Alberta budget targets 'full employment' by 2023 despite economic volatility

When Jason Kenney campaigned for premier last spring, he said job creation would be a top priority.

On Thursday, his government's new budget laid out a plan for getting people back to work — officially, A Blueprint for Jobs. But there's no escaping the size of the challenge ahead.

Like most governments, Alberta's United Conservative Party will also have to contend with a mountain of volatility — from China-U.S. trade relations to COVID-19 — that continues to rattle markets.

More than most jurisdictions, Alberta will also have to deal with oil prices' wild ride, which saw the North American benchmark price slump below $47 US a barrel on Thursday. Alberta is budgeting for $58 US a barrel this year.

Still, Finance Minister Travis Toews told reporters prior to his budget speech he was feeling "optimistic," and that 2020 "has the potential to be a turnaround year for the economy in this province."

When it comes to jobs, the government's goal appears to be an ambitious one.

Last month, the unemployment rate in the province climbed to 7.3 per cent. But finance officials expect the number to edge downwards to 6.7 per cent this year.

Their expectation is it will keep falling over the next couple of years, dropping to 5.1 per cent, or full employment, in 2023. That would be a welcome achievement, but private forecasts aren't as hopeful.

The Conference Board of Canada said in November that it expects unemployment to come in at 7.8 per cent this year and still be 7.7 per cent in 2023. Stokes Economics foresees 6.6 per cent this year and 5.9 per cent by 2023.

Shannon Phillips, the NDP's finance critic, said she didn't see anything in the budget that suggests the provincial government will "magically outperform" those estimates.

'Beginning to attract investment'

But the government defended their forecast by pointing to a number of recent investments that will add jobs, such as an expansion of Dow's Alberta petrochemical facilities, Suncor's plans for a $300-million wind power project, and Canadian Natural Resources' increase in its capital spending.

"We're seeing signs at this point that our broad-based method of improving the Alberta economy is beginning to attract investment," Toews said.

Still, others aren't so certain, explaining that the forecast will require a number of pieces to fall into place.

"There may be a little hope baked into that 5.1 per cent assumption," said Mike Holden, vice president of policy and chief economist at the Business Council of Alberta.

"I think they're expecting a lot of things to happen in order to achieve that.

"They're expecting an additional pipeline access to be created. They're expecting a narrower bitumen price differential. They're expecting a lot more investments to come into the province as a result."

Predictions can be fuzzy, but the goal remains clear: to get Albertans back to work.

The UCP blueprint includes agriculture, forestry and tourism, among others. It also plans to spend $6.9 billion this year on capital projects, including a highway twinning and hospital renovations, that it says will support 3,000 jobs.

Better oil prices and new pipelines still key

Still, the province, as it has for decades, continues to rely on the well-being of Alberta's oil and gas sector, which has been challenged by prices, pipeline bottlenecks and growing investor scrutiny on climate change.

If oil prices fall from their stated forecasts, or if none of three major pipeline projects get built, Alberta's economic picture and job prospects begin to slide, according to the budget.

For example, under the budget's low oil price scenario — where the WTI price is $57 US a barrel in 2022-23 — employment is 20,000 or 0.8 per cent lower by 2023. In a scenario where no key pipelines are completed, production is expected to fall and drag down investment and employment.

Toews says he's more hopeful now than he has been in months when it comes to pipeline construction.

Political analyst John Santos said it's clear the government is counting on brighter days for the oilpatch.

"The plan is basically to double down on getting the oil and gas industry running to its old, glorious self," he said.

A big part of the effort to improve the economic landscape — for those in or outside the oil and gas sector — is to make Alberta more attractive to investment. The government's plan includes cutting red tape and corporate taxes, with the goal of having the lowest corporate tax rate in the country and lower than 44 U.S. states.

Dubbed the Job Creation Tax Cut, the new budget estimates that it will increase investment in the province by about $4 billion per year by 2023. By 2022, it should be creating 55,000 jobs annually.

But will such tax cuts be enough to entice new companies or industries to Alberta?

The plan has had it critics since it was discussed on the campaign trail last year. NDP Leader Rachel Notley said again Thursday she saw no "practical" plan to create jobs from the government's budget.

Kenney's UCP now has the chance to show what their blueprint can do to get Albertans back to work, but it will have to do it despite some mighty economic turbulence.