Alberta's economy is still struggling, but you wouldn't know it from the rosy outlook in the provincial government's latest budget.
Budget 2020, a so-called "Blueprint for Jobs" according to the province, dropped Thursday, and unsurprisingly, much of it focused on getting Albertans back to work and fighting the federal government for more money.
What did come as a surprise was the lack of painful cuts many have been fearing. This budget came nowhere near to paring back departments as severely as the 2019 budget did. Instead, this budget holds the line on spending for most departments and predicts Alberta's $6.8-billion deficit will turn into a $700-million surplus by 2023, thanks to economic growth from cutting the corporate tax rate, money from bitumen royalties and federal transfers – incredibly ambitious numbers, given consumer confidence is low, spending is low and unemployment remains high.
It's no coincidence the government's rosy predictions coincide with the 2023 provincial election. The projected surplus hinges on Alberta turning a revenue corner and will only materialize if revenues soar by more than $8 billion to $58.1 billion in the next three years. Given the current state of affairs, and looking down the road at what's in store for the oil and gas industry, this is akin to pulling a rabbit out of a hat. For comparison, Alberta's revenues were $49.6 billion in 2018-19, $50.9 billion last year and are forecast at $50 billion for 2020-21.
The government's forecasts don't mesh with forecasts from the private sector. Alberta forecasts a 2.5-per-cent increase to our real GDP in 2020, higher than all nine private sector forecasts cited in the budget – forecasts that ranged from 1.6 to 2.4 per cent. And we all know government knows better than the private sector.
Meanwhile, the province forecasts Alberta's unemployment rate will drop to 6.7 per cent this year and six per cent next year – lower than eight of the nine private forecasts for both years. By 2023, the province forecasts our employment rate will be 5.1 per cent.
All that despite this being the weakest recovery from recession Alberta has ever seen. St. Albert and District Chamber of Commerce president and CEO Jennifer McCurdy told the Gazette earlier this month local businesses are coming off a challenging year. There has been some new business growth locally, but residents aren't spending money like they used to. A recent poll from MNP Consumer Debt Index and Ipsos found nearly 30 per cent of Albertans are insolvent, and last November our unemployment rate in the Edmonton metropolitan area hit 7.7 per cent.
The latest report from the Canadian Federation of Independent Business puts Alberta's small business confidence at the lowest in the country.
Locally, our school divisions saw a small operational funding increase, although nowhere near enough to offset the cuts they received in 2019. No word yet on whether the government is slashing education grants. The province is also hiking the education tax – another decision that will hit residents' pocketbooks – and Advanced Education has been slashed back by six per cent.
Finance Minister Travis Toews says the government has faith in the accuracy of its predictions. Given the volatility of our non-renewable resource revenue and economic factors outside Alberta's control – national and international climate change policy, for example, and the disastrous impact Coronavirus is having on global markets – the UCP government appears to be viewing our immediate future through rose-coloured glasses.
We wish we shared their optimism. Unfortunately, the more likely scenario is the government is in for a rude awakening.
