What the federal government’s fall economic update means for Albertans

Deputy Prime Minister and Minister of Finance Chrystia Freeland arrives for a news conference before tabling the Fall Fiscal Update in Ottawa, on Thursday, Nov. 3, 2022. THE CANADIAN PRESS/Justin Tang

A federal budgetary surplus has been forecast for the first time since the Liberals came to power. Economic experts think it means the country, including Alberta, is in a good place financially, and Albertans can expect changes in the province’s energy sector.

Read more: Canada projected to see balanced budget by 2027, Freeland says in fiscal update

Scott Crockatt with the Business Council of Alberta said the shrinking deficit – from around $53 billion to $36 billion – is promising for the country’s economic future.

“We’ve seen the deficit come down, and the labour market numbers coming out today show the Canada labour market is in a strong position. And within that, Alberta is probably in the strongest position,” he said.

“So it’s much like we’re the best player on a team that’s doing well.”

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Read more: Canadian economy added 108K positions in October in ‘blowout’ jobs report

Crockatt said there were a lot of good announcements around decarbonizing the energy sector in the budget, but it lacked short-term initiatives.

“How are we going to meet the growing needs for energy and food that the world really needs from us right now?” he said.

“Things like hydrogen and small modular reactors are going to be great in the distant future, and carbon capture in the near future. But what are we going to really be doing today to take advantage of the opportunities and even the responsibilities that we have?”

Read more: Fall economic statement to include proposed corporate stock buyback tax: source

The government is proposing to put a new tax on share buybacks after companies have been buying their own stock back in a bid to return value to existing shareholders.

Under the proposed rule, companies would have to pay a corporate-level two per cent tax on the net value of all types of share buybacks – a levy that would come into force on Jan. 1, 2024.

Crockatt said the tax will effect resource and energy companies, particularly those based in Alberta.

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“We’ve just been through the better part of a decade of really, really difficult business and economic performance,” he said. “A lot of these bodies have hardly made any money at all and suffered through years of really beat-up balance sheets and stock prices.

“They’re looking to repair some of that damage and return some capital to investors who are being used by these companies, who are — for the first time in a long time — seeing quarter over quarter of really good numbers.”

Click to play video: 'Liberals defend carbon pricing, potential tax hikes as ‘most effective’ method of fighting climate change'
Liberals defend carbon pricing, potential tax hikes as ‘most effective’ method of fighting climate change

Environment Minister Steven Guilbeault lashed out at oil companies last week for making very limited investments in climate action even as massive profits driven by inflation allowed them to pad the wallets of shareholders.

Oil giant Cenovus announced third-quarter profits on Friday of $1.6 billion, 192 per cent higher than the same quarter a year ago.

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The company also delivered $659 million to shareholders through share buybacks during the quarter.

Read more: Budget 2022: Liberals will put $15B toward new business investment fund

The budget is forecast to be balanced by 2027, Finance Minister Chrystia Freeland said.

Trevor Tombe, a professor of economics at the University of Calgary, told 630CHED’s Shaye Ganam the rising cost of everyday items means the government can take in more tax revenue.

“Interestingly, high oil prices and inflation generally is actually a net positive for the government budget, adding about $30 billion to add to their balance overall,” he said.

LISTEN: University of Calgary economics professor Trevor Tombe with Shaye Ganam

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Tombe said corporate income tax revenues are also up significantly this year.

“They’re projecting that corporate income taxes will be about $23 billion higher than they previously anticipated, really putting us at a level that we haven’t seen since the late 1960s when the corporate income tax rate was significantly higher than it is today.”

Read more: Conservatives, NDP slam government’s ‘out of touch’ fall economic statement

There were good and bad things to note in the update, according to Edmonton Griesbach MP Blake Desjarlais.

He said he and the New Democrats were pleased to see mentions of the expansion of the basic health-care system in Canada to include dental care.

“Something that was particularly important for me to hear was the work related to the removal of interest off of student loans,” Desjarlais said.

“One of my first questions in the House of Commons was, ‘Why is the government continuing to punish young people with huge interest rates when the cost of living is so egregious and we’re penalizing the next generation who can’t even get the first step of their life going?’”

However, he was disappointed with the lack of support for seniors in the update.

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Read more: Student loan interest relief and more: What’s new in the fall economic statement?

Edmonton Centre MP Randy Boissonnault said the smaller deficit shows the country is prepared for an uncertain economic future.

“If you have any fiscal hawks listening, I think they’re going to see the fact that the deficit is $20 billion less, so that means we’re serious about making sure that we have fiscal firepower for whatever the world throws at us,” he said.

“Our balance in this fall economic statement was between getting support to those people who need it the most when they need it the most, making sure that the economy can be competitive, but also making sure that we have a balance sheet of the country that’s going to allow us to face whatever the world is going to throw at us in the next six to 12 months.”

Click to play video: 'Federal government warns Canadians of more economic challenges ahead'
Federal government warns Canadians of more economic challenges ahead

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