions going forward budget.alberta.ca
www.finance.alberta.ca twitter.com/AB_TB_Finance
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