Prentice says austerity will start at top in bid to balance budget amid low oil

EDMONTON – Premier Jim Prentice says with low oil prices knocking the legs out from under the Alberta economy, austerity will start at the top.

“We can’t expect people in the public sector to tighten their belts unless they see the premier, his office, and the people that work with him in government tightening their belts,” Prentice told reporters Wednesday during an announcement at the Edmonton International Airport.

He declined to be more specific and wouldn’t say if the austerity will include cuts to MLA salaries.

“We’ll deal with that in the days ahead,” he said.

The base pay is about $156,000 for Alberta government and opposition members, $234,000 for cabinet ministers, and $240,000 for the premier.

Members of Prentice’s cabinet and government are currently canvassing Albertans on solutions to the collapsing oil prices that have siphoned billions of dollars from the treasury.

The premier has said all options are on the table when it comes to cutting expenditures or raising revenue.

He is seeking a short-term solution to the multibillion-dollar oil losses, and is promising long-term fixes to wean Alberta off relying on volatile oil prices to fund day-to-day expenses.

He says some of his changes will be reflected in the next budget, to be unveiled sometime in March.

Also Wednesday, he reiterated that public sector workers must help out in tough times.

He wouldn’t say what he is seeking from the unions, but has said that the current wage deals are, on average, the best in Canada and can’t be sustained with oil prices being cut in half to less than US$50 a barrel.

“Wage settlements at the levels that we have had in Alberta over the last three to five years are not sustainable,” said Prentice.

“Over the next three years baked into the province’s budget numbers are close to $2.6 billion of wage increases in the public sector.

“We’re going to have to deal with it.”

Union leaders have already labelled that augment a red herring. They say the inflation that accompanied Alberta’s hyper-growth economy has forced up salaries across the board.

They say while public sector wages are about five per cent higher than the rest of Canada, private wages are 25 per cent more.

Prentice also said Wednesday he is re-examining the merits of the province’s 10 per cent flat tax on income.

The opposition Liberals and NDP have demanded Alberta bring in a progressive tax, saying a flat tax benefits the wealthy at the expense of everyone else.

Prentice said he is ready to listen.

“I have been concerned, and I know other Albertans are concerned as well, about how the flat tax operates on the working poor in this province,” he said.

“Particularly working families who are struggling to raise children, they are going to be hard hit by the economic circumstances that we feel in Alberta over the next couple of years.

“I want to be sure that the flat tax operates relative to working poor in this province in a way that is fair and equitable and doesn’t place an undue burden on them.”

The province expects to run a $500-million deficit in the current fiscal year, with the red ink covered off by funds from the $5-billion rainy day contingency fund.

Prentice has said his advisers expect oil will rebound slowly, reaching US$75 a barrel by 2017-18.