Finance Minister (and GP-Wapiti MLA) Travis Toews delivering the bleak first quarter fiscal update to the Alberta Legislature on Thursday morning (Photo: Government of Alberta)

By Canadian Press

Historic Deficit

Alberta deficit to hit $24.2 billion in 2020-21

Aug 27, 2020 | 10:22 AM

EDMONTON – Alberta’s first-quarter fiscal update says the double blow of collapsing oil prices and the COVID-19 crisis have pushed the province into a historic deficit of $24.2 billion.

The red ink Finance Minister Travis Toews is predicting for 2020-21 is more than triple what the United Conservative government projected in its February budget.

The value of everything Albertans produce is forecast to drop by nearly nine per cent.

The unemployment rate, now about 12 per cent, is expected to remain at near double-digit levels well into next year.

“These numbers are incredibly sobering to all of us. If left unchecked, they predict a grim reality for Albertans,” said Toews. “We are facing the most significant economic challenge of our generation.”

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The government says the economy will start to bounce back next year, but it won’t be enough to make up for the ground lost in 2020.

The Conference Board of Canada said this week that Alberta will be the hardest hit province economically this year with an 11 per cent contraction in GDP.

In an effort to offset the deficit, the Alberta Government has plans reduce the costs of providing government services to Albertans, while also doubling down on efforts to encourage economic growth.

“That’s why we rolled out Alberta’s Economic Recovery Plan in late June of this year” says Toews. “Alberta was the first province to roll out an economic recovery plan, and we believe economic recovery and growth is absolutely essential in dealing with our long-term fiscal challenge.”

The Economic Recovery Plan focuses on ensuring a competitive business environment with a Corporate Tax Rate set at just 8 per cent, as well as reducing red tape, which Toews says attracts investments and brings in jobs.

The plan also focuses on strategic infrastructure investments to help create jobs, both in the short- and long-term, and on creating strategies for individual sectors to diversify the economy.

“We know that the energy industry, the agriculture industry and the forestry industry continue to have a bright future in this province. But economic diversification is also incredibly important, so we’ll also be focusing on sectors, such as tourism, tech, logistics, aerospace, and others.”

The figures released by the Provincial Government does not account for a second wave of COVID-19 forcing further lockdowns. Toews says Albertans have done well with flattening the curve, adding that people will have to continue to be vigilant and follow the public health guidelines to make sure more outbreaks don’t surface and cause more adverse economic impacts to the province.

The government had plans to balance the budget in 2022-23, but Toews says that will most likely have to be pushed back. He says they will need to work through the pandemic and economic uncertainty, and build a new plan to balance the budget.

A three-year fiscal update will be introduced in November, and a budget will be presented in September of 2021.

(With files from Liam Verster, EverythingGP)