Jim Prentice eyes public sector wages in budget crunch

Premier Jim Prentice is eyeing public sector wages as part of a solution to the roughly $7-billion revenue hole facing the Alberta government. 

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Prentice repeatedly mentioned public sector wages during an interview on CBC Radio's alberta@noon program with host Donna McElligott Wednesday.

"We have $2.6 billion of incremental wage settlements that were arrived at by the previous government that are now essentially built into the government's budget.… It's going to take co-operation and support from public sector unions to deal with it."

He also says health-care spending makes up almost 50 per cent of the provincial budget and that cannot continue.

Prentice said the revenue hole is "not a single-year problem."

"That shortfall next year is in the order of $5.5 billion and from then it's about $5 billion per year on a structural basis as long as oil prices remain in the lower end."

He says sacrifices will have to be made in his own office and by MLAs.

Flat tax hard on working poor

The premier took questions from listeners who asked about his plans for coping with the ailing provincial economy.

When asked about the possibility of changing to progressive taxation system, Prentice did not rule it out. 

He says Alberta's current flat tax is hard on the working poor, especially families struggling to raise their children.

"It is a system which bites them pretty hard compared to the rest of the country."

"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's fair and equitable and does not place an undue burden on them."

When asked about a gas tax, the premier said it could be part of the solution. But at $115 million for every cent taxed on a litre of gas, Prentice says it's a drop in the $7-billion shortfall bucket.

See more of what Prentice had to say below. On mobile? Click here.