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EDMONTON - Labour leaders in Alberta have joined forces to say they don't want to see public services cuts in Thursday's provincial budget.

The group consists of the Alberta Federation of Labour, Alberta Teachers' Association, Alberta Union of Provincial Employees, Canadian Union of Public Employees-Alberta, Health Sciences Association of Alberta and United Nurses of Alberta.

They said in a joint release Monday that the majority of Albertans don't want public services cut and would rather see an increase in taxes for the wealthy and corporations.

The group says Albertans see a booming economy, soaring corporate profits and low unemployment.

So they're confused as to why health care, education, and community services still don't have the resources they need to do the job right.

The group says the Conservative government is trying to justify massive cuts to health care and education by saying oil prices have dipped, but the labour leaders say Albertans aren't buying it.

Huffpost Alberta, Monday, Mar. 04, 2013

Days ahead of the provincial budget, Alberta's largest unions are calling on Premier Alison Redford to avoid Ralph Klein-like cuts to the public service in a bid to balance the books.

Speaking jointly in Edmonton Monday, Alberta Federation of Labour (AFL) president Gil McGowan said Ms. Redford's warnings of "tough choices" in Thursday's budget – which is expected to cut some services, abandon other earlier promises of increases and still deliver a deficit – amounts to "something close to a betrayal" for a premier who campaigned on preserving services and social programs.

"There's absolutely no doubt we're disappointed with Alison Redford, and frankly we think most Albertans should be disappointed as well," Mr. McGowan said, adding the premier's "promises and reassurances are starting to ring hollow."

Mr. McGowan was joined Monday by leaders from the Alberta Union of Provincial Employees (AUPE), the Alberta Teachers' Association (ATA), the United Nurses of Alberta (UNA) and the Health Sciences Association of Alberta (HSAA). Altogether, they represent over 160,000 public employees in the province.

Under Mr. Klein, who famously slashed public services two decades ago to balance Alberta's budget, union uproar would hardly be surprising. But Ms. Redford has relied on union support in both her campaign for her party's leadership and last year's provincial election. She's since had to backtrack on funding promises and has been locked in bitter contract battles with doctors and teachers.

Debt-free Alberta is poised to table what's expected to be its sixth consecutive deficit budget on Thursday, despite a strong economy, steady growth and low unemployment. In explaining Alberta's inability to balance its budget during a boom, Ms. Redford has pointed to what she's called a "bitumen bubble," referring to the "differential" between global benchmark oil prices and the lower price Alberta's oil sands bitumen fetches. The differential customarily fluctuates, but has widened lately.

Ms. Redford has said the "bitumen bubble" crisis was unforeseen, though industry had warned about it for years and the province's past budget documents predicted the discount would be, in fact, larger than it is now. The labour leaders, as such, dismissed the "bubble" as a misnomer.

"I think that's part of the whole game, to create that sense of panic," said AUPE President Guy Smith, adding: "Those of us who were around in the Klein years, the early 90s, are beginning to smell it in the air again a little bit."

Even if funding for a program holds steady, it's a de facto cut in the fast-growing province, ATA vice-president Mark Ramsankar said. Without previously promised education increases of 2 per cent, which are now in doubt, "we'll see 12,000 students wedged into classrooms [next year] with no funding or services to support them," he said.

Ms. Redford has said Alberta needs to totally overhaul its fiscal formula, but has been vague in how she plans to do that. "I think we have the opportunity to change the parameters of the discussion about what the future of this province looks like," she said in a speech last week.

That means cuts, tax hikes, borrowing or some combination thereof. Ms. Redford already plans to take on billions in debt to pay for infrastructure, but has ruled out borrowing for operating expenses. The province has frozen salaries of its managers and said it will cut about 10 per cent of those positions over three years. Raising taxes in this particular budget, she has said, "is taking the easy way out."

But Albertans have little appetite for cuts, according to an Environics Research Group poll commissioned by the AFL and released Monday. Of 1,014 respondents, 73 per cent saw no need for public service cuts.

Instead, to make ends meet, 77 per cent favoured higher taxes for corporations and the rich, while 72 per cent feel Alberta should reintroduce a progressive income tax, where the rate increases for higher earners, and that the province should hike oil royalties.

Alberta is the only province without a provincial sales tax, and the poll shows little appetite for that to change: 82 per cent were somewhat or strongly oppose introducing a PST. The poll is considered accurate within 3.1 per cent, 19 times out of 20.

All told, it means voters aren't buying into the crisis the Redford government is trying to raise the alarm on, argued Elisabeth Ballermann, president of the HSAA, which represents a total of 23,000 health care workers. "Albertans aren't buying it. Albertans are saying we should be able to afford this," she said.

Ms. Redford won a majority in last year's spring election by steering her party to the centre and fending off the right-wing Wildrose Party, which she argued would hurt Alberta by cutting spending on social programs and infrastructure. Now she finds herself considering similar moves.

"Albertans who elected this government believed they were not electing a Wildrose policy government," UNA President Heather Smith said. "In fact, I've heard people say, if what we're going to get is Wildrose policy, maybe we should have just voted for them, right? [Ms. Redford's Progressive Conservatives] weren't elected to do the kinds of slash-and-burn to social programs," that labour leaders now fear.

The legislature is scheduled to resume its session on Tuesday, with the budget coming two days later. Ms. Redford's government has signalled it will split the budget into an operational plan, capital plan and spending plan. It will borrow for capital project to avoid what the premier calls a "social infrastructure deficit," or a shortage of schools and hospitals as new residents flock to her province.

The Globe and Mail, Monday, Mar. 04, 2013
Byline: Josh Wingrove

Nurses, teachers, health sciences professionals, and public employees urge government to listen to majority of Albertans

Edmonton - Labour leaders are standing up for the majority of Albertans who do not want to see public services cut on March 7.

At a joint press conference on Monday, March 4, at the Crown Plaza Hotel in Edmonton, the presidents of the province's six largest public sector unions and associations urged Alison Redford to listen to Albertans, most of whom want their public services protected. The Alberta Federation of Labour, Alberta Teachers' Association, Alberta Union of Provincial Employees, Canadian Union of Public Employees-Alberta, Health Sciences Association of Alberta and United Nurses of Alberta have decided to join their voices together to send a clear message about the upcoming budget.

Polling, conducted by Environics from February 14-21, shows that more than 70 per cent of Albertans reject the idea of cuts to public services. More than three quarters of those polled agree that there should be an increase on taxes for the wealthy and corporations.

Far from thinking the government should cut public services, the majority of Albertans believe we should be investing more in health care, education, and other services. Albertans see a growing province, a booming economy, soaring corporate profits and low unemployment, and they're confused as to why health care, education, and community services still don't have the resources they need to do the job right.

Albertans were clear in their message that they support the need for some increased revenues, but that they reject the idea of a sales tax. Only 17 per cent of those polled were in support of a provincial sales tax, 72 per cent said they would be in favour of returning to a progressive income tax, and 77 per cent were in favour of increased taxes on corporations and those who make more than $200,000 per year.

When asked about spending, respondents identified several priorities: Creating a provincial strategy for long-term care for seniors was a high priority for 70 per cent of respondents, while protecting publicly-funded health care against for-profit health care was identified as a high priority by 57 per cent. Nearly half of respondents said that hiring more teachers and support staff for elementary and secondary schools was a high priority.

The government is trying to justify massive cuts to health care and education by saying oil prices have dipped. Albertans aren't buying it. Albertans know a growing economy needs adequate investment in public services.

Because labour leaders were concerned about the direction that budget discussions had been going, they commissioned a poll by Environics Research Group to find out what Alberta are looking for. The poll, which surveyed more than 1,000 Albertans, is considered to have a margin of error of +/- 3.1, with a 95% confidence level.

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MEDIA CONTACT:

Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email [email protected].

Fact sheet–Revenue, spending & public sector wages (Revised March 2013)
Fact sheet–Oil companies' profits (March 2013)

Podcast of today's conference

Nurses, teachers, health sciences professionals, and public employees urge government to listen to majority of Albertans

Edmonton - Labour leaders are standing up for the majority of Albertans who do not want to see public services cut on March 7.

At a joint press conference on Monday, March 4, at the Crown Plaza Hotel in Edmonton, the presidents of all five public sector unions and the Alberta Federation of Labour will urge Alison Redford to listen to Albertans, most of whom want their public services protected.

When:
10 AM, March 4, 2013

Where:
River Valley Room, Lobby Level
Crowne Plaza Chateau Lacombe Hotel
10111 Bellamy Hill Rd NW, Edmonton

Who:
Canadian Union of Public Employees, Alberta President Marle Roberts
United Nurses of Alberta, President Heather Smith
Alberta Union of Provincial Employees, President Guy Smith
Health Sciences Association of Alberta, President Elisabeth Ballermann
Alberta Teachers' Association, Vice President Mark Ramsankar
Alberta Federation of Labour, President Gil McGowan

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MEDIA CONTACT:

Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email [email protected].

In front of a government panel on Tuesday, a labour group argued in favour of increasing refining operations in Alberta, instead of sending unprocessed bitumen to foreign refineries.

Alberta Federation of Labour president Gil McGowan told the province's Standing Committee on Alberta's Economic Future that upgrading bitumen locally should be a top priority for resource development and job growth.

The committee was debating whether or not Alberta should renew the Bitumen Royalty in Kind program, where the province receives oil from producers instead of royalties and then uses that bitumen to feed upgraders.

Under BRIK, the program has created capacity to upgrade up to 75,000 additional barrels per day. Established by former premier Ed Stelmach in 2007, Stelmach pledged to upgrade 72% of Alberta's bitumen locally by 2016.

Although a new, $5.7 billion refinery is currently being built near Redwater, no new refinery has been built in Alberta since 1984, despite the sudden demand for Canadian oil.

A refinery that would have been operated by several First Nations bands was dismissed by the government in early 2012, after the project's proponents failed to impress the province with their business model.

There is also talk about creating a pipeline linking the oilsands to refineries in Ontario, Quebec and New Brunswick. However, McGowan and the AFL have focused most of their criticism towards pipelines that aim to send bitumen to foreign refineries.

"This is the time to be investing in the long-term prosperity of this province," said McGowan. "75,000 barrels per day may sound like a lot, but it's really little more than a drop in the bucket."

The AFL has continually argued against projects like the proposed Northern Gateway and Keystone XL pipelines. McGowan says most of the jobs created would be short-term, temporary jobs and would only provide job growth to refineries in the United States and Asia.

Government reports obtained by the AFL through freedom of information requests show exporting bitumen provides a 35% return in value, while locally upgrading synthetic crude captures 70%.

After Premier Alison Redford told Albertans that the upcoming budget would see a $6 billion loss in resource revenue – a phenomenon she called a "bitumen bubble" – McGowan has repeatedly asked the province to look into domestic refining.

"The latest government projection is that we will only be upgrading 26% of our bitumen by 2020," said McGowan. "Something needs to be done to turn this ship around."

Although Redford told Albertans that her province would be facing "tough decisions" to solve the province's current financial woes, McGowan says the bitumen bubble may offer a silver lining.

"The price of bitumen is low right now because we're flooding the market with bitumen," McGowan told Today in early February.

"The solution they're proposing is building more pipelines to flood the market even further. That's just not how markets work," he said. "We need to refine the bitumen here, so that we're selling what the international markets want: synthetic crude."

Fort McMurray Today, Thursday, Feb. 28, 2013
Byline: Vincent McDermott

In front of a government panel on Tuesday, a labour group argued in favour of increasing refining operations in Alberta, instead of sending unprocessed bitumen to foreign refineries.

Alberta Federation of Labour president Gil McGowan told the province's Standing Committee on Alberta's Economic Future that upgrading bitumen locally should be a top priority for resource development and job growth.

The committee was debating whether or not Alberta should renew the Bitumen Royalty in Kind program, where the province receives oil from producers instead of royalties and then uses that bitumen to feed upgraders.

Under BRIK, the program has created capacity to upgrade up to 75,000 additional barrels per day. Established by former premier Ed Stelmach in 2007, Stelmach pledged to upgrade 72% of Alberta's bitumen locally by 2016.

Although a new, $5.7 billion refinery is currently being built near Redwater, no new refinery has been built in Alberta since 1984, despite the sudden demand for Canadian oil.

A refinery that would have been operated by several First Nations bands was dismissed by the government in early 2012, after the project's proponents failed to impress the province with their business model.

There is also talk about creating a pipeline linking the oilsands to refineries in Ontario, Quebec and New Brunswick. However, McGowan and the AFL have focused most of their criticism towards pipelines that aim to send bitumen to foreign refineries.

"This is the time to be investing in the long-term prosperity of this province," said McGowan. "75,000 barrels per day may sound like a lot, but it's really little more than a drop in the bucket."

The AFL has continually argued against projects like the proposed Northern Gateway and Keystone XL pipelines. McGowan says most of the jobs created would be short-term, temporary jobs and would only provide job growth to refineries in the United States and Asia.

Government reports obtained by the AFL through freedom of information requests show exporting bitumen provides a 35% return in value, while locally upgrading synthetic crude captures 70%.

After Premier Alison Redford told Albertans that the upcoming budget would see a $6 billion loss in resource revenue – a phenomenon she called a "bitumen bubble" – McGowan has repeatedly asked the province to look into domestic refining.

"The latest government projection is that we will only be upgrading 26% of our bitumen by 2020," said McGowan. "Something needs to be done to turn this ship around."

Although Redford told Albertans that her province would be facing "tough decisions" to solve the province's current financial woes, McGowan says the bitumen bubble may offer a silver lining.

"The price of bitumen is low right now because we're flooding the market with bitumen," McGowan told Today in early February.

"The solution they're proposing is building more pipelines to flood the market even further. That's just not how markets work," he said. "We need to refine the bitumen here, so that we're selling what the international markets want: synthetic crude."

Fort McMurray Today, Wednesday, Feb. 27, 2013
Byline: Vincent McDermott

Alberta Premier Alison Redford, desperate to cut costs amid a ballooning deficit, is angering the very labour groups she coveted for support during her leadership bid and last year's election.

The province's teachers on Tuesday joined a growing number of groups expressing frustration with Ms. Redford's Progressive Conservative government, dismissing the latest contract offer by the province as a "thinly veiled threat" to roll back salaries and reduce staff.

"Teachers do not respond well to ultimatums," said Carol Henderson, president of the Alberta Teachers' Association, which represents the province's 42,000 teachers.

She said the offer, which includes wage freezes, fails to address workloads adequately. She called it "unacceptable" and urged teachers to go back to the bargaining table with Alberta's 62 school boards to find labour peace at the local, rather than provincial, level.

The Tory government is scrutinizing teachers, doctors and civil servants as it prepares to release a very tight 2013-14 budget on March 7. Facing a deficit of $3.5-billion to $4-billion this fiscal year – about four times bigger than projected – the government is looking to pinch every penny it can.

In its third-quarter update last week, the province announced a three-year salary freeze for public-sector managers starting April 1 to save about $54-million. The government also said it would cut the number of managers by 10 per cent over the same period.

Alberta Health Services, which manages health care, told its staff to brace for austerity. The University of Calgary has said enrolment at its medical school would be limited to 155 spots, down from 170, because it expects the budget to slash funding. The fast-growing province already has a shortage of physicians and is stuck in long-running labour talks with doctors.

"It seems like the Redford government is preparing to pick an unnecessary fight," said Gil McGowan, president of the Alberta Federation of Labour. "If there's any province in Canada that can afford quality public services, it's Alberta. The sky is not falling."

Mr. McGowan said Ms. Redford appears to have forgotten the new constituency – teachers, nurses and public sector workers – that propelled her to a massive majority last April, and warned of labour strife if the province doesn't sort out its revenue problem.

"If they think they can return to Klein-style cuts or rollbacks, then they've got another thing coming," he said.

This month, Alberta Medical Association president Michael Giuffre, who represents about 10,000 physicians, issued a letter accusing Ms. Redford of making "inaccurate and misleading" public comments about the province's doctors. He highlighted a particularly touchy topic: pay.

Dr. Giuffre wrote that doctors are paid 14 per cent more than the national average – not 29 per cent, as the government suggested – and noted that salary also covers the costs of running an office in a province where space and staffing are expensive.

"The tenor of your comments vilifies Alberta's physicians and creates an environment that will poison efforts to recruit and retain doctors in the future," he wrote.

He also said funding cuts will have "serious and negative" impact on health care.

"Some medical practices in Alberta will no longer be viable; offices will close and patients will be without care," he added.

Negotiations with doctors are continuing with a facilitator after almost two years, but there's no deadline for a deal. Health Minister Fred Horne enraged doctors in November when he attempted to force a contract that included an overall raise, cost-of-living adjustments over three years, as well as a lump-sum payment of 2.5 per cent of the previous year's billings that would run through 2016. He revoked the offer to head back to the bargaining table.

"There was an end of February deadline, and then that was extended to as soon as possible once the budget comes out," said Bart Johnson, a spokesman from Mr. Horne's office.

Last week, Alberta Education Minister Jeff Johnson offered the teachers and school boards a four-year contract with a wage freeze for the first three years, followed by a 2 per cent hike in the final year. He also dangled cash incentives, including 1 per cent of their salary in each of last two years of the deal if an agreement is reached by the end of February.

Otherwise, he warned of the "possibility of salary rollbacks" and expressed his desire to "minimize as much as possible reductions in teaching staff."

The ATA had offered a four-year deal with salary increases at 0, 0, 1 and 3 per cent, and provisions around working conditions, but Mr. Johnson rejected it. On Tuesday, he said he was disappointed the teachers turned down his latest offer, which he said would ensure labour and cost stability.

Jacquie Hansen, president of the Alberta School Boards Association, said the minister's recent offer has "some merit" as well as "some concerns," but her organization recommended boards ratify it. The previous five-year deal with the teachers and boards ended last August.

The Globe and Mail, Tuesday, Feb. 26, 2013
Byline: Dawn Walton

AFL to highlight advantage of in-province upgrading in presentation to Redford Government

Edmonton – Alberta Federation of Labour president Gil McGowan will promote the benefits of the bitumen bubble on Tuesday.

McGowan, who will be presenting to the Standing Committee on Alberta's Economic Future about the Bitumen Royalty In-Kind (BRIK) program, says that the bitumen bubble is an opportunity to create more in-province upgrading projects.

The BRIK program, which incentivizes in-province upgrading, is under the government's microscope this week as they consider how they intend to continue or expand it. McGowan, who will be speaking to the committee from 1:00 p.m. to 1:45 p.m. on Tuesday, will be available to media immediately after his presentation.

“This is the time to be investing in the long-term prosperity of this province,” Alberta Federation of Labour president Gil McGowan said, noting that the program has helped create capacity to upgrade up to 75,000 more barrels per day in Alberta. “75,000 barrels per day may sound like a lot, but it’s really little more than a drop in the bucket. Building Alberta's economic future requires more than just one BRIK.”

Under the BRIK program, the province takes its royalty payments from producers in bitumen, the thick, heavy oil squeezed out of the oilsands, rather than in cash.

“The governments own internal documents indicate that there is $72 billion in refining value being lost as a result of the current focus on raw bitumen exports,” McGowan said. “This is money the Alberta taxpayer could recover if we had an upgrading strategy. I'm glad to have been invited to speak on this subject — it gives me hope that the government might be taking in-province upgrading strategies seriously.”

Several times over the past decade, and under the leadership of three premiers, the Government of Alberta has promised to ensure at least 2/3 of Alberta's bitumen is upgraded in the province. At present, barely half of our bitumen is upgraded in-province, and the percentage is decreasing.

“The latest government projection is that we will only be upgrading 26 per cent of our bitumen by 2020,” McGowan said. “Something needs to be done to turn this ship around.”

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MEDIA CONTACTS:

Gil McGowan, President, Alberta Federation of Labour at 780-218-9888 (cell)
Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email [email protected].

A $2.4 billion drop in resource revenue has put Alberta on pace for a deficit of between $3.5- and $4 billion — one of the highest deficits in history, Finance Minister Doug Horner revealed Tuesday in the province's third quarter fiscal update.

The sea of red ink will be four times deeper than was forecast in the budget last February. The province initially predicted an $886 million deficit, but by the second quarter had increased its deficit forecast to $2.3 to $3 billion.

Now it's forecast to be $1 billion more, which will rival the $4 billion deficit the Don Getty government posted in 1986-87.

Horner blamed the ballooning deficit on the discounted price Alberta companies are getting for the heavy oil or bitumen from the oilsands, which has had a dramatic impact on royalties and taxes.

"We're seeing declining resource revenues in Alberta and that's, for the most part, a result of Alberta's market access problem," Horner told reporters at Calgary's McDougall Centre, "I know you have heard me talk a lot about the bitumen bubble. ... It is a bubble that is not going to pop any time soon and it is costing us a lot of money."

But he noted it is not just the differential between the price of Alberta heavy oil and West Texas Intermediate that is hurting the treasury, but also the higher exchange rate and lower land lease sales.

"It doesn't paint a pretty picture for the third quarter, and to be honest, it's not getting all that prettier," Horner said.

The new deficit projection doesn't include $1.1 billion the province is borrowing for the twinning of Highway 63 to Fort McMurray or the $4.1 billion already borrowed for various financial corporations and for lending to municipalities.

The sustainability fund which has covered four previous deficits has been reduced to $3.4 billion from a one-time high of $17 billion.

The flood of red ink prompted the government to simultaneously announce a three-year management salary freeze that it says will save taxpayers $54 million. Horner also announced plans to cut public sector managers by 10 per cent over the same three-year period.

While he said he didn't want to interfere in the ongoing collective bargaining, unions should take the management wage freeze as a sign of the times.

"We've been fairly consistent in saying that there is no new money," he said. "They should take that as a strong signal of what we have in mind."

The province froze MLA wages earlier this month, rejecting a one per cent cost of living increase to their $156,311 salaries.

Horner said his Conservative government has also found $600 million of in-year savings across all ministries.

Guy Smith, president of the Alberta Union of Provincial Employees, said he doesn't think the government should be blaming a $3.5 plus billion deficit on the discounted price of bitumen, which accounts for less than $1 billion of the shortfall.

"It seems rather strange that the minister of finance would tell Albertans that this is a long-term situation because it's probably not going to be," he said. "It seems to be very much a knee-jerk reaction to a situation that won't last."

Smith said Horner is obviously interfering in the collective bargaining process before it even begins and that rather than slash management jobs, he should be redeploying managers to the front lines to meet the province's rapidly growing population and its demand for more public services.

Alberta Federation of Labour President Gil McGowan said the finance minister appears to be more intent on finding scapegoats than solutions.

"It's clear they are desperate to blame anyone but themselves," he said. "It's time for the government to stop playing the blame game."

McGowan said the question Albertans should be asking is not where to cut, but why does the province have a deficit in a booming economy.

"The real cause of the problem has to do with years and years of cuts to taxes for high income earners and corporations, and years and years of royalty giveaways," he said. "It has nothing to do with how much we pay our public sector workers."

Wildrose Leader Danielle Smith said the fiscal update shows Premier Alison Redford's provincial budget is unravelling.

"We're seeing the budget was an absolute farce," she said.

She dismissed as "window-dressing" the government's plans to cut management by 10 per cent and to freeze their salaries.

Liberal critic Kent Hehr said it was folly to blame slumping oil and gas revenues for the financial problems, saying the government needs to budget more conservatively and change the tax structure.

"Everyone knows our revenue structure is broken," he said.

NDP critic David Eggen said Albertans are angry over the Tory government's bungling of the province's finances.

"They know our economy is growing," he said. "What's wrong with this government? Why did they miss the boat that's been sailing along in Alberta?"

The Calgary Herald, Tuesday, Feb. 19, 2013
Byline: Darcy Henton and Chris Varcoe

A $2.4 billion drop in resource revenue has put Alberta on pace for a deficit of between $3.5- and $4 billion — one of the highest deficits in history, Finance Minister Doug Horner revealed Tuesday in the province's third quarter fiscal update.

The sea of red ink will be four times deeper than was forecast in the budget last February. The province initially predicted an $886 million deficit, but by the second quarter had increased its deficit forecast to $2.3 to $3 billion.

Now it's forecast to be $1 billion more, which will rival the $4 billion deficit the Don Getty government posted in 1986-87.

Horner blamed the ballooning deficit on the discounted price Alberta companies are getting for the heavy oil or bitumen from the oilsands, which has had a dramatic impact on royalties and taxes.

"We're seeing declining resource revenues in Alberta and that's, for the most part, a result of Alberta's market access problem," Horner told reporters at Calgary's McDougall Centre, "I know you have heard me talk a lot about the bitumen bubble. ... It is a bubble that is not going to pop any time soon and it is costing us a lot of money."

But he noted it is not just the differential between the price of Alberta heavy oil and West Texas Intermediate that is hurting the treasury, but also the higher exchange rate and lower land lease sales.

"It doesn't paint a pretty picture for the third quarter, and to be honest, it's not getting all that prettier," Horner said.

The new deficit projection doesn't include $1.1 billion the province is borrowing for the twinning of Highway 63 to Fort McMurray or the $4.1 billion already borrowed for various financial corporations and for lending to municipalities.

The sustainability fund which has covered four previous deficits has been reduced to $3.4 billion from a one-time high of $17 billion.

The flood of red ink prompted the government to simultaneously announce a three-year management salary freeze that it says will save taxpayers $54 million. Horner also announced plans to cut public sector managers by 10 per cent over the same three-year period.

While he said he didn't want to interfere in the ongoing collective bargaining, unions should take the management wage freeze as a sign of the times.

"We've been fairly consistent in saying that there is no new money," he said. "They should take that as a strong signal of what we have in mind."

The province froze MLA wages earlier this month, rejecting a one per cent cost of living increase to their $156,311 salaries.

Horner said his Conservative government has also found $600 million of in-year savings across all ministries.

Guy Smith, president of the Alberta Union of Provincial Employees, said he doesn't think the government should be blaming a $3.5 plus billion deficit on the discounted price of bitumen, which accounts for less than $1 billion of the shortfall.

"It seems rather strange that the minister of finance would tell Albertans that this is a long-term situation because it's probably not going to be," he said. "It seems to be very much a knee-jerk reaction to a situation that won't last."

Smith said Horner is obviously interfering in the collective bargaining process before it even begins and that rather than slash management jobs, he should be redeploying managers to the front lines to meet the province's rapidly growing population and its demand for more public services.

Alberta Federation of Labour President Gil McGowan said the finance minister appears to be more intent on finding scapegoats than solutions.

"It's clear they are desperate to blame anyone but themselves," he said. "It's time for the government to stop playing the blame game."

McGowan said the question Albertans should be asking is not where to cut, but why does the province have a deficit in a booming economy.

"The real cause of the problem has to do with years and years of cuts to taxes for high income earners and corporations, and years and years of royalty giveaways," he said. "It has nothing to do with how much we pay our public sector workers."

Wildrose Leader Danielle Smith said the fiscal update shows Premier Alison Redford's provincial budget is unravelling.

"We're seeing the budget was an absolute farce," she said.

She dismissed as "window-dressing" the government's plans to cut management by 10 per cent and to freeze their salaries.

Liberal critic Kent Hehr said it was folly to blame slumping oil and gas revenues for the financial problems, saying the government needs to budget more conservatively and change the tax structure.

"Everyone knows our revenue structure is broken," he said.

NDP critic David Eggen said Albertans are angry over the Tory government's bungling of the province's finances.

"They know our economy is growing," he said. "What's wrong with this government? Why did they miss the boat that's been sailing along in Alberta?"

The Calgary Herald, Tuesday, Feb. 19, 2013
Byline: Darcy Henton and Chris Varcoe