Pandemic spending, no tax increases: Some highlights from the Alberta budget

Cornelia Mascio
Febbraio 26, 2021

The government will spend $3.1 billion on measures aimed at helping the Alberta economy recover from the double whammy of the global oil price crash and the COVID-19 pandemic.

Kenney says the budget will concentrate on getting Alberta past the pandemic and on rebuilding the economy that has seen businesses close and jobs lost during the health crisis.

Finance Minister Travis Toews said at a Thursday briefing the plan will ensure Alberta gets through the COVID-19 pandemic. The province also plans to invest almost C$21 billion over three years in construction projects to create new jobs and support economic recovery. The energy industry was battered past year by a collapse in global fuel demand due to COVID-19, although commodity prices are picking up as vaccines are rolled out globally. Emerging sectors such as tech and innovation, life sciences and pharmaceuticals.

"It's a little bit of a deer in the headlights budget".

Alberta's revenue fell to a forecasted $42.3 billion in 2020, $7.7 billion less than the government had budgeted for last February.

Physician pay is estimated to cost the Health Ministry $5.2 billion, up from $5 billion in 2020-21, according to the budget.

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. The province is estimating a deficit of $18.2 billion in 2021-22, though that deficit should shrink to $11 billion next year and $8 billion the following year.

"I am very disappointed we can't present a balanced budget in our first term", Toews said. Annual debt interest charges nearly $3 billion.

- Corporate income tax estimated to be $1.9 billion.

The government is also setting aside $500 million in contingency funding in 2021-22 for "further economic recovery initiatives" that may arise during the year.

Toews said Alberta's real gross domestic product would grow 4.8% in 2020, having contracted 7.8% a year ago. This climb comes after a drop in GDP by 7.8 per cent in 2020 and a near-flat GDP in 2019.

Indicators suggest the overall fiscal future, while not rosy, is brighter.

There is $5.4 billion for physician compensation and development, "as the government continues to manage these costs through the physician funding framework".

Toews said the United Conservative government remains committed to reducing public-sector, per-capita spending to match that in comparable provinces such as British Columbia and Ontario.

Kenney has promised a stay-the-course budget with no deep spending cuts or any tax increases.

Toews said that the UCP is still set to meet the four-year target. Alberta is now the only province without a PST.

The session begins February 25 with the tabling of Budget 2021.

Spending has increased by more than $ 4 billion to fight COVID-19 and mitigate the economic consequences.

No accounting provision has been built into the budget to handle the hit the province will take from Keystone XL, as the province is still negotiating with TC Energy to determine what the final hit to taxpayers will look like.

Alberta said its financial exposure from an investment in TC Energy (NYSE:)'s Keystone XL pipeline, which would have shipped to the US but had its permit revoked by President Joe Biden, was C$1.3 billion.

Alberta's unemployment rate, estimated at 11.4 per cent past year, is expected to slowly decline to 7.3 per cent by 2023, close to its pre-pandemic level. "This is mainly due to rapid vaccine development, higher oil prices and slightly better 2019 "actuals" than expected", reads the budget. Officials are predicting the province won't reach 2014 economic markers until 2023.

Alberta forecast prices to average $46 per barrel in 2021/22.

Along with hope that oil prices will rebound, the province is panning for a provincial recovery by investing in infrastructure, including $21 billion in construction projects to support 90,000 new jobs.

"Budget 2021 gives the health system the resources it needs to keep fighting the COVID-19 pandemic, while keeping Albertans safe and healthy".

The government is also earmarking $1.5 billion to support targeted strategies to help out key sectors, like agriculture, energy, technology and tourism, and plans for that funding will be released during the year. The budget shows the program will be funded to the tune of $136 million over three years, not including a federal contribution.

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