Alberta's government rejoiced over a smaller forecasted deficit with higher revenues and lower spending than previously predicted.
Alberta ended the 2020 - 2021 fiscal year with a deficit of $16.9 billion, which is $3.2 billion lower than the third-quarter forecast, according to the June 30 government press release. Oil prices and other economic indicators trended upwards as the fiscal year came to a close, which boosted government revenue.
Compared with the previous expense forecast, the government held the line on spending while sticking to its commitments to keep Albertans safe, protect their livelihoods, and support job creation during the COVID-19 pandemic.
"Last year was very difficult for many Albertans, but the province is emerging stronger than expected," said Finance Minister Travis Toews. "The government took bold action to support job creation, build infrastructure and diversify our economy, and we are determined to carry this momentum forward while remaining committed to our fiscal anchors."
Revenue for 2020 - 2021 was $43.1 billion, which is $0.8 billion higher than the third-quarter forecast reported in Budget 2021. The increase is due mainly to stronger-than-expected oil prices in the last quarter of the fiscal year.
With the substantial improvement in energy prices and economic activity late in the fiscal year, revenue from oil sands royalties and corporate and personal income taxes also increased from the third-quarter forecast.
Financial markets picked up steam in the latter months of the year, which boosted investment income. Revenue from premiums, fees, and licences also improved significantly. For example, strong North American lumber prices bolstered the province's income from timber royalties.
Total expense in 2020 - 2021 was $60.1 billion, which is $2.4 billion lower than the third-quarter forecast. Of particular note, there is a decrease in non-COVID-related operating expenses of $1.2 billion from Budget 2020, demonstrating the government's commitment to the responsible use of taxpayer dollars.
At the same time, the expense was $2.8 billion higher than initially budgeted for due to the COVID-19 pandemic, protecting jobs and supporting economic recovery. In 2020 - 2021, support for the COVID-19 pandemic response and Alberta's Recovery Plan totalled $5.1 billion, plus $460 million in capital investments. The government also deferred $2.5 billion in fees and taxes to help Albertans through the pandemic.
Alberta's government made significant investments in Albertans during the pandemic, including $626 million to small businesses impacted by the public health measures, an additional $1.5 billion in health-care, and accelerating the Job Creation Tax Cut to make Alberta one the most competitive jurisdictions in North America to invest and start a business.
Spending continues to be anchored by sound fiscal principles that ensure the government is fiscally responsible with Albertans' tax dollars. This past November, Alberta's government committed to keeping the ratio of net debt to gross domestic product (GDP) below 30 percent. This ratio compares what Alberta owes with the size and strength of its economy.
Alberta's overall level of debt remains low compared to most other provinces, which aligns its overall spending levels with other comparable provinces. The Alberta government is committed to setting a timeframe for balancing the budget and repaying debt. They said this will be done once the pandemic is over and the government has a clearer idea of the long-term global impacts.
Alberta's economy is emerging from the depths of the downturn. While Alberta's real gross domestic product (GDP) contracted by an estimated 8.2 percent in 2020, many economic forecasters have predicted that Alberta will lead all provinces in growth this year, including the Conference Board of Canada, BMO, CIBC and Desjardins. As of May, Alberta has already recovered about 86 percent of the jobs lost between February 2020 and April 2020.
In 2020 - 2021, Capital Plan spending totalled $6.9 billion, including $1.1 billion spent in response to COVID-19 and support of Alberta's Recovery Plan.
- Five new health facilities are under construction. Twelve health facilities are currently being renovated, modernized or expanded.
- Alberta rehabilitated 830 kilometres of road and completed 111 new roads and bridges.
- The province completed 20 school projects and 68 others are underway.
- Alberta completed 705 new housing units and 1,842 more are under construction.
- The province renovated two courthouses and five courthouse projects are currently underway.
Alberta's government, along with the Canada Infrastructure Bank and eight irrigation districts, partnered on a historic $815-million investment in irrigation infrastructure to support economic recovery in the province.
The investment is expected to lead to the expansion of more than 200,000 irrigated acres over the next several years.
Alberta is now the most tax-competitive jurisdiction for businesses in Canada and among the most attractive investment destinations in North America.
In 2020, Alberta reported $455 million in venture capital investment across 51 deals, a 100 percent increase in over-investment in 2019, further diversifying the economy. Alberta's government is committed to making life easier for Albertans and their businesses by reducing regulatory requirements by one-third by 2023.
Alberta achieved an "A" grade as the most improved province in the country on the Canadian Federation of Independent Business' annual Red Tape Report Card.
In response to COVID-19 and the associated economic crisis, the government spent $475 million on accelerated capital maintenance and renewal projects, supporting thousands of jobs while maintaining the long-term value of the government's capital assets. The government launched various sector strategies to drive growth in other key industries, including tourism, technology, aviation, aerospace, logistics, and financial services.
For example, the government launched the Site Rehabilitation program and the Alberta Petrochemical Incentive Program, which will generate 5,300 direct jobs and 90,000 direct and indirect jobs, respectively. Also, the Department of Agriculture and Forestry facilitated $359 million in investment in the agri-food sector, which is expected to lead to the creation of 1,147 full and part-time jobs.
Alberta continues to fight for the energy sector and hard-working Albertans.
The Enbridge Line 3 Project is replacing 1,600 kilometres of 60-year old pipeline between Alberta and Wisconsin, restoring original capacity from the current 390,000 barrels per day to 760,000 barrels per day and providing reliable energy, jobs and economic benefits on both sides of the border.
Construction continued on the Trans Mountain Pipeline Project, which will create 1,800 good-paying jobs and increase capacity from 300,000 to 890,000 barrels per day when operational in December 2022.
Alberta's supply share of global oil consumption in 2020 increased from 3.1 percent in 2019 to 3.3 percent in 2020, despite the worldwide impacts of the COVID-19 pandemic on global oil consumption.