Wrapping Up Gifts and Session – 2021 Comes to a Close
In what will be a surprise to absolutely no one, the fall sitting of the Alberta Legislature has been extended by an additional week at the time of writing. Six government remain on the Order Paper to be processed, including both the Infrastructure Accountability Act and the Election Statutes Amendment Act, 2021 (No. 2) which have been the centre of some debate since being read a first time.
There are ten private member bills which are stuck in second reading (with the exception of Bill 206 which has been referred to the Select Special Committee on Real Property Rights). It may be too soon to say whether or not the United Conservative Government will resume in February with a Speech from the Throne. Should this happen, bills such as the Cost of Public Services Transparency Act and the Traffic Safety (Maximum Speed Limit for Provincial Freeways) Amendment Act, 2021 would completely fall off the government’s agenda if not passed prior to prorogation. Of course, they could always be reintroduced when a new session began (or this discussion becomes a moot point should session merely adjourn).
Fiscal Update Summary
Long gone are the days of debating whether the UCP or NDP had a better plan to balance the provincial budget. Of course, neither party had any idea that we would be bombarded by the impact of a pandemic for nearly two years. While the government does not pretend that they have a chance at balancing the budget as promised in 2019, each fiscal update seems to be a bit more positive than the last.
The provincial government has reduced the deficit by more than $12 billion from Budget 2021 forecasting. Alberta is now projecting an annual deficit of $5.8 billion for this fiscal year, followed by yearly reductions which is expected to drop to $2.3B in 2023-24.
While this is excellent news on the deficit front, taxpayer supported debt is projected stay high at $101.5 billion. It is expected to rise up to $107.1 billion next year while settling at $106.6 billion in 2024.
Provincial revenues experienced substantial increases over projections, including a $14.2 billion increase to $57.9 billion this year. As this fiscal update outlines, much of Alberta’s economic resurgence can be attributed in part to soaring oil prices. Royalties for bitumen reached $6.1 billion above projections while crude oil exceeded expectations by $858 million.
WTI projections do appear to be strong, but the current economic climate and market volatility make projections difficult to predict. Last week, there was a huge double-digit drop in pricing which was obviously not reflected in the update. WTI is projected to sit at US$70.50/bbl for this year but expect to see a drop to $63.50 by 2023-24.
Despite this recovery, the updates make it clear that the coast is not yet clear.
“Risks remain elevated: pandemic impacts constrained short term energy supply growth, and now demand is returning with unexpected strength, causing what should be a temporary spike in oil and natural gas prices. This, combined with pent-up consumer demand, supply chain issues, including major flooding in British Columbia, are pressuring inflation and interest rates.”
We witnessed significant improvements with our projected net assets, though Alberta remains in the negatives. A $12.3 billion improvement is excellent; however, we are still $11.5 billion in the red. Alberta is projecting for those numbers to get even worse once again by 2023-24.
Budget Submission Speculation
Shifting focus from retrospective to consultative – the provincial government released its annual budget submission survey a short time following the release of the fiscal update. Albertans will have until January 15th to provide their submissions on the questions offered by the province with Budget 2022 anticipated to be released at the end of February.
As usual, the questions asked by the survey can be somewhat indicative of general themes that could compose Budget 2022 (though they cannot be taken as gospel until the budget itself is released). Looking at the fiscal update from November 30th, it is reasonable to expect another austerity budget in an effort to reduce spending to continue paving the road towards a balanced budget.
Question 12 in the survey asks Albertans to identify three fiscal umbrellas which they would like to see spending reduced “if the government needs to reduce spending”. Given the $5.8 billion deficit and more than $100 billion tax-payer supported debt load, it is incredibly unlikely that this government will not seek to further reduce spending. An interesting observation is that the survey writer elected not to sort the options in alphabetical order, putting health and education at the top and energy at the bottom. While this could very well be a random order, context is always important. On the next page, survey respondents are offered seemingly leading options for items such as supporting oil and gas, maintaining Alberta’s tax advantage, and investing in infrastructure.
It is interesting to see K-12 education listed on this survey question. During the 2019 provincial election, the party platform indicated that “a United Conservative government will maintain or increase education funding while seeking greater efficiency by reducing administrative overhead and pushing resources to front line teachers.” Semantics aside, the UCP has kept its promise of maintaining funding for primary education (with the common counter argument being that maintained funding despite an increasing student population actually amounts to a cut). While spending and funding are not always synonymous, including the possibility of reducing K-12 spending in the pre-budget survey gives rise to worry for school boards, teachers, parents, and students.
The survey also raises the question of whether the next budget could include some significant changes to the health portfolio. In addition to health being included in a question of what umbrellas should see reduced spending, the next question asks whether or not Albertans agree or disagree with “new fees for government services (some provinces have health care premiums, for example).” Bill 80 makes numerous changes to the Health Insurance Premiums Act, so this may be an item to watch in Budget 2022.
Elections Alberta Report on Social Media Fumble
Last week, the Standing Committee on Legislative Offices met to hear a presentation from Glen Resler, the Chief Electoral Officer of Elections Alberta on the subject of some controversy that arose from the 2021 municipal elections. On election day, a user of the Elections Alberta Twitter account got into a back-and-forth with economist Andrew Leach (a thread which has since been deleted). Leech had accused the account holder of pushing out incorrect information during the election.
One of the tweets in question read, “I’m sure you’re well aware of the federalist state, the three levels of government, and how extra veres (sic) and intra veres (sic) powers are assigned, just as much as an old tweet holds no value versus an up-to-date one. Move on, Andrew,”.
Elections Alberta representatives acknowledged that there were concerns about the wording on the equalization referendum questions, but ultimately stood by the information provided insofar as what the result of a ‘yes’ vote would mean.
“While the wording on the Elections Alberta website could have been more technically precise, the information provided explicitly stated that a yes vote would not end equalization payments, and explicitly explained the extent to which the outcome would be binding.”
-Glen Resler, Chief Electoral Officer of Elections Alberta
He would also go onto say that he would be recommending that Alberta develop a framework for information provision on referendum questions be developed to ensure a balance of proponent and opponent messaging.
While certain details that are protected by confidentiality could not be disclosed (including whether or not the offending staffer is still employed by Elections Alberta), committee members were able to have some of Albertans’ questions answered. Following an internal investigation, it was determined that the individual violated codes of conduct and other policies as they responded to individuals without prior approval from superiors.
Resler suggested that "while I appreciate the quick action that my office took to respond to this incident, this should never have happened.”
We want to wish everyone in the Alberta Counsel family a Merry Christmas and Happy Holiday season! Our next issue of The NEWS will be released on January 11, 2022.
