2014 15 3rd Quarter Fiscal Update Presentation

2014-15 Third Quarter Fiscal Update and Economic Statement

February 24, 2015

Fiscal plan surplus

• Smaller surplus

Budget 2014 Estimate

Q3 Forecast

$1.1B surplus

$465M surplus

Fiscal Plan surplus (change in net assets)

Actual 2013/14

Q3 Forecast

($302M) deficit

$361M surplus

Consolidated Financial Statements surplus (incl. SUCH sector)

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

Average: $79/bbl

40

50

60

70

80

90

100

110

120

$US/bbl

WTI (US$/bbl)

Budget 2014 Forecast

Second Quarter Forecast

Third Quarter Forecast

2014-15 Fiscal Year

Revenue

• Revenue forecast $397M higher than Budget 2014 estimate • Resource revenue forecast down $503M

Budget 2014 Estimate

Q3 Forecast

$44.4B $44.8B

Revenue (full year forecast)

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

3.8

3

1.4

2.5

3.6

2.9 2.6

2.2

0.6

2

1 1

0

1

2

3

4

% Change 2013 2014 Estimate 2015 Forecast

$7 billion challenge

• $7 billion projected revenue shortfall in 2015

Public sector wages

31%

18% 24%

15%

12%

Alberta Health Services

Physicians

Education

Post-secondary Education

Alberta Public Service

Public Sector Compensation, 2013-14: $22.5 billion

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