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Alberta's fiscal picture improving, but still a long way to go

The province's projected deficit is $2.8 billion lower than last quarter, but is still $21.3 billion for 2020-21.
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Morinville-St. Albert UCP MLA Dale Nally is looking on the bright side of Alberta's mid-year fiscal update released Tuesday.

“While there is a long road ahead to full recovery, it is encouraging to see Alberta’s economy is gradually emerging from the worst of the downturn,” Nally said in an emailed statement to the Gazette

The province's projected deficit is $2.8 billion lower than last quarter, but is still $21.3 billion for 2020-21. That number had been projected to be $7.3 billion at the start of the year, but that number skyrocketed due to what is being called a "triple black swan" event.

The global economy has seen the largest economic contraction since the Great Depression, oil prices have plummeted and the pandemic has made a bad situation much worse. The fiscal update reflects these events, with high unemployment levels, decreased revenues and a high deficit.

Marie Renaud, NDP MLA for St. Albert, thinks the government is glazing over some of what she sees as the more troubling aspects of the report. 

“There are a lot of things that are concerning. The record deficit, although it is lower than projected, it is still enormous,” said Renaud. 

Highlights of the report include a drop in revenue to $41.4 billion. Some of that drop is due to the decrease in the corporate tax. 

“I think that you know, the shortfall in our revenue is worrisome. I think some is certainly understandable related to COVID, oil and gas prices. But I think it's important to note that some of that is made up of lost revenue, because the UCP chose to just to move a little quicker on the reduction of corporate taxes,” said Renaud. 

Renaud is also worried about the decrease in certain areas of spending. 

“I think that the government needs to make smart investments to support people through this, whether that's supporting businesses with some of the measures that we proposed, around lower interest loans for businesses, around eviction protection, or capping insurance costs, supporting workers, so they can stay home and isolate or quarantine when they need to, and all those require investment,” said Renaud. 

The government announced an increase in spending for COVID-related issues that will take place over a three-year period. Fiscal anchors were also announced to keep spending in check. The three anchors include keeping spending in line with other provinces, keeping the debt ratio below 30 per cent and coming back to reducing debt once the pandemic is over. 

Nally is looking toward the future.

“While the province’s finances have improved over the past several months, the long-term future of Alberta’s programs and services hinges on our ability to bring our spending in line with other provinces, bring debt under control and get a roadmap back to balance," he said.