Alberta Finance Minister Travis Toews spoke to the Calgary Chamber of Commerce on Monday about the provincial budget and how the government plans to increase competitiveness and attract investment.
The budget projects a deficit of $6.8 billion on revenues of $50 billion. Debt is expected to rise to almost $77 billion by spring 2021 and to almost $88 billion by 2023.
It predicts better times ahead in the oil sector as pipeline projects come online and exports increase. Natural resource revenue, about 10 per cent of total income, is expected to grow by 15 per cent by 2022-23.
“There remains much risk to additional pipeline capacity but I’ve not been more encouraged probably in the last two years than I am today that we will see additional energy egress in the province and in western Canada,” Toews said on Monday morning.
“The fact our federal government seems committed to getting Trans Mountain completed is positive. My conversations with (federal Finance) Minister (Bill) Morneau would leave me to believe that they intend on completing Trans Mountain.”
The provincial finance minister noted the province is projecting the Enbridge Line 3 project will be done in early 2021.
Toews also said the government believes the deficit will be $1.2 billion lower at the end of the current fiscal year than predicted and the province will be out of deficit by the end of its current term.
Calgary Chamber of Commerce president Sandip Lalli said the chamber has completed an analysis on the budget and she likes the path the government is taking.
“This is what this government was elected on,” Lalli said. “This is what we want as business is for the fiscal house to be in order so that the debt payments and the interest payment continues to decrease, so that it reduces the likelihood of increasing taxes later on.”
The budget forecasts the oil benchmark West Texas Intermediate to average US$58 a barrel in the upcoming year. It is currently hovering at about $50 due mainly to the novel coronavirus outbreak that is reducing demand in China.
Toews said the outbreak has reminded the province of the global economy’s volatility and its impact on Alberta.
“It reminds us to double down on the things we can truly manage here as a province, and those things are creating the most competitive business environment possible, so that our businesses are prepared and competitive going into the future and also to ensure that we’re delivering responsible spending restraint on behalf of Alberta taxpayers,” he said.
However, NDP energy critic Irfan Sabir questioned the finance minister’s projections.
“I think that oil was trading at $46 this morning and their projections are just fairy tales: $58 this year, $62 next year and $63 the year after,” she said. “If you look at future contracts on stock exchanges, they are trading somewhere around $50 for 2023, so their projections are way off.”
Kenney’s United Conservatives were elected last April on a promise to focus on oil and gas and bring jobs back to Alberta by reducing the corporate income tax rate and red tape.
But since last June, 50,000 full-time jobs have been lost. The unemployment rate was 6.9 per cent in 2019 and is forecast to be 6.7 per cent this year. The province is aiming for five per cent.
Toews said lowering the corporate tax rate to eight per cent and modernizing the regulatory environment are among the ways the government is attempting to create jobs.
“In 2020, we will double down on this effort because of all of our initiatives I believe modernizing our regulatory environment, cutting red tape, holds the most promise to improve our business competitiveness,” he said.
“There is a role for government and that role is to make the most competitive business environment possible so individuals and businesses can thrive and can compete on the global stage.”
However, Lalli said she was not satisfied with what she heard from Toews regarding job creation.
“We didn’t get how do we get from A to B on job creation and what the blueprint looks like. I think they have laid the foundation, but if I am unemployed today, I am still wondering how I am getting a job,” she said.
Premier Jason Kenney has been criticized for scrapping targeted tax incentives brought in by the previous NDP government to lure high-tech startups to the province.
To counter that, the budget’s signal feature is what’s being called a “Blueprint for Jobs.” Its centrepiece is $200 million to support research and innovation, and to attract talent in areas such as artificial intelligence, aviation, tourism and financial tech.
NDP Leader Rachel Notley disparaged the budget as a plan for more public sector cuts and service fee hikes underpinned by unattainable growth projections that are out of step with private-sector forecasts.
— With files from The Canadian Press