By Trevor Busch
Albertans were bracing to hear the results of the province’s recent fiscal update, and with debt projected to reach $100 billion by March 2021 and few signals as to when finances will be steered back into the black, the news was certainly grim.
Taber-Warner MLA Grant Hunter didn’t dance around the negative fiscal implications, but pointed out that Alberta is hardly the only jurisdiction dealing with the impact of COVID-19.
“The reality is that there is not a jurisdiction in the world that has not been hit hard by the pandemic, and Alberta is certainly not going to be insulated from it. And that’s what we saw. But we were hit with a triple black swan event. Not only were we hit with the complete crash in the world economy due to a decrease in demand for products and services with the pandemic, but we were also hit really hard with this drop in oil and gas. So our royalties have taken an absolute hit. And then there was an increase in supply when Saudi Arabia and Russia decided that they were going to start fighting with each other. So this was a triple black swan event that was kind of the worst of the situation that we could have seen.”
The province is also staring a $24.2 billion deficit in the face — the largest in the province’s history — and some $16.8 billion higher than was originally projected in the provincial budget in February.
With the oil and gas industry mired in recession and employment numbers cut to the bone, Hunter wasn’t mincing words about the road to recovery.
“It’s not just now, but for the last five and half years now, they have been restructuring. So this is one of the reasons why we’ve had persistent unemployment rates. They’ve let go a lot of their staff because they’ve had to in order to be successful with the business models. They’ve had to be very, very tight organizations, efficient organizations. When it comes to whether or not we’re going to hear anything good coming out of oil and gas, we have still a lot of oil and gas in this province…this is the sort of thing that obviously is going to hit a jurisdiction like Alberta where this is one of our primary exports.”
Revenues are expected to drop by $11.5 billion during the current fiscal year, while debt will be up $25.4 billion from 2020 by March 2021, with a debt-to-GDP ratio of 22 per cent. Albertans will soon be paying roughly $2.2 billion annually to service that debt. Total revenue is expected to be $38.4 billion, with expenses coming in at a whopping $62.6 billion.
“One-time spending is certainly something that you’ve seen, and that’s what we call counter-cyclical spending,” said Hunter, who also serves as associate minister of Red Tape Reduction. “Counter-cyclical spending is certainly something that is employed by many governments throughout the world, and throughout time. That is a way to be able to kind of soften the blow of that trough in whatever the drop is. In this situation, it’s just an absolute drop in demand. And so the counter-cyclical spending happened so that we could keep Albertans — and people around the world, quite frankly — working.”
“When we did the counter-cyclical spend, and we looked at what we we’re going to be spending on, we didn’t just say let’s just spend to get Albertans back to work — that was not our criteria. Our criteria was get Albertans back to work, but we also want to make sure that whatever road we’re building, whatever building we’re building, it has at the end of that, private sector jobs that will be equated to that.”
In spending dollars Alberta doesn’t have to stimulate the provincial economy, Hunter argues the Kenney cabinet looked at projects that would have the most reciprocal benefit for the private sector.
“For instance the Highway 3 twinning when we announced that, a $150 million project. Everybody knows that that wasn’t on the docket for moving forward. But we took a look at it, we realized that if we get at that, that the agri-food businesses in the area would see that as a benefit, and let’s double the size of our production. You double the size of your production, you get more private sector people back to work, that’s exactly what we’re looking for.”
While provincial numbers may seem alarming, Hunter is still confident the measures that have been taken by his UCP government are sound.