Alberta’s UCP government says that the fiscal deficit for 2020-21 will a staggering $24.2 billion. The province now sits on a debt burden of $99.6 billion, or $22,400 per Albertan.
Albertans have experienced losses of more than 170,000 jobs and a 13 per cent unemployment rate.
The government claims that the record deficit was caused by the COVID-19 pandemic and oil price crash, however several analysts believe that the province was unlikely to meet its balanced budget promises even before the pandemic and downturn in oil.
“The first-quarter projections show a significant increase to the deficit reaching $24.2 billion – $16.8 billion higher than estimated in Budget 2020. Almost 70 per cent of this increase is due to a sharp decline in revenue with non-renewable resource revenue down $3.9 billion. Total revenue is estimated to be $38.4 billion, down $11.5 billion, or 23 per cent from Budget 2020,” the government said in a release.
“These numbers are incredibly sobering to all of us. If left unchecked, they predict a grim reality for Albertans. We are facing the most significant economic challenge of our generation. To deal with this challenge, our government is developing a path forward – a path of economic recovery that will see job creation, diversification and stability restored to Alberta’s finances,” said Travis Toews, President of Treasury Board and Minister of Finance.
“The reality is balancing the budget will almost certainly need to be necessarily delayed,”
“We need to deliver the most cost-effective government services possible,” Toews said.
The UCP government’s budget cuts just $1 billion over four years from NDP levels of spending when they took office.
“That’s absolutely essential. Alberta can no longer afford to be an outlier in terms of the cost of delivering services to Albertans.”
“An updated economic forecast shows the pandemic has negatively affected business investment, oil production and consumer spending. Although 2020 began with a strong investment market, the fallout of COVID-19 has sidelined that expected growth. Alberta’s economy is expected to contract by 8.8 per cent in 2020, the largest decline in modern-day history and a decrease of 11.3 percentage points from the budget forecast,” the government said in a release.
Wednesday, the Conference Board of Canada predicted Alberta’s economy would shrink by 11.3 per cent.
In April, the price of Western Canada Select actually went into negative territory as global prices hit an 18-year low. Price were also hit by an oil war between Russia and Saudi Arabia.
Toews said the economy should rebound by 4.6 per cent next year but employment will not recover until the end of 2021.
The Canadian Taxpayers Federation is calling on the Alberta government to tackle its spending problem..
“For years, politicians have been hitting the snooze button while the government’s spending has been skyrocketing and our finances have been deteriorating,” said Franco Terrazzano, the CTF’s Alberta Director.
“Today’s fiscal update and the $100-billion debt tab is a loud wake-up call for the politicians and interest groups who think we can keep racking up charges on the taxpayer credit card. It’s time for Alberta politicians to stop procrastinating and tackle the government’s overspending problem.”
The CTF said interest costs on the debt are expected to be $2.5 billion this year, which is more than $500 per Albertan.
The Alberta government has the highest per person spending in Canada, according to the Blue Ribbon Panel on Alberta’s finances. The panel also found that Alberta would spend $10.4 billion less every year if its per person spending was in line with B.C., Ontario and Quebec.
“Alberta’s in fiscal quicksand and we’ll need quick action to get out before we are up to our necks in debt,” said Terrazzano.
“Struggling Alberta families and businesses can’t afford to keep paying for a high-cost provincial government, so Premier Jason Kenney needs to cut spending and grow the economy.”
The NDP also blasted the Kenney government.
“The UCP’s plan was failing before the pandemic and it’s failing now. All they’ve managed to do is make a bad situation worse,” said NDP Finance Critic Shannon Phillips.
“While the UCP continues to give handouts to CEOs and shareholders, Albertans continue to fall further behind.
“Today’s update has no plan for Calgary, it has no plan for getting people back to work, it has no plan for an economic recovery at all.”
Quick facts – First Quarter Fiscal Update
- The deficit is forecast at $24.2 billion for 2020-21
- Taxpayer-supported debt is forecast to be $99.6 billion on March 31, 2021
- Total forecasted revenue is $38.4 billion which is down $11.5 billion from budget
- Total forecasted expense is $62.6 billion, which is an increase of $5.3 billion from budget
- $1.4 billion has been added to the 2020-21 Capital Plan, with total capital plan spending for the year now at $8.4 billion. The majority of these increases reflect economic stimulus and support for municipalities as part of Alberta’s Recovery Plan
- As part of the recovery plan, government added a $1.5 billion commitment to the Keystone XL pipeline, bringing Alberta’s total commitment to infrastructure in 2020-21 to nearly $10 billion
….More to come