In the 2019 Provincial Election the United Conservative Party ran on a platform of reducing government spending by trying to find about three cents of savings for every dollar spent by the government. The debt under the previous government had grown to close to $63 billion dollars, the economy was in a recession and who ever was elected was going to have to start to address the debt and government spending. Between finding efficiencies and growing the economy the UCP government believed it could eventually have a balanced budget and then begin looking at how best to reduce the debt that the government had accrued.
Alberta has been hit especially hard by the effects of the COVID-19 pandemic, the oil price crash and an already weakened economy. On August 27, 2020 the Minister of Finance presented Albertans with a provincial update and the fiscal reality that Albertans must now face is serious indeed. Here are some of the numbers you need to know:
Revenue is down
• Resource revenue has dropped drastically to $1.2 billion a $3.9 billion decrease.
• Bitumen royalties of $686 million are forecast, $2.5 billion lower.
• Personal income tax revenue is forecast at $10.7 billion a $1.9 billion decrease.
• Corporate income tax is forecast at $2.1 billion which is $2.4 billion lower.
• Total Revenue is projected to be $38.4 billion a decline of $11.5 billion or 23% from Budget 2020.
The Deficit and Debt are up
• The yearly deficit now sits at $24.2 billion – $16.8 billion higher than estimated in Budget 2020.
• Alberta now faces a debt burden of $99.6 billion, or $22,400 per Albertan.
• Interest payments on the debt have increased by $21 million and is a net $154 million higher.
The Economy is struggling
• Manufacturing shipments and goods exports are down 20%.
• Non-Energy exports are down more than 10%.
• Drilling rig activity is down nearly 80% on a year to year basis.
• Investment in oil and gas extraction is forecast to fall by over $8 billion or more than 30%.
When the Premier told Albertans that a time of economic reckoning was coming he was not exaggerating. Albertans have not faced these kinds of economic times since the “Great Depression”. But we are not without hope! Albertans are a hard-working, entrepreneurial people who are prepared to pull together, address the problems set before them and work to overcome our challenges. That was the message of the Finance Minister in his update to Albertans. We will face the challenges, we will work towards living within our means and we will work hard to grow the economy and provide a pathway of hope for all Albertans.