OPINION | Alberta's new budget merely postpones the 'fiscal reckoning'

·5 min read
OPINION | Alberta's new budget merely postpones the 'fiscal reckoning'
Finance Minister Travis Toews purchased new footwear to wear when presenting his 2021 budget at the Alberta Boot Company in Calgary.  (Paul Taillon/Office of the Premier  - image credit)
Finance Minister Travis Toews purchased new footwear to wear when presenting his 2021 budget at the Alberta Boot Company in Calgary. (Paul Taillon/Office of the Premier - image credit)

This column is an opinion from Graham Thomson, an award-winning journalist who has covered Alberta politics for more than 30 years.

Before delivering the new provincial budget Thursday, Alberta Finance Minister Travis Toews bought himself new cowboy boots.

A pair of ballet shoes would have been more appropriate.

Toews's budget does a lot of dancing, much of it on eggshells.

This is a budget that is afraid of suffering another embarrassing pratfall like the one performed last year when Toews tabled an overly optimistic budget in February that predicted solid economic growth, higher employment and a balanced budget by 2023 — and was quickly rendered obsolete with the arrival of the COVID-19 pandemic.

"When I was actually presenting the budget, it felt like Rome was burning behind me," said a slightly traumatized Toews at the time.

This year's budget might be entitled, "Protecting lives and livelihoods" but, "Once burned, twice shy" would work, too.

It's a conservative document, not in terms of spending and deficits, but in terms of predictions.

The budget uses the word "uncertainty" so often it's like a nervous twitch, as in, "A great deal of uncertainty remains about vaccination roll-outs and the speed and breadth of global economic recovery."

WATCH | Finance minister, Opposition leader discuss 2021 budget:

"Uncertainty" is the word of the day. And it's going to be the word of the year as we continue to muddle through the minefield that is COVID 2021.

The government learned an important lesson last year: don't raise expectations.

Toews's economic outlook this year includes an $18 billion deficit, in addition to last year's $20 billion shortfall caused in part by a price of oil that went negative at one point. The accumulated debt will hit $115 billion this year and reach an astronomical $132 billion in two years.

That's not including the $1.3 billion at risk in the Keystone XL pipeline gamble.

The debt is climbing so high, so fast, the government is starting to couch the debt in terms of its relationship to the total provincial economy. This is called the net-debt-to-GDP ratio and it's a term beloved by pernickety economists — and by politicians trying to mask the size of their government's record debt.

Right now Alberta's ratio is 24.5 per cent, which is pretty good compared to Ontario, for example, at 50 per cent. But just two years ago, our ratio was 11 per cent.

Yes, there are few encouraging numbers in this budget.

The government is spending four per cent more on health care and is setting up a $1.25-billion contingency fund to fight the pandemic.

Premier Kenney is not slashing spending or cutting services as he seemed to suggest much of last year with his warning of a "fiscal reckoning" to come.

Alberta Premier Jason Kenney promised there would be no new taxes in the budget.
Alberta Premier Jason Kenney promised there would be no new taxes in the budget.

This is not a fiscal-reckoning budget or even an austerity budget. It is not the fiscal plan of a self-assured government. This is the keep-your-head-down-budget of a government under siege from COVID-19 and an unhappy public that seems to be increasingly dissatisfied with the UCP.

The fiscal outlook is so uncertain that Toews doesn't even pretend to have a plan to balance the budget, unlike last year when he confidently predicted no more deficits starting in 2022, right before he felt the flames of COVID setting his prognostications on fire.

'Right-sizing'

But if Toews is not outright slashing, he is planning to do some whittling and that has public-sector unions nervous.

"One area where we can no longer delay is addressing a public -ector salary structure in Alberta that has for decades been an outlier compared to other provinces," said Toews, who has previously warned unions that if they don't accept concessions, they'll face more job cuts.

Toews calls this "right-sizing" public-sector compensation, a term sure to infuriate workers and do nothing to quell labour unrest.

"Perhaps if governments had shown more restraint in previous years, we would not have had to confront this issue," added Toews, who might be taking a jab at the former NDP government but really should be aiming at a succession of previous Conservative governments.

True to form, Toews also pointed the finger of blame at the federal Liberal government: "The biggest obstacle to recovery may be our own national government, which has layered on regulatory requirements, created investment uncertainty, chased away the investment that maintains family-supporting jobs, and is now increasing the costs for our most vital national economic drivers."

What the Kenney government tends to gloss over is that after the pandemic hit, most of the financial aid delivered to beleaguered Albertans came from Ottawa.

Not only did the federal government deliver $11 billion in direct transfers to the Alberta treasury last year, it sent an additional $23 billion to individual Albertans and businesses via programs such as the Canada Emergency Response Benefit and the Canada Emergency Wage Subsidy.

Albertans are no doubt relieved that, as Kenney promised, there are no new taxes in the budget.

But you have to wonder if that's just a matter of time.

The pandemic might have forced the government into spending record amounts of money but our fiscal problems didn't begin and end there. COVID's rampage through our economy demonstrated once again how over-reliant we are on the capricious price of fossil fuels.

There will be a "fiscal reckoning" in our future, sooner or later.