Budget 2021 was massive. Not only the size of the document (724 pages) but in the volume of spending. It promises $101 billion in new spending over the next three years and will generate a deficit of $154.7 billion this year. Throughout the pandemic, the Business Council of Alberta has supported federal efforts to deal with the crisis and protect people and businesses, even at significant cost.
While we are not out of the COVID-19 woods yet, it is time to look ahead and begin positioning Canada as a globally competitive economic and environmental leader. Budget 2021 has something in it for everyone, but in spraying a lot of fiscal “water,” it misses many of the most important “fires” that will help get Canada back on a long-term path to prosperity and competitiveness.
Importantly for Alberta, it doesn’t do enough to capitalize on how the resource sector can help Canada achieve its environmental and economic goals.
First though, on the positive side is a robust investment in childcare. The evidence is clear that $1 put into childcare and early childhood education pays a return of $1.50 to $2. This investment is about the future, it drives the economy, and is one of the best long-term investments a nation can make.
There is also significant funding for skills and training, something needed in Alberta. With the nation’s highest proportion of long-term unemployed people, combined with automation, energy sector evolution and COVID-19, many jobs in Alberta are not coming back; or if they are coming back, they will look very different. Many Albertans will need support to reskill and retrain for new roles, in ways reflective of Alberta’s economic and competitive advantages.
It’s also positive to see the government’s investment in growing the innovation ecosystem. While not perfect, it increases funding available for research, start-ups and data, and IP. Rural broadband expansion will also enable all corners of our nation to be connected digitally to help drive commerce and investment.
Where the budget fell short for Alberta is in ensuring that Canada’s resource sector — oil and gas, energy, agriculture and forestry — can be global leaders in performance and innovation. The budget spends a lot of money but does not lay out a plan for growth — one that will enable job creation, investment and company spending in the long term. It is not rooted in the sound recommendations of the government’s own Industry Strategy Council.
Specific to Alberta, the budget does speak heavily to carbon capture, utilization and storage (CCUS) as a lynchpin for the future — which it is — but many uncertainties exist. The federal budget earmarks $319 million for CCUS research and development — short of what will be needed to make this technology fully viable. A 90-day consultation process will be launched on a Canadian tax credit similar to the U.S. 45Q credit, but it remains to be seen how competitive it will be to the U.S. version. Getting it wrong will send CCUS investment dollars south of the border.
Hydrogen, specifically blue hydrogen, is an immense opportunity for Alberta and Canada, but the budget is completely silent on it. The focus instead is entirely on green hydrogen, which is less viable and much further down the road.
The budget creates tax breaks and funding for emissions reductions product manufacturing, but it goes to lengths to avoid mentioning Canada’s resource sector, focusing instead on things like wind turbine manufacturing, green hydrogen, steel and cement manufacturing. Canada’s resource sector is a significant contributor to Canada’s economy and emissions profile. We had hoped to see the budget recognize the sector as an important part of the climate solution.
The federal budget has many good elements and includes something for everyone. Yet in doing so, it misses the opportunity to make focused choices for Canada to be an economic and climate leader, and in ensuring that Alberta — one of the hardest-hit provinces in the country — can be a significant part of that goal.
As appeared in the Calgary Herald
Adam Legge is president of the Business Council of Alberta.
Feature image credit: Calgary Herald