Alberta finance minister sees hopeful signs in latest fiscal update, despite COVID-19 pandemic
Deficit forecast improves to $21.3 billion
Finance Minister Travis Toews says he sees reason for hope in Alberta's latest fiscal update, even though the province is well into the second wave of the COVID-19 pandemic.
"I can't say definitively that our toughest days are behind us but what I can say is we are starting to see signs of some economic recovery, so that is positive," Toews said Tuesday, hours before tabling his second-quarter update in the Alberta legislature.
His optimism is based on slight improvements in some key indicators since the first-quarter update was released in August.
Alberta is now forecasting a deficit of $21.3 billion at the end of the fiscal year, an improvement over the $24.2-billion deficit reported at the end of the first quarter.
The change is due to increased revenues of nearly $3 billion from the projections in the last quarter. Toews attributed that to a better outlook for bitumen and other resource revenues, increased income from investments and transfers from the federal government.
Real GDP is expected to contract by 8.1 per cent in 2020, not the 8.8 per cent forecast in Q1.The update forecasts real GDP growth to hit 4.4 per cent in 2021.
WATCH | Alberta Finance Minister Travis Toews gives a run down on the province's finances
Despite those improvements, the cloud of COVID-19 hangs heavily over the government's finances, which Toews admitted are subject to an "environment of uncertainty." He said the economy won't return to pre-pandemic levels until 2023.
The government is setting aside $750 million for COVID-19 expenses in the next fiscal year, an acknowledgement that the pandemic will not be over by March 31, 2021.
Toews introduced an appropriations bill Tuesday afternoon that will request an additional $5.7 billion to fund pandemic expenses and the government's economic recovery plan.
The second-quarter update forecasts Alberta will end the 2020-21 fiscal year with $41.4 billion in revenue and $62.7 billion in expenses.
Taxpayer-supported debt is forecast at $97.4 billion, with a debt-to-GDP ratio of 20.6 per cent. Toews said the government plans to keep that ratio below 30 per cent.
Quarterly updates and budgets are not just forecasts of the province's finances and spending priorities; they are also political documents reflecting the views of the government.
Tuesday's update included a statement containing an unprecedented jab at public sector unions currently negotiating with the provincial government.
"While the public sector plays a key role in delivering public services, it does not create jobs or generate wealth," the document said.
"Rather, public sector activities and spending are paid by withdrawing money from the economy, through taxes, or by taking money from future taxpayers by borrowing for deficit financing."
During an embargoed news conference, Toews was asked about that statement, given that public sector workers pay taxes and spend their salaries on goods and services.
He acknowledged that public sector workers are providing vital services during the pandemic.
"While the public sector does pay income taxes," he said, "ultimately it's private sector wealth creation that funds public service delivery.
"So to that end, we know that our economic recovery is absolutely critical to our fiscal health in our province."
Lethbridge West MLA Shannon Phillips, the NDP critic for Treasury Board and Finance, called the statement "an unprecedented ideological smear" on frontline health care and education workers.
"I would encourage the premier to look a front-line nurse in the eye after their 12-hour shift in an emergency room full of COVID-19 and tell that nurse they are a drain on society and read them this quote," she said.
Phillips said she can't trust the government's economic projections after the auditor general had to make $1.6 billion in adjustments to last year's annual report. She said Toews is running up a record-setting deficit with little to show for it in terms of COVID-related relief.
"Albertans are looking around and asking themselves: where is the money for small business assistance?" Phillips asked.
"Where is the money to keep our economy moving? Where is the investment in health care and education to make sure that kids can keep going to school so that we can keep going to work?"
The fiscal update was tabled 90 minutes before a news conference where Premier Jason Kenney was announced new measures to curb the spread of COVID-19 in Alberta.
Over the last week, Alberta has reported some of the highest case numbers in the country, surpassing Ontario, a province with more than three times Alberta's population, on Sunday.