The motto of lives and livelihoods we have heard on repeat in the previous months was a good indication of how today’s budget would play out. Entitled “Protecting Lives and Livelihoods” the 2021 Alberta Budget delivered earlier today by Finance Minister Travis Toews emphasized the importance of getting Albertans past the COVID-19 pandemic and righting our economic prospects while maintaining a focus on fiscal prudence in government. Our assessment is that while this budget is pragmatic and uneventful, like going to see your accountant, it is a solid plan to deliver on their stated focus for the upcoming year.

In previous budgets, Toews has rejected the tradition of Finance Ministers purchasing new shoes for new budgets, as a point of demonstrating the United Conservative Party’s focus on fiscal belt tightening. This year and in this moment in time, Toews donned new pair of boots from the Alberta Boot Factory in Calgary. A move symbolizing support for Alberta small businesses and a shift in mindset from previous years.

The 2021 Budget is the Kenney government’s plan to address the triple Black Swan events our province faced in the last year: COVID-19 pandemic response, the crash of energy prices and investment in the industry, and overall economic recovery. What was built up to be either the sky falling from spending or the ground opening up from austerity, fell short and was almost boring.

As the world moves towards a return to some semblance of normal, today’s budget indicates Kenney is pushing all chips in on an attempt to recalibrate and rebrand his government as kinder, Alberta-first and focused on economic recovery. Kenney and the UCP have faced tremendous heat and public questioning of his administration on pandemic management, travel-gate, the government investment in the Keystone XL pipeline, and the disastrous repeal of the 1976 Coal Policy. With the next election two years out, and the Premier’s approval rating wallowing in the 26-32 per cent range, Kenney, the master campaigner, knows he has work to do if he wants to be re-elected in 2023.

While it may anger the extremes on both sides of the spectrum, this could be the right budget for difficult times. Budget 2021 is built on three fiscal anchors:

  • Keep net debt below 30 per cent of GDP to help protect future generations from rising debt servicing costs.
  • Deliver services more cost effectively by bringing spending in line with other comparator provinces.
  • Re-establish a plan to balance the budget post-pandemic when a more stable level of predictability returns to the budgeting process.

Now that Toews has delivered his third Budget, the legislature will break for a constituency week, presumably for MLAs to get back to their constituencies to sell the Budget and gather feedback. In the legislative session press conference earlier this week, Government House Leader Jason Nixon sent a clear message that the Budget is job one; with up to 19 new bills held until the Budget is passed.

We said it in 2019, and again in 2020; so, let us say it one more time – if the left is mad, and the right is mad, you have probably struck the best possible balance; or at least close.

What does the budget mean for you? 

The UCP can remake Alberta in a positive way – if they can stick to message and deliver on the promises from today.

There are governments that show that it is easy to govern when you spend money without consequence. What we see the Alberta government trying to do is manage the current situations that are largely out of their control while taking a fiscally prudent approach. This is to keep our standard of living high by attracting investment and jobs to the province; and it cannot be achieved if there is an annually high debt repayments; and a daunting debt hanging over the heads of every Albertan. If this was the case, then the advantages we once were so proud of would never be seen in Alberta again.

After a year we have just seen you could ask if debt and deficit matter, or does balancing the budget? This budget like the two previous UCP budgets demonstrates that the government understands the repercussions faced by high debt jurisdictions. Many will muse about Kenney’s previous comments around a “fiscal reckoning” what we see is a government trying to mitigate that other eventual shoe from dropping gradually. There is once again stability for the year to come – no cuts to impact sectors across the province, no sales tax to impact Albertan’s wallets. The fear the opposition has instilled into Albertans that Kenney would slash and burn has still not come to fruition.

This budget will not change your mind if you plan on investing in the province, but as Kenney has often said, “first, do no harm.” We think he has struck that balance on all accounts.

Highlights:

  • Provincial revenue is projected to be $43.7 billion
  • $18.2 billion deficit is targeted for 2021–22
  • $23 billion for health services, an increase of $900 million
  • $8.2 billion operating expense for education
  • $6.4 billion operating expense for social services ministries
  • $136 million over 3 years for the Alberta Jobs Now program
  • $166 million over 3 years for the Innovation Employment Grant
  • $500 million in 2021–22 for additional investments in economic recovery
  • Increases to clients of AISH and PDD

 

Authored by: Darren Cunningham, Tim Moro, Natalie Sigalet and Jessica Conlin