UCP budget will get good ship Alberta through the storms

We are well- positioned for recovery, says Mike Holden.

Despite growing up on the prairies, some of us tend to use nautical metaphors when describing our economic and policy challenges. To indulge once again in that, Thursday's provincial budget was designed to keep HMCS Alberta afloat for the remainder of the pandemic storm. It focuses on supporting Albertans through this difficult time, patching the ship and helping us ride the waves until we see clear skies once again.

There is really one question on the minds of Albertans: “Will this budget get us to the other side of the storm?”

We think the answer is yes.

In advance of the budget, we identified several areas for action to help Alberta emerge faster and stronger. First and foremost was making vaccine rollout the province's top short-term priority. Simply put, no economic recovery policy or action will be more effective or more important than a fast and efficient vaccine rollout. With $1.25 billion dedicated to pandemic and vaccine-related spending, the government clearly sent the message about its top priority.

We were also looking for measures to support short-term economic recovery, while planting the seeds for longer-term success. The budget included positive steps in this direction, with $3.1 billion dedicated to growth strategies for hard-hit and high-growth sectors. We particularly liked seeing additional funding for innovation, tourism and infrastructure, and a major new jobs and training program to help Albertans update their skills and find work. Training people for new jobs will be critical as Alberta has the highest rate of long-term unemployment in the country, even as thousands of jobs remain open in sectors like technology

Now is not the time for deep cuts, not when many Albertans are struggling.

and agriculture. These actions should pay dividends, as we are already seeing signs that Alberta's economy is beginning to turn around.

Where the budget could have gone further is on capitalizing on climate action as an opportunity. What Alberta still needs is a plan that is strategic, ambitious and material for the energy sector in being a global leader in emissions reduction. This is important because it can increase the competitiveness of our largest industries, and help attract an outsized proportion of the federal $100-billon stimulus. Working with the private sector and the federal government could position Alberta as a global centre for environment, social and governance, or ESG, and emissions reductions technology and practice.

Now, if the budget gets us to the other side of the storm, what do we do once the seas calm and we can survey the damage? Attention then must focus on rebuilding the ship and charting a sustainable fiscal course to the future.

This budget saw the province largely hold the line on government spending, with the exception of COVID-19 programs and additional support for health care. This is important, as our research shows that government spending in Alberta is 11 per cent higher per person than the average of the other nine provinces. We spend more but don't get noticeably better results. Holding the line on spending is a reasonable way to bring costs closer in line without a dramatic shock to the system at a vulnerable time. Efficiency must be fiscal job No. 1, as Albertans deserve to get good value for every tax dollar. But now is not the time for deep cuts, not when many Albertans are struggling.

There are more challenges ahead. For decades, Alberta governments have been able to spend more than other provinces while imposing a relatively light tax burden because we could make up the difference with natural resource royalties. That isn't going to work forever. While now is not the moment for big changes, in the coming years there is a major opportunity to build a reimagined fiscal model. Alberta will need to streamline its expenses and embark on the necessary conversation about our revenue model. A reimagined fiscal model could be one that makes Alberta an even more competitive place and one that attracts people, investment and economic growth to the province.

Because once the storm lets up, nothing will put more wind in our sails than a strong economic recovery.