How will Alberta be impacted by 'historic' $343B federal deficit?
CALGARY -- Premier Jason Kenney says a comprehensive review is underway into the impact the $343.2 billion federal deficit will have on Alberta and the results of the review won't be released until mid-August at the earliest.
The announcement of the massive deficit comes at a time when Alberta is facing a projected deficit of its own that’s grown from $7 billion pre-pandemic and now approaches the $20 billion mark.
The Conference Board of Canada has also forecasted a 6.8 per cent decline in Alberta’s economy this year.
"I guess I would say that while we appreciate the scale of the Government of Canada’s fiscal response to the COVID crisis, I would suggest that governments be careful as we go forward not to spend indiscriminately," Kenney said.
"The support for the economy and obviously the health response needs to be targeted."
The federal government announced its spending levels are the highest they’ve been since the Second World War. Direct support for businesses has resulted in spending of $212 billion, while the Canada Emergency Response Benefit (CERB) has cost more than $80 billion.
The federal wage subsidy has also cost Ottawa $82.3 billion.
Kenney says all of this quick federal cash gives employees incentive not to work. "The federal government payments for people not working have created a kind of rupture in the labour market."
As for Canada’s debt load, the latest data from March shows the country is now $765 billion in the red with forecasts showing that number is expected to increase to $1.2 trillion by March of 2021.
University of Calgary economist Jack Mintz is now questioning whether or not Ottawa will be asking Canadians to pay it all back.
"We’re blowing a massive debt hole into the earth that were going to have to climb out of," said Mintz.
"Are they expecting us to pay it back through higher taxes? And of course Alberta pays more taxes per capita than any other province so are we going to be bearing the biggest brunt of this burden?"
In the meantime, Alberta’s UCP Government has launched its own recovery plan by investing $10 billion into major infrastructure projects and fast tracking a business tax cut from 10 per cent to 8 per debt in the hope of creating 50 thousand more jobs.
However, new data from Statistics Canada suggests Alberta jobs numbers and its GDP could see dramatic declines unless supply and demand improves for the oil and gas industry.
Calgary Chamber: Bold, visionary action needed for economic recovery
The Calgary Chamber called Canada’s fiscal snapshot 'sobering' but not surprising given the impact the COVID-19 pandemic has had on local businesses.
The organization’s focus now is on advocating for better federal policies and programs to create economic growth in the future.
"While remaining focused on protecting the health of Canadians, we must now build the future we want through and beyond the pandemic," said Sandip Lalli, Calgary Chamber CEO.
"To that end, the Calgary Chamber will continue to advocate for policies and programs to ensure the resiliency, a winning strategy, as well as sustainable and inclusive job growth."
The Calgary Chamber’s recommendations include:
- Establishing a Royal Commission to conduct a comprehensive review of the Canadian tax system
- Increasing the funding capacity and scope of the Canada Infrastructure Bank to spur additional public-private partnerships
- Developing a national vision for natural resource development and the global fight against climate change through the creation of a Natural Resource Innovation Supercluster and a Royal Commission on Natural Resource Development and Climate Change