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Alberta legislature resumes amid low oil, critics eye return of bitumen bogeyman

The Alberta legislature.

EDMONTON – Alberta’s provincial politicians begin their fall session this week with a reset legislative agenda and a new premier madly crunching numbers under the Damoclean sword of plunging oil prices.

Opposition critics, meanwhile, say low oil means Albertans better brace for an encore of the bitumen bogeyman and opening night of the great Prentice promise pullback.

The session begins Monday with a speech from the throne to outline the priorities and goals of Premier Jim Prentice’s Progressive Conservative government.

Prentice, who took over from former premier Alison Redford in September, has promised to introduce in the session new legislation to improve government accountability and affirm the sanctity of property rights.

READ MORE: Prentice wants his cabinet to bring a change of decorum in upcoming legislative session

But the pivotal event is expected to occur at the end of the month, when Finance Minister Robin Campbell delivers the latest budget update.

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At that time, Prentice said in an interview, the government will make clear its economic future.

The falling price of West Texas Intermediate oil – representing the linchpin of Alberta’s economy – changes everything, he said.

“Seventy-five-dollar-per-barrel oil does not represent business as usual in Alberta, and I think that’s clear to every single family and business person in our province,” said Prentice.

“There are significant consequences if we continue in a low price environment for a protracted period.”

The province budgeted for oil at US$95.22. The price currently sits under $76 a barrel. Every $1 drop in the price per barrel over the course of the year could cost the treasury an estimated $215 million.

READ MORE: Oil’s crash threatens to derail booming Alberta – and Canada too

The province has $5 billion in its contingency fund and Prentice expects this year’s budget to be balanced.

After that, it’s unclear.

It’s been a gradual change of messaging for Prentice.

While campaigning for the Tory leadership, he promised to return Alberta’s finances to a sound footing, cap the infrastructure debt and accelerate its paydown.

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After winning power in early September, he has been silent on the specifics of how he will do that except to caution “prudence” and, in the last week, warn of “consequences.”

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Watch below: Oil prices catch attention of Alberta premier, oil patch

At the same time, Prentice has promised to continue spending to fulfil the unfulfilled Redford promise to build more schools, seniors care centres and other infrastructure for a rapidly growing province.

Redford also promised to run the government in the black but instead delivered more than $10 billion in debt.

She blamed the price differential between oil going to the U.S. market versus the higher amount it could fetch if Alberta had a pipeline to the coast to ship its oil further abroad.

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Redford called the differential the “bitumen bubble.”

Prentice has not used that term, but agreed with the concept, saying “we (need to) work together to get pipeline access out of the province and tidewater access off the North American coast so that we realize global prices instead of continental prices.”

READ MORE: Alberta premier will ‘do what needs to be done’ to move forward Northern Gateway pipeline

Prentice has left himself little wiggle room on the revenue side. He has previously promised to not hike taxes, add taxes, tinker with the 10 per cent flat tax on income, or boost oil royalties.

When asked if he still stands by those promises, Prentice would only say “We’ll deal with these issues when we announce the quarterly results (at the end of November).”

Opposition Wildrose Leader Danielle Smith said Prentice is showing himself to be Redford redux.

“He has given every indication that he’s going to keep on spending even though we’re facing $80 (or lower) oil,” said Smith.

Smith said the Tory plan to go into debt only for infrastructure is fundamentally flawed.

“We’re not going to ever be able to be at a point where we’re done building infrastructure and say ‘Phew, we’re done now we can start paying the money back,”‘ said Smith.

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“If we’re going to continue to keep up with (population) growth we have to figure out a way to do this within the resources and revenues that we have right now.”

READ MORE: Oil just slipped below $80 – and it’s expected to fall further

Prentice said low oil also means decisions on the spending side, adding: “To be sure this is a time for discipline and caution in terms of our expenses.”

He has not been more specific, but political pollster and analyst Janet Brown said trotting out a bitumen bogeyman once again to justify wielding the budget axe is questionable strategy.

“I don’t know that Albertans are going to be all that sympathetic,” said Brown.

“They weren’t sympathetic to Redford when she talked about the bitumen bubble. I think Albertans are going to say, ‘Look, oil prices go up and down. We all know this.’

“We manage our lives according to the vagaries of the energy industry. Why does it always take our government by surprise?”

NDP Leader Rachel Notley agreed Prentice is pursuing a “bitumen bubble 2.0” strategy, and said promises made by his party in 2012 on investment to education and to social programs are now at risk.

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As it stands, said Notley, Prentice is only building a fraction of the schools and care spaces promised by the PCs in the last election.

She said the PCs are beholden to that promise regardless of who is in charge.

Meanwhile, there are also new security arrangements at the legislature following the recent shootings at Parliament Hill.

The front main doors of the legislature are now locked and visitors will have to undergo security screening at a side entrance.

This will be the first session as premier for Prentice, and the first time Rachel Notley will enter the chamber as the new leader of the NDP.

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