EDMONTON – Alberta’s first-quarter fiscal update says the double blow of collapsing oil prices and the COVID-19 crisis have pushed the province into a historic deficit of $24.2 billion.
The red ink Finance Minister Travis Toews is predicting for 2020-21 is more than triple what the United Conservative government projected in its February budget.
The value of everything Albertans produce is forecast to drop by nearly nine per cent.
The unemployment rate, now about 12 per cent, is expected to remain at near double-digit levels well into next year.
Here's a more detailed breakdown of the Alberta fiscal update.
Of note, revenue projections are down $11.5B from budget, while expenses are up $5.3B.#yeg #yyc #ableg #covid19ab pic.twitter.com/iVFRYsWNCA
— Courtney Theriault (@cspotweet) August 27, 2020
The government says the economy will start to bounce back next year, but it won’t be enough to make up for the ground lost in 2020.
The Conference Board of Canada said this week that Alberta will be the hardest hit province economically this year with an 11 per cent contraction in GDP.
The update shows Alberta’s expenses rose $5.3 billion higher than projected in the latest budget.
That comes despite revenue falling over $11 billion due to oil prices and other factors such as lower income tax revenue, bitumen royalties and a drop in investment income.
Reaction to the fiscal update has poured in with many condemning the UCP for allowing such a deficit to happen.
NDP Finance Critic Shannon Phillips said the government’s economic plan didn’t work even before the pandemic started.
“All they’ve managed to do is make a bad situation worse. “While the UCP continues to give handouts to CEOs and shareholders, Albertans continue to fall further behind. It has no plan for getting people back to work, it has no plan for an economic recovery at all,”
The NDP referenced the government’s cuts to the corporate tax rate and the current unemployment rate of 12.8 per cent, second highest in Canada.
“Jason Kenney promised Albertans jobs and investment, but he’s failed to deliver,” added Deron Bilous, NDP Critic for Jobs, Economy and Innovation.
“Instead of more cuts to job-creating programs and billions in handouts that go out of province, we need to be investing in building a modern, diversified economy that sets us up for a successful recovery.”
Meanwhile, the Canadian Taxpayers Federation (CTF) said if the government wants to rebound from the massive debt, it has to continue its spending cuts.
“Politicians have been hitting the snooze button while our government’s spending has been skyrocketing and our finances have been deteriorating,” said Alberta director Franco Terrazzano. “Today’s dire fiscal update and the $100 billion debt tab should be a loud and clear wakeup call for any politician in Alberta or any interest group here who thinks we can keep racking up charges on the taxpayer credit card.”
Terrazzano added spending needs to be cut now before Alberta gets into more significant problems, and it doesn’t help that both current and past governments continue to overspend while neglecting to save for a rainy day.
