Finance Minister Travis Toews is seen in Medicine Hat on March 9. (CHAT News File Photo)

By Alex McCuaig

Fiscal update

Province forecasts $21B deficit, unemployment rate to remain high

Nov 24, 2020 | 2:58 PM

MEDICINE HAT, AB – Alberta’s mid-year fiscal update shows this year’s provincial deficit won’t be as bad as predicted in the first-quarter fiscal statement and paints a bleak picture of the province’s job market.

The province will still be spending $21.3 billion more than it takes in for the 2020-2021 fiscal year, with half of the improved position from the first quarter due to $2.2 billion more in federal government transfers which are now the highest revenue source for Alberta.

The mid-year update forecasts the province’s goal to reach 2019’s 6.9 per cent unemployment rate won’t be achieved until 2023. The Alberta unemployment rate is expected to rise to 11.6 per cent this year before going down to 9.5 per cent next year.

“What I would say to Albertans looking for a job is that we are doing everything we can to see economic recovery in this province,” said Alberta Finance Minister Travis Toews. “We know that is critically important for Albertans who need opportunity right now, who need an opportunity to provide for themselves and their family.”

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Toews says the economic downturn, pandemic and crash in the price of oil represent a triple-whammy to provincial finances.

It’s a hit significant enough that the government will no longer be able to keep its commitment to balance the budget by 2023, says Alberta Finance Minister Travis Toews.

“Reluctantly, but necessarily, we will have to delay balancing the budget,” said Toews.

He added he doesn’t have a definitive date as to when that will occur.

Despite the situation, the finance minister says the province has no plans to introduce a provincial sales tax.

“To introduce a sales tax at this point of great economic challenge would be poor economic policy,” said Toews.

He says there is positive news on the employment front as Alberta has recovered “more than 258,000 of the 361,000 jobs lost between February and April. The unemployment rate has fallen steadily from highs it hit this spring.”

He adds the province will be embarking on increasing capital spending on infrastructure projects to help spur job creation.

In the long-term, that will increase private sector investment by improving productivity and competitiveness.

In the short-term, they will provide tens of thousands of jobs to Albertans that need an opportunity, said Toews.

The value of goods and services produced by Albertans is also not expected to recover to 2019 levels until 2023 with current forecasts predicting an eight per cent drop in the provincial gross domestic product rate.

Provincial total expenses are forecast to remain in the range of $57- to $58-billion range during the next two fiscal years.