Finance Minister Travis Toews. (Government of Alberta)

By Canadian Press / David Opinko

High-flying oil and gas prices paint rosier shade of red ink on Alberta’s budget

Nov 30, 2021 | 3:05 PM

EDMONTON, AB – Alberta’s budget outlook for this year is turning a rosier shade of red ink, with jobs up, the deficit down and oil and gas prices humming along at unexpectedly high levels.

Finance Minister Travis Toews says the deficit is now expected to be $5.8 billion when the government closes the books on the 2021 fiscal year next March 31.

That is a third of the $18.2-billion deficit Toews predicted when he tabled the budget back in February.

“Our persistent focus on attracting new investment and improving competitiveness for our key sectors is making a difference. We are seeing billions of dollars of new investment and capital deployed in the province, and its happening in hydrogen, tech, aerospace, petrochemicals and many other areas. As we maintain responsible fiscal management, Alberta will reap the rewards of a more stable and prosperous future.”

Since then, Alberta’s resource-driven economy has sailed higher than expected with demand increasing as the global economy emerges from COVID-19 pandemic lockdown.

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The province’s real GDP is expected to grow by 6.1 per cent this year, up from the 4.8 per cent that was forecast at the beginning of this year.

Toews says all spending decisions are driven by three fiscal anchors: keeping the net debt below 30 per cent of GDP, aligning per capita spending with comparator provinces, and setting a timeframe for when the budget will be balanced “once the government has a clear picture of the long-term global impacts of the pandemic.”

Total revenue from non-renewable resources is expected to be almost $11 billion, an $8-billion leap from what was predicted nine months ago in the budget.

The unemployment rate is forecast at almost nine per cent down from about 11 per cent in 2021 and it is expected to keep dropping to under six per cent by 2024.

The full 2021-22 Mid-year Fiscal Update and Economic Statement can be read here.

“Thanks to the UCP, inflation costs you more in income tax and at the same time reduces the buying power of benefits for families, seniors and Albertans with disabilities,” said Shannon Phillips, NDP Critic for Finance.

“This comes while Albertans are paying more in property taxes, school fees, tuition and interest on student debt because of the UCP. Families are also getting hit by unprecedented auto insurance and utility bills, also thanks to the UCP.”

Provincial revenues were lifted significantly by an increase in global energy prices, but the largest increase in tax revenue came from Personal Income Tax in the second quarter update, despite the fact that fewer Albertans were working than in the first quarter of 2021, and the economic growth was revised downward by 0.6 per cent.

“Fewer Albertans at work, but more personal income tax revenue. Albertans are paying more income tax under Jason Kenney,” Phillips said. “This loss of Alberta jobs is because of the UCP’s deadly failure to manage the fourth wave of COVID-19. While the danger was obvious to everyone, the UCP did nothing. This cost hundreds of lives, led to tens of thousands of cancelled surgeries, and also damaged Alberta’s economy. Treasury Board officials explicitly acknowledge this on page 14 of the update.”

“So this update may look like Christmas has come early for the UCP government,” Phillips said. “But for Alberta families, Christmas is looking more expensive than ever, with only higher taxes and higher costs for everything to come in the New Year.”

(With files from rdnewsNOW)