Following Tuesday's throne speech, the Alberta government released it's 2011-2012 budget on Thursday. The budget has been the source of much anticipation, with the recent announcement by premier Ed Stelmach that he would step down later this year, and the resignation of finance minister Ted Morton amid speculation about a rift in fiscal policy within the government.
The budget, delivered by new finance minister Lloyd Snelgrove, provides for a projected deficit of $3.4 billion dollars (out of a $39b budget), to be funded from the Sustainability Fund. That fund, which stood at $16.8b in 2009, is projected to be whittled down by a series of budget deficits to $1.7b by 2014.
On with respect to energy and environmental matters, environmental spending will be significantly reduced or deferred. While stating that developing energy resources in an environmentally friendly way is one of the government's top priorities, the budget for Alberta Environment was cut 3.3%.
As well, funding for four carbon capture and storage projects has been deferred. Those projects were originally to have received $800m in funding by 2012; with the latest deferral they will now receive nothing this year, $70m next year, and $500m over the following three years. The finance minister laid some of the blame on the federal government, for failing to set out a framework for carbon pricing in Canada that would allow the projects to proceed.
On the revenue side, $8.3b in revenue from the energy sector is forecast for this year. The revenue forecasts continue to show a significant ongoing shift away from natural gas and towards the oilsands.
Forecast revenues include:
$4.1b in oilsands revenue (up from $3.6b last year and forecast to grow to $7.1b by 2014); and
$1b in natural gas revenue (down from $1.6b last year and $8.4b in 2006)
All forecasts are based on an oil price of $89.40 per barrel, a gas price of $3.45 per GJ, and the Canadian dollar at $US0.9838. Revenues are highly sensitive to each of those factors; the final deficit for this year may vary significantly from predicted if any of those differ significantly from those forecasts.