While Airdrie-Cochrane MLA Peter Guthrie wasn’t too surprised by the province’s financial woes outlined in a fiscal update yesterday, he remains gravely concerned.
The 2019-20 annual report and 2020-21 first quarter fiscal update and economic statement reflect the devastating economic impacts of the COVID-19 pandemic and oil price crash.
The province now sits on a debt burden of $99.6 billion, or $22,400 per Albertan. All the while Albertans have experienced losses of more than 170,000 jobs and a 13 per cent unemployment rate.
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.
“We’re going to have ourselves in a situation here where debt servicing costs are going to continue to go up and they’re going to take a bigger and bigger portion of Alberta taxpayer funds going forward.”
Guthrie says the government has been taking action to attempt to around the economy. It has reduced corporate taxes, reduced red tape and invested in infrastructure to stimulate the economy and create jobs.
While want growth in all sectors, a rise in the price of the Western Canada Select oil price would go a long way to help with the recovery.
It dropped into the negative for a few days earlier this year and has slowly eased back to the $33 per barrel mark.
“It has recovered somewhat, but we need that to go up to attract investment here on the oil and gas side,” says Guthrie.
There are several questions as to whether the government will be cutting spending, and what the outlook is for the 2021-22 fiscal year.
Guthrie says the picture may be clearer when Finance minister Travis Towes provides further information at the end of October.
“There are some question marks there, and I don’t envy his (Toews) position right now in trying to evaluate and forecast what the next year it going to look like.”