Alberta Finance Minister Travis Toews speaks about the upcoming budget in Edmonton on Wednesday, Feb. 26, 2020. Toews says the goal in 2021 is to get vaccines out and put the COVID-19 pandemic in the rear-view mirror, thenwork to fix Alberta’s battered economy. THE CANADIAN PRESS/Jason Franson

2021: Alberta eyes post-COVID economic rebound but faces big budget questions

EDMONTON — Alberta Finance Minister Travis Toews says the goal in 2021 is to get vaccines out and put the COVID-19 pandemic in the rear-view mirror, then work to fix a battered and beleaguered economy.

But with a $21-billion deficit and Alberta’s wellspring oil and gas economy still in flux, there’s a red-inked elephant in the room: Where’s the money going to come from?

“We will not cut our way out of a $21-billion deficit,” Toews said in a year-end interview with The Canadian Press.

“We have to get the economy growing again. And economic recovery will very quickly become job No. 1 as we start to get past the pandemic.”

Roll the tape back to the start of 2020. Premier Jason Kenney’s United Conservative government was busy trying to resuscitate an already wheezing economy only to see COVID-19 blow everything apart and take with it Kenney’s signature election promise to balance the deficit in his first term.

That goal is a distant memory with a projected budget deficit this year tripling an original forecast of $6.8 billion. COVID-19 has slashed demand for energy, shuttered businesses and demanded relief aid and job supports to keep people going.

Toews said the plan is to get Alberta out of the financial ditch in February with the budget.

In November, he laid out “fiscal anchors” for the journey: keeping the net-debt to GDP ratio under 30 per cent, reducing public sector spending to match comparable jurisdictions and setting a timeline to get the budget back to balance.

University of Calgary economist Trevor Tombe said Alberta is in the enviable position of having options. It’s the lowest-taxed province, and oil and gas will continue to deliver billions of dollars to the treasury for the foreseeable future, though not in the same eye-popping amounts as boom times.

“But even if (the energy revenue) is significant, it won’t be nearly enough, so we need to shift gears on how we fund public services.”

By his number crunching, Tombe said if Toews is to meet his targets, Alberta will need to find an extra $7 billion a year if it wants to get the budget out of the red and start paying off a debt now projected to reach $97 billion in 2021.

Such talk raises again the spectre of a sales tax.

Alberta’s Social Credit government brought in a two per cent levy in 1936 and quietly dropped it a year later. After the Second World War, Alberta’s oil and gas economy exploded, allowing it to eschew the stability of a tax.

Sales tax is the third rail of Alberta politics and by law can’t be brought in without a referendum. Toews said it’s not in the cards, but he’ll strike a panel to revisit Alberta’s revenue generation.

Opposition NDP Leader Rachel Notley did not bring in a sales tax when she was premier before Kenney was elected in 2019. She agrees with the UCP that it would be a debilitating blow to a fragile economy.

Notley says the solution begins with further diversifying the economy and building on Alberta’s strengths of a young educated workforce, a burgeoning tech sector and entrepreneurial business owners.

Oil and gas are key, she adds, but warns that Kenney’s blinkered focus on them to the exclusion of other opportunities will be the province’s undoing.

“If (Kenney) continues to insist on operating through an ideological lens, which is squarely focused backward by about 25 years … then we are in big trouble.”

The economy is also a political question. The United Conservatives reach the midpoint of their mandate in 2021 and early initiatives, including a deep slash to the corporate tax rate, have yet to bear fruit.

Political scientist Duane Bratt said COVID-19 and the economy are destined to again slam into each other in 2021. The government has said that after the pandemic is over it will follow through on saving money in health care including reducing or outsourcing 11,000 jobs.

“How do you say, ‘Thank you for all the hard work (during the pandemic). Here are your layoff papers?’” said Bratt with Mount Royal University in Calgary.

Broadly speaking, Bratt said, the NDP is more trusted by the electorate on the health file, while the United Conservatives own the economy. That raises future ballot box questions two years from now, if the UCP has angered Albertans with its health decisions while failing to get the economy going.

Said Bratt: “If the economy trumped everything in 2019, does health trump everything in 2023?”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta has 3,651 active cases of COVID-19.  (File photo)
Gov’t reports two more COVID-19 deaths in Red Deer on Sunday

Nineteen new deaths, including two in Red Deer, were reported by the… Continue reading

Andre Lemus, the owner of Las Palmeras in Red Deer, says he hopes in-person dining restrictions are lifted this upcoming Thursday. (Photo courtesy www.laspalmeras.ca)
Red Deer restaurant owner hopes in-person dining restrictions are lifted Thursday

The owner of a Red Deer restaurant says business has “dropped” since… Continue reading

The Town of Ponoka and the Alberta Union of Provincial Employees (AUPE) have ratified a new agreement, averting a strike. (File photo from Facebook)
Alberta gov’t ‘using pandemic as shield to lay off workers,’ says AUPE

The Government of Alberta’s “attacks on workers” is continuing with a new… Continue reading

Rocky Mountain House RCMP, EMS, Search and Rescue, STARS air ambulance and Alstrom Helicopters worked together to rescue a fallen ice climber Friday. (Photo contributed by Rocky Mountain House RCMP)
Rocky Mountain House RCMP help rescue fallen ice climber

Rocky Mountain RCMP helped assist a fallen ice climber Friday afternoon. At… Continue reading

Dwayne Buckle, 40 of Red Deer finished a 1,638-kilometre walk, in honour of his family. The 12-week, 82 day-journey wrapped up in Port Hardy, B.C. on Monday. Facebook photo
Red Deer man completes 1,638 km hike for cancer research

Dwayne Buckle, a Red Deer firefighter returned home Friday after his 12-week journey

A cat named Willow is shown in this recent handout photo. Victoria firefighter Capt. Tim Hanley says using a jackhammer and other home repair tools to save a cat stuck in a tiny basement drainpipe ranks as the strangest rescue call he's been on in his 20-year career. Hanley says he and three other firefighters spent more than two hours using sledgehammers and a jackhammer to break through Victoria homeowner Emma Hutchinson's concrete basement floor to free Willow, a nine-month-old kitten. THE CANADIAN PRESS/HO - Twitter, City of Victoria
Victoria firefighters use homeowners’ jackhammer to rescue cat trapped in tiny pipe

VICTORIA — A Victoria firefighter says using a jackhammer and other home… Continue reading

Conservative Leader Erin O'Toole holds a press conference on Parliament Hill, in Ottawa on December 10, 2020. THE CANADIAN PRESS/Sean Kilpatrick
No place for ‘far right’ in Conservative Party: O’Toole

OTTAWA — Federal Conservative Leader Erin O’Toole says there is “no place… Continue reading

Alberta Energy Minister Sonya Savage addresses the attendees while Tom Olsen, Managing Director of the Canadian Energy Centre, looks on at a press conference at SAIT in Calgary on Wednesday, Dec. 11, 2019. THE CANADIAN PRESS/Greg Fulmes
‘Morally and ethically wrong:’ Court to hear challenge to Alberta coal policy removal

First Nations, ranchers, municipal officials and environmentalists hope to persuade a judge… Continue reading

Sub-Lt. Jeffrey Delisle arrives at Nova Scotia provincial court for a sentencing hearing in Halifax on Friday, Feb. 1, 2013. THE CANADIAN PRESS/Andrew Vaughan
Canada’s spy-catching system caused delay, angst in Delisle case: former FBI official

OTTAWA — The U.S. Federal Bureau of Investigation’s former head of counter-intelligence… Continue reading

People wait to be screened before entering Little Mountain Place, a long-term care home that has had 41 residents die since a COVID-19 outbreak was declared at the facility in November in Vancouver on Sunday, January 3, 2021. Staff in long-term care homes across Canada are struggling to isolate elderly residents with dementia during COVID-19 outbreaks, accelerating the deadly spread of the virus, experts say. THE CANADIAN PRESS/Darryl Dyck
Care home staff struggle to isolate dementia patients during outbreaks: experts

VANCOUVER — Staff in long-term care homes across Canada are struggling to… Continue reading

A passer by walks in High Park, in Toronto, Thursday, Jan. 14, 2021. This workweek will kick off with what's fabled to be the most depressing day of the year, during one of the darkest eras in recent history. THE CANADIAN PRESS/Chris Young
‘Blue Monday’ getting you down? Exercise may be the cure, say experts

This workweek will kick off with what’s fabled to be the most… Continue reading

Winnipeg Jets' Blake Wheeler (26) just misses the net against goaltender Laurent Brossoit (30) during  scrimmage at their NHL training camp practice in Winnipeg, Wednesday, January 6, 2021. THE CANADIAN PRESS/John Woods
Jets return to practice a day after suspending workouts due to COVID concerns

WINNIPEG — The Winnipeg Jets have returned to practice a day after… Continue reading

Most Read