On 25 February 2021, Jason Kenney’s United Conservative Party government tabled its third budget, announcing very few major changes to either spending or taxation, while also projecting a deficit of $18.2 billion for the 2021-22 fiscal year.
1. Alberta remains Canada’s lowest-taxed province by a sizable margin. According to the budget document, Alberta’s provincial government would generate at least $13.3 billion more in taxes annually if it had the same tax system as Canada’s next lowest-taxed provinces (namely, Ontario and Saskatchewan). Alberta is also the only Canadian province without its own sales tax. Previous analysis has estimated that the implementation of a 5% provincial sales tax in Alberta would generate approximately $5 billion in new revenue annually.
2. The budget announces additional pandemic-related funding. According to the budget document, this consists of “$1.25 billion specifically for pandemic-related costs including extra health system capacity, treatment, personal protective equipment, contact tracing and testing and vaccine administration.” This includes $118 million in provincial funding for the Critical Worker Benefit, which will provide a one-time payment of $1,200 to some individuals working on the front lines during the pandemic. Having said that, in Alberta, for every $1 spent by the provincial government on COVID-19, more than $13 comes from the federal government.
3. This government’s hard push to reduce the size of Alberta’s public service continues. In its first budget, tabled in October 2019, this government announced its intent to reduce the size of Alberta’s public sector by approximately 7.7% (an announcement that will likely result in the loss of more than 16,000 public sector jobs between 2019 and 2023 through a combination of layoffs and attrition).
At a bare minimum, this budget could have announced funding for additional Registered Nurses and health care aides at existing long-term care facilities.
4. The quality of post-secondary education will continue to deteriorate, while its cost to students will increase. This budget announces a decrease in nominal funding for post-secondary sector of between 6% and 8%. After accounting for both population growth and inflation, that represents an actual decrease of between 8% and 10%.1 This will put pressure on institutions to cut staffing positions, increase class sizes, increase tuition fees and attract more international students (keeping in mind that this is the third consecutive Alberta budget announcing substantial cuts to this sector).
5. The budget misses an important opportunity to bring about transformative changes to the province’s long-term care sector. In light of the number of COVID-related deaths in long-term care facilities, both among residents and staff, major changes to the sector would have seemed appropriate. At a bare minimum, this budget could have announced funding for additional Registered Nurses and health care aides at existing long-term care facilities.
6. The budget contains no major initiatives with respect to child care, even though such investments could assist with economic recovery. It is important to remember that the pandemic has had a disproportionate impact on women. Further, it is not just advocates who want increased child care investment at the present juncture; the Bank of Canada Governor recently underlined its importance to economic recovery. (This government had previously announced that it would not be extending the previous government’s $25/day child care pilot project).
7. The budget includes some good news with respect to affordable housing. First, it includes a 5% nominal increase in operating funding for provincially-owned social housing units (but after accounting for both inflation and population growth, this is akin to a 3% increase). Second, the budget announces a $16 million annual increase in financial assistance provided to low-income households who rent from for-profit landlords—indeed, the 25% cut to the Rental Assistance Program, announced by this government in its first budget, has been restored.
This budget chooses to hold the line on very low rates of taxation, the trade-offs for which are insufficient levels of social investment and a large deficit.
8. The budget also contains some bad news for affordable housing. Funding for capital maintenance for subsidized housing will see a 6% nominal cut over the upcoming fiscal year (which is more like an 8% cut after accounting for both inflation and population growth).
9. Alberta’s affordable housing picture remains dire. Three things are worth noting: 1) the percentage of Alberta households in core housing need has been rising steadily over the past three Census periods; 2) on a per capita basis, Alberta has far fewer subsidized housing units than the rest of Canada; and 3) Alberta has been very slow to sign a bilateral agreement with the federal government with respect to the Canada Housing Benefit (even though the initiative was supposed to take effect 1 April 2020).2 I’ve previously written about the state of affordable housing in Alberta here.
10. No major investments were announced with respect to homelessness. This is regrettable in light of the fact that: a) many emergency shelters in Alberta are not able to maintain two metres of distance between residents during COVID (as recommended by public health officials); b) targeted investment in homelessness can result in savings to other public services; and c) homelessness is projected to rise in some municipalities as a result of the economic crisis.
In sum. Budgets are about choices and trade-offs. This budget chooses to hold the line on very low rates of taxation, the trade-offs for which are insufficient levels of social investment and a large deficit.
1 The budget projects 1.4% inflation and 0.6% population growth for 2021 (p. 14).
2As of 31 December 2020, seven provinces and territories had signed agreements, five of which were already dispersing funds to households in need.
I wish to thank the following individuals for assistance with this blog post: Ricardo Acuna, Fiona Clement, Stéphan Corriveau, Susan Falvo, Martha Friendly, Lorian Hardcastle, Trevor Harrison, Ron Kneebone, Mel McMillan, Lauren Montgomery, Bill Moore-Kilgannon, Rick Mueller, Lars Osberg, Alejandro Pachon, Rakhi Pancholi, Alyssa Pretty, Katie Raso, Angela Regnier, Sydney Sheloff, Christopher Smith, Lee Stevens and Hitomi Suzuta.