Although Albertans across the province enjoyed summer temperatures with mostly clear skies back on Aug. 27, the economic forecast coming out of the legislature was one of dark days ahead.
Alberta’s 2020 deficit is projected to be $24.2 billion after falling oil prices, compounded with the global economic shutdown instigated by the Covid-19 pandemic, devastated the province’s economy.
The deficit comes from a $5.3 billion increase in spending towards Covid support while revenue was $11.5 billion less than expected.
In a Breeze interview shortly after reporting to the legislature, Finance Minister Travis Toews affirmed that attracting investment was the only way Alberta could push through its current fiscal challenges and secure future prosperity.
“Our economic recovery plan includes attracting investment, creating job opportunities for Albertans, which leads to additional government revenues,” he said. “In order to disproportionately attract investment, we have to have the most competitive business environment.”
Creating that competitive environment includes lowering business income taxes to eight per cent, with the government also considering changing how linear assessments are done so the oil and gas industry pays less in property taxes.
The proposed changes have led to outcries from MDs across the province as the cuts would significantly limit municipal revenues. The MD of Pincher Creek, for example, estimates it could lose up to $1.2 million in its operating budget.
When asked about such concerns, Minister Toews recognized the property taxes play an important role in sustaining municipalities but said the need for investment justified their review, given that energy property taxes in Alberta are currently higher than what is paid in Saskatchewan and British Columbia.
“The sustainability of municipalities is very important. At the same time, it is very important that we have a very competitive energy industry in Alberta,” he said.
“We’re going to be working with municipalities with energy interests and rural Albertans to understand if there is improvement that can be made.”
Controlling spending on social services to better match other provinces, Minister Toews added, is also key in improving Alberta’s financial fortunes.
“We need to deliver the most cost-effective government services possible — that’s absolutely essential,” the finance minister insisted. “Alberta can no longer afford to be an outlier.”
When asked why funds should be directed towards future economic benefit instead of covering immediate public social needs, Minister Toews replied that the two aren’t mutually exclusive.
“I really believe that, in order to pay for social services, we are going to have to ensure our economy is growing and healthy, because that’s ultimately the tax base that will provide for social services into the future,” he reasoned.
“Economic growth will lead to increased government revenues in the future, revenues that we’re going to need to pay for social programs in the province.”
Locals last week had the chance to listen to the minister outline Alberta’s economic recovery plan during a presentation at the Crowsnest Pass golf clubhouse.
For Blair Painter, mayor of Crowsnest Pass, the opportunity to discuss aspects of the plan with Minister Toews was too good to pass up.
“Anytime we can get a minister to come into our community and I have the opportunity to have a few minutes’ face-to-face time with them, I definitely feel privileged — and I think our community should feel privileged as well,” he remarks.
Pincher Creek’s economic development officer, Marie Everts, agrees.
“It was great to have an opportunity to have some face time and kind of that one-on-one, more relaxed conversation opportunity — just to be able to ask him questions directly, [without it] going through anyone,” she says. “It just seems more authentic.”
Another important aspect in facilitating Alberta’s economic recovery is dealing with the high level of unemployment brought on by the Covid shutdown.
The provincial unemployment rate sits at 15 per cent. From April to June, 330,000 jobs were lost, equalling the amount created this past decade.
Doug Schweitzer, newly appointed minister of jobs, economy and innovation, states the focus of his newly formed ministry is to roll out strategies for each sector of the economy to get people back to work. Agriculture and tourism figure predominantly in recovery plans.
“Agriculture is a foundational element of our economy, and we have some really amazing announcements coming out this fall that’s going to see us lay the foundation for future growth in agriculture,” he says.
And though tourism has undoubtedly taken a hit, Minister Schweitzer sees changing travel habits of Albertans as a key opportunity to help the industry recover and flourish.
“We should really be selling this province to people here in Alberta as well as selling it internationally,” he says, adding that encouraging Albertans to enjoy what their own province has to offer will help tourism in the short and long terms.
As for the recovery plan overall, Mayor Painter believes it’s the best path forward the provincial government can take under the circumstances.
“You know, they’re trying — what else can you ask? If we all had that crystal ball, we wouldn’t be in the situation that we’re in right now,” he says.
Alberta’s recovery plan can be read in full at www.alberta.ca/recovery-plan.aspx.
Sean Oliver, Local Journalism Initiative Reporter, Shootin' the Breeze