Insights & Analysis

February 23, 2021

Five things to get right in the 2021 Provincial Budget

The Alberta Government’s 2021 budget will be like none we have ever seen. Last year at this time, the government was contemplating a fiscal path forward based on the pillars of reducing taxes, stimulating the economy, and controlling costs. This year, we continue to struggle with the lasting impacts of a pandemic that has taken thousands of lives, done untold damage to the provincial economy, and driven unemployment into the double digits—with young Albertans disproportionately affected. As a result of tumbling revenues and rising costs to support Albertans through the pandemic, the projected deficit has risen from $7.3 billion to $21.3 billion for 2020/21. This Business Council of Alberta has been supportive of these efforts to support the province through this time of crisis.

We also recently released a paper, Towards a Fiscally Sustainable Alberta, which outlines our concerns about the province’s long-term fiscal trajectory and opens a discussion of potential solutions on both the expense and revenue sides of the equation. But this budget cannot be about the long term; it must be about the short term—vaccine rollout, a controlled and safe re-opening, ongoing support for affected Albertans, and putting the necessary policies in place for a quick and dynamic economic recovery. Our longer-term recommendations must wait largely until the province is back on its feet. Although this is a good time to begin laying out parts of that pathway, especially given that budgets are also a good time to signal longer-term policy trajectory.

That said, attracting investment and stimulating job creation and economic growth is by far the most effective way to get Alberta—and Albertans—on more sustainable financial footing. This is why it is critically important that the budget also lay the groundwork of an investment-friendly environment that contributes to a clearly articulated long-term vision of the province. With high unemployment and a growing skills mismatch, it will be equally essential that all Albertans are prepared to contribute to this goal.

So how do we navigate or even interpret this budget? Here are five things we’ll be looking for on February 25.

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From vaccine roll out and support for tech and innovation to a plan to address Alberta's long-term unemployment and fiscal challenges, here are five things to watch out for in this year's Provincial Budget. #abbudget #abpoli #ableg Click To Tweet

Vaccine rollout as the utmost priority

Vaccination will be an essential component of moving forward in the province’s staged easing of restrictions so Albertans can more fully resume normal activities. In fact, no economic recovery policy or action will be more effective or more important than a fast and efficient vaccine rollout.

While vaccine availability is primarily determined at the federal level, we recognize that the province can do little until steady supplies are received through federal channels. After that, we look to the province to administer the injections quickly, efficiently, and fairly. Doing so will require transparent guidelines on who will be given priority (and when) as well as addressing barriers to information and access, especially for low-income, Indigenous, and racialized groups. It will also require clear, consistent communication on the science and benefits of the vaccine to ensure maximum uptake. As heard in a recent member session with Minister Shandro, “vaccines equal freedom” should be a part of the message. Vaccinations will be critical to getting our economy and livelihoods back on track.

Beyond clear communication, the province should think big and plan ahead by:

  • Converting large, available spaces to safely and quickly administer the vaccine;
  • Ensuring a vaccination site is located within easy access to all Albertans;
  • Keeping vaccination sites open for long hours—and possibly overnight—to increase the pace of vaccination as well as enable access for individuals with different schedules and needs;
  • Working with private sector channels such as pharmacies and major employers to increase the speed and scale with which vaccines can be deployed; and
  • Utilizing mobile vaccination units for those with mobility limitations and individuals who may be harder to reach.

All of this must be underpinned by an accessible and reliable system for booking appointments and confirming vaccination. Additionally, given the high level of uncertainty of vaccines, it will be essential to have a plan—including a plan A, B, and C—to swiftly respond to the changing availability of vaccine and needs of Albertans.

We encourage the province to contemplate some prioritization of critical workers in subsequent vaccine rollout phases—following health care workers and vulnerable populations—to protect critical infrastructure and services. To help facilitate this and subsequent prioritization, we also recommend establishing a “Standby List” of Albertans willing to receive the vaccine when it is available, to allow greater ability to fill any open vaccination spots with the “next highest priority” person, and also to better forecast demand.

All of these components will require sufficient funding to facilitate well but it is worth our investment and ingenuity to do this right. Any money spent in the short term on vaccine distribution and rollout will be more than offset by a quicker return to more normal economic activity.

A plan to capitalize on climate change investment opportunities

Despite the seismic economic shock created by the COVID-19 pandemic, it has become clear that the global appetite to drive down emissions has continued unabated. This trend can be either an anchor on the Alberta economy, or it can fuel the engine of our post-COVID recovery.

In this spirit, we are looking for the provincial budget to chart a bold and credible pathway, including investments and partnerships, that work towards Alberta’s role in a net-zero-emissions future for Canada, while seizing on opportunities to attract investment and create economic growth where Alberta has competitive advantages. Working with the federal government, post-secondary institutions, and the private sector, the province has a tremendous opportunity to position Alberta as the global leader in areas of emissions reductions (e.g., carbon capture, utilization and storage (CCUS); direct air capture; small modular nuclear) and future fuels (e.g., hydrogen).

A commitment and focus by the provincial government that is material and strategic will enable Alberta to become the global leader in reducing domestic emissions and supplying the world with lower carbon fuels and green technologies. Doing so will accelerate the short-term recovery and put the province on a more stable and secure path to long-term prosperity, while also enhancing the competitiveness of our province’s largest sector.

Attracting investment and stimulating job creation and economic growth is by far the most effective way to get Alberta—and Albertans—on more sustainable financial footing.

Enhanced training and development opportunities for those who are unemployed or precariously employed

It is no secret that Albertans are struggling more than other Canadians to find work. The double-whammy of a collapse in commodity prices and the fallout from the global pandemic has led to a staggering unemployment rate of 10.7% as of January 2021. As a result, Alberta’s economy is predicted to recover more slowly than other provinces.

More concerning still, Alberta has the highest rate of long-term unemployment of any province in Canada. Long-term unemployment is linked to the atrophy of skills and harm to individual well-being. Individuals in this situation also tend to have greater reluctance or difficulty in re-entering the workforce as the economy recovers.

At the same time, the skills needed in the workforce continue to evolve. Albertans who are out of work or facing precarious employment need assistance with updating or enhancing their skillsets. Enhanced training and re-skilling programs are critical to getting Albertans back to work, and to accelerating the economic recovery. There are literally thousands of open jobs in Alberta right now, waiting for the right skilled applicants in fields from technology to agriculture.

As such, we are looking for the provincial budget to support individuals facing unemployment via skill development and training in order to not just limit the consequences of long-term unemployment but also ensure all Albertans can meaningfully contribute to the needs of a changing economy. This budget would the prefect time to outline a major job training and skills initiative for Alberta.

Support for tech & innovation

Technology is a critical growth opportunity for Alberta, with burgeoning expertise in artificial intelligence, big data, energy tech, and unmanned systems. The provincial government previously noted this in its Alberta Recovery Plan: “With a young and highly educated population and business-friendly environment, we are well-positioned to capitalize on this rapidly growing sector.”

In the same report, the government noted it would be considering the Innovation Capital Working Group’s recommendations. We believe now is the time to further advance the recommendations in this report, to set Alberta up for future success in an economy in which ideas, innovation, and technology are all highly valued.

As a starting point, we hope to see the implementation of Recommendation 1: to establish the Premier’s Advisory Panel on Technology and Innovation, which would “provide strategy, stewardship, guidance, and advice to ensure Alberta develops a competitive, robust innovation ecosystem.”

Furthermore, we need to continue to aggressively create the conditions to enable the necessary capital, talent, and customers for global-leading innovation to occur. Currently, talent is a key barrier to growth of the tech sector. We hope to see the creation of a dedicated experienced tech talent nominee program that is competitive with other provinces—using the energy infusion of immigration to enable business growth. On the capital side, we encourage government to continue to grow capital support for Alberta Enterprise Corporation when appropriate, maintain sufficient funding for Alberta Innovates, and implement a strategy within the Invest Alberta Corporation to continue to attract tech businesses to the province.

A plan to optimize government services for Albertans

Alberta’s spending is out of line with other provinces and has been for more than a decade. Minimizing provincial spending growth and optimizing the value of public services to Albertans will therefore be an essential component of building a more fiscally sustainable Alberta. Many recommendations to curb spending have already been detailed in the MacKinnon Report on Alberta’s Finances, and the Council has supported the provincial government in moving these efforts forward.

However, deep spending cuts in the midst of a pandemic could come with great consequence to Albertans, especially to those most vulnerable. As such, the provincial government should carefully consider the unintended costs of any major cuts to social prosperity and well-being. We believe the first and foremost goal right now should be to support Albertans and Alberta businesses fully through the pandemic, while a secondary goal should be to make a plan to gradually take steps to optimize the value of public services over the next few years. Options such as holding budgets at similar levels and negotiating prudent employee contacts are good options to begin this process.

Thus, in the short term, we hope to see the government continue to provide support to Albertans through the pandemic, while laying the groundwork to curtail spending growth outside of temporary support measures. Ultimately, the goal should be to provide the highest quality of government services at the lowest cost to Alberta taxpayers.

Albertans deserve to get excellent value for every tax dollar, and provincial budgets are a key place to show that.

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