Budget 2020 contains many measures designed to offset the bad news, many of them bundled into the already announced Blueprint for Jobs. Some build on previous initiatives. Others are new. In the pages ahead we will identify the most important of those measures and speak to their significance. Given the year’s shaky start, it might be a surprise to discover that Budget 2020 is also hopeful.
Since the great oil crash of 2014/2015 Albertans have become accustomed to layoffs, bankruptcies, low oil and natural gas prices, delayed pipelines, blocked pipelines, tanker bans and an attitude that sometimes borders on hostility from the federal government caucus. It was recently revealed that one Liberal M.P. from Ontario has spent money to buy Facebook ads encouraging Canadians to sign his anti-oil sands petition. It is highly likely that protestors will attempt to block the construction of the Trans Mountain pipeline. Albertans would be forgiven then if they conclude that 2020 will be more of the same and that the oil and gas industry in Alberta is in a long, slow decline.
That’s why the optimism that brightens the normally dull prose of the Budget documents may appear out of place, but perhaps there’s good reason to look past the recent bad news. It is human nature to scan for trouble and when we scan for it these days, it’s easy to find. But there is good news ahead too, news that will almost certainly improve the lives of Albertans.
As Budget 2020 notes, for the first time in years, this year will see significant progress on long delayed pipelines. Construction is already underway on Trans Mountain pipeline near Edmonton and construction will commence elsewhere once the Canadian Energy Regulator identifies the final routing in British Columbia. TC Energy has announced that they have purchased almost 100% of the right of way for Keystone XL and will begin construction in August. Likewise, Enbridge has cleared almost all legal hurdles to move oil through the US via the long-delayed Line 3. Once the oil starts to flow the impact will be felt quickly as oil volumes increase and the price differential with West Texas Intermediate crude, shrinks. Small and medium sized conventional producers are likely to benefit the most.
Some of the government’s projections are surprising. Minister Toews told the legislature that Alberta’s revenue will grow by an eye popping 7.8% over the next two years, with most of the growth coming from income taxes, bitumen royalties and federal transfers. But that makes some sense if the Alberta economy grows anywhere near as quickly as the Alberta Government forecast of 2.5% in the 2020 calendar year, a significantly higher forecast than the private sector average of 1.9%. He also told the House that the deficit will be $1.2 billion dollars lower than projected just 4 months ago in Budget 2019. Spending in the 2020-21 fiscal year will shrink by 2.9%. The Minister also cautioned that the spread of the coronavirus and it’s impact on the world economy created uncertainty that he would not attempt to quantify.
The Budget of course speaks of the spending reductions set in motion in last fall’s budget, but it doesn’t dwell on them. To the contrary, this is a Budget that emphasizes something approaching optimism. It notes the recommendations in the Mackinnon Report and it’s recommendations including finding new ways to deliver services and it speaks of the progress the government has made. It also attempts to make sexy the decidedly non-sexy world of red- tape reduction, the laborious but important task of trimming unnecessary regulations and administrative burden. The Minister also spoke of the importance of freeing up interprovincial trade. The Job Creation Tax Cut, the initiative to cut corporate taxes by 30%, receives a prominent mention in the Budget documents.
In many respects Budget 2020 seems to be out of step with the times. It is more optimistic than we might expect, some of which is reflected in the tone of the speech and some in the Government’s growth projections. It emphasizes opportunities even as Indigenous protestors blockade Canada’s rail lines and angry Alberta public servants harangue ministers. Where does this hopeful attitude come from? We get the feeling that the Alberta Government knows some things that they aren’t quite ready to reveal.