Alberta’s COVID-19-era budget made a hard landing Thursday with an $18.2-billion deficit but also a promise that good times will return.
Finance Minister Travis Toews said as vaccines continue to be given and businesses open up, Alberta is on track to start its rebound in the back half of this year.
“Alberta’s economy is now expected to reach pre-COVID levels by 2022, one year earlier than expected,” Toews told a news conference prior to introducing the 2021-22 budget in the legislature.
“(But) Albertans continue to face one of the most difficult times in our history. We’re ensuring that we’re resourcing our health-care response adequately to meet the pandemic challenge (and) we’re positioning the economy for growth and a rebound.”
For now, the eye-popping deficits continue – $20.2 billion for the fiscal year ending March 31 and the $18.2 billion forecast in the coming fiscal year.
Toews and Premier Jason Kenney have called Alberta’s economic bludgeoning a rare “triple black swan” caused by the pandemic, the resulting global recession and an oil-price war that further depressed prices.
The medium-term outlook is for more red ink. Alberta is on track to carry $98 billion in tax-supported debt this year, rising to more than $132 billion by 2024. The province’s debt a decade ago was $5.1 billion.
Annual spending on debt interest is closing in on $3 billion.
The budget delivered on promises to avoid tax increases in a province that has the lowest per-capita tax regime in Canada – and is the only one with no retail sales tax.
The fiscal plan calls for $57 billion in spending, along with a minimum $1.1 billion to fight COVID-19 and another $1.8 billion in pandemic spending if needed. That’s on top of $5.8 billion in COVID-19 spending last year.
The health budget is to rise by about $1 billion to $21.4 billion.
Non-renewable resource revenues, the traditional foundation of Alberta’s economy, are expected to bring in $2.9 billion, about half of what they were before the pandemic.
Oil prices have rebounded in recent weeks to above US$60 a barrel for the benchmark West Texas Intermediate, but Toews said the province can’t count on or budget for renewed boom times.
“We’re focused on what we can manage and we’re looking to ensure that we’re delivering government services most efficiently.”
Toews said the United Conservative government remains committed to reducing public-sector, per-capita spending to match that in comparable provinces like British Columbia and Ontario.
Indicators suggest the overall fiscal future, while not rosy, is brighter. Real gross domestic product, or GDP, is expected to rise 4.8 per cent this year after a 7.8 per cent decline in 2020.
Alberta’s unemployment rate, estimated at 11.4 per cent last year, is expected to slowly decline to 7.3 per cent by 2023, close to its pre-pandemic level.
The government also promises to continue strategies to diversify the economy. It’s budgeting $3.1 billion to encourage expansion in high-tech, pharmaceuticals, aviation and tourism.
The failed Keystone XL pipeline has Albertans on the hook for almost $1.3 billion so far. A year ago, Kenney promised $7.5 billion in direct investment and loan guarantees for the cross-border megaproject before it was cancelled a month ago by United States President Joe Biden.
Dean Bennett, The Canadian Press
This report by The Canadian Press was first published Feb. 25, 2021.