Fiscal outlook improved, but no full recovery expected this year
Finance Minister Travis Toews delivered the province’s first-quarter fiscal update yesterday, which painted a rosier picture for Alberta’s future than February’s budget, with a higher-than-expected GDP thanks to a boost in oil prices.
“After a historically challenging year, Alberta’s economy is already witnessing signs of recovery and growth,” Toews said. “While this indicates Alberta’s recovery plan is working, we know there is still more to do to create jobs and restore Alberta’s place as the economic driver of the nation.”
Oilsands production was up eight per cent in the first half of 2021, with non-energy investment growing by five per cent annually in both 2021 and 2022. It is expected to hit 2019 levels this year.
The fiscal picture shows a more resilient than anticipated recovery to the third wave of Covid, with a boost in consumer spending, including in homes, propelled by home renovations.
Alberta’s GDP is expected to fully rebound to 2014 levels by 2022 but remains projected at $340.1 billion this year. Unemployment is expected to drop to 7.3 per cent by the first quarter of 2022.
NDP Jobs and Economy critic Deron Bilous said the good news is the result of factors outside of the government’s control, like a boost in world oil prices.
“[Premier Jason Kenney] can’t take credit for any of this,” Bilous said.
The UCP continued to cut funding to health care and universities at the expense of innovation and other economic diversification efforts, the critic charged.
While smaller than forecasted, a large deficit still looms, in addition to brewing labour unrest in the public sector.
Toews said despite strike threats from the United Nurses of Alberta, he is hopeful mediation will lead to an agreement and that nurses will continue to be paid “very well.”
But Independent MLA Drew Barnes said the UCP’s cuts don’t go far enough.
“The government of Alberta has a spending problem,” Barnes said. “The finance minister knows he has a spending problem. He freely admits it. There was a spending problem when this government took office, and that problem has only grown.”