Kenney previews historic deficit as fiscal update looms

EDMONTON – Alberta Premier Jason Kenney is painting a dark picture ahead of this week’s financial update.

The Alberta legislature is to convene on Thursday for the United Conservative government’s release of first-quarter numbers for the 2020-21 fiscal year.

Kenney said in Edmonton Tuesday that it will be the biggest deficit in the history of Alberta “by a country mile.”

He said it will be well above $20-billion because of the total collapse of revenues resulting from the COVID-19 pandemic and a crash in oil prices.

Kenney said revenue is more than $10-billion lower than expected.

He said the province’s debt will continue to rise and at some point, there will be a financial reckoning in the province.

This comes as Kenney announced a cabinet shuffle naming Doug Schweitzer as Minister of Jobs, Economy and Innovation.

Minister @doug_schweitzer will move to the newly-named Jobs, Economy, and Innovation ministry, replacing the Economic Development Trade, and Tourism file.

I am confident Doug will bring the energy and drive this vital file needs for a successful recovery. pic.twitter.com/HTFNY6su7u

— Jason Kenney ???????????????????????? (@jkenney) August 25, 2020

“This is a broadened and expanded ministry built on the base on what until today was known as economic trade development and tourism.,” said Kenney.

Political Scientist with Mount Royal University Duane Bratt said Schweitzer’s new role is an important portfolio. It comes as the Conference Board of Canada forecasts Alberta will be the most heavily hit province this year with an 11 per cent contraction in its GDP.

“It’s not all Kenney’s fault,” said Bratt. “COVID has really hit Alberta hard.”

Meanwhile, Trevor Tombe with the University of Calgary believes Alberta has a strong balance sheet and the ability to borrow money to bridge the province through the crisis in the short term.

“Government borrowing, in this large deficit is appropriate given the situation that we’re in.”

Yup. Will depend on the economic outlook as well, but deficit of between 7-8% of GDP is probably what we'll see on Thursday. Previous record was 1986 at 6.8%. https://t.co/kn5qJPbXuc

— Trevor Tombe (@trevortombe) August 25, 2020

However, he doesn’t advise the government enact short term tax increase or spending reductions this year or next in order to quickly balance the budget in the short term.

“After we’re through the worst of the crisis, then we can start thinking about tax changes and spending changes.”

Although it’s expected to be the largest deficit in Alberta history, Tombe said people shouldn’t panic as the province has the fiscal capacity to deal with the situation unlike other provinces.

The fiscal update will be provided by Finance Minister Travis Toews on Thursday.

 

-With files from The Canadian Press and CityNews