Opinion
Let the Good Times Roll –seemed to be the message from Minister Toews as he crowed Tuesday about the huge revenue boost coming in. In summary- “the economic recovery plan is working.” (Here is the link to the press conference and Second Quarter Update for 2021-22.) The job creation tax cut is working. The economy is growing and diversifying. Toews as MLA for Grande Prairie Wapiti highlighted the $2.5-billion (the Northern Petrochemical project) as well as the Amazon Web Services commitment to the Calgary Area.
Personal income tax and corporate income tax revenues are up but nothing like non-renewable resource revenues that have cracked a decade high (table below). The driving force was the bitumen producers who are bringing in a five-fold increase from what was budgeted. This turnaround is courtesy to five projects in the post-payout phase.
The timing is auspicious for Mr. Kenney. He now may be anointed as Savior of the party. A new narrative emerges- he stuck with the tough decisions and they are bearing fruit. The problem with all that is that most of these favorable plot twists are courtesy of the oil and natural gas price upswing and the largesse of the Canadian federal government with transfers still exceeding the resource revenue line.
| 2021-22 Second Quarter Fiscal Update ($milions) | ||||
| Revenue | 2021-22 Budget | 2021-22 Forecast | Change | % Change |
| Personal Income Tax | 11647 | 13075 | 1428 | 12% |
| Corporate Income Tax | 1891 | 2916 | 1025 | 54% |
| Non-renewable Resource Revenue | 2,856 | 10,908 | 8052 | 282% |
| Federal transfers | 10,181 | 11,367 | 1186 | 12% |
| Total Revenue | 43697 | 57917 | 14220 | 33% |
| Spending | ||||
| Education/Advanced Education | 13292 | 13316 | 24 | 0% |
| Health | 21,418 | 21588 | 170 | 1% |
| Community and Social Services | 3886 | 3745 | -141 | -4% |
| Total Operating ex, COVID | 48280 | 48875 | 595 | 1% |
| COVID-19 Economic Recovery Plan | 2669 | 2725 | 56 | 2% |
| Debt servicing costs | 2764 | 2484 | 280 | -10% |
| Total Operating Expenses | 53713 | 54084 | 931 | 2% |
The Politics
Whether any of this will translate into growing Kenny support is another matter. But with Danielle Smith and Brian Jean appearing above the parapet to officially challenge Kenney’s leadership, Kenney needs all the good news he can get. If Kenny fails in April, the fact of the matter is that Kenny looks as good as, or better than, his competition. Smith wears the baggage of the sellout of Wild Rose to Jim Prentice and Jean lacks charisma.
For Rachel Notley this may be good news- running against any of these tired face/ political brands- has to be promising. However she should be under no Illusion that fissures within her party on environment and fiscal policy can be kept hidden by polishing platitudes. Her last campaign- essentially fighting for Albertans as opposed to Kenney fighting for Alberta oil reveal two pugilists going at one another. The upcoming fight will become an epic battle and perhaps the most meaningful in policy terms since the Klein Decore “brutal” versus “nasty cuts” campaign of June 1993.
To Graham Thomson’s press conference question about a revenue review and sales tax, Toews expressed his personal support for a review prior to the next election. While saying that a sales tax is not appropriate fiscal policy today, he felt that a review panel should be given a blank sheet of paper- that is to say that a sales tax should be considered. If such a review is ongoing or completed, this will be a wedge issue that UCP may try to exploit into the 2023 spring election. Remember, during the 1993 election Klein’s no sales tax pledge, along with a prudent fiscal plan, carried the day.
Rachel Notley
On the environmental issue, It is no longer good enough to say that Alberta’s economy can be tweaked by green washing Net Zero and pretending that carbon capture will ease the transition. More Albertans, especially young Albertans, are awaking to the issue and want something done.
Coincidentally, municipal politics have shifted notably in Alberta. The two major cities continue to have progressive mayors and councils. Climate emergencies declared are symbolic and may win a few extra federal dollars. But the battle lines are drawn:-bike lanes, walkable communities, and the demise of developer-led automobile urban sprawl. It is not only Calgary and Edmonton councilors who have a different attitude. Rural reeves and councilors no longer accept the dictates of the province. Kenney’s naked support and defence of oil and gas companies refusing to pay taxes was the first straw. Then the province decided to pay out for the non-taxpaying companies, earning well deserved opprobrium from many municipal politicians. Cuts to municipal grants and the continuing nonsense of an Alberta police force to deal with rural crime has led to much disenchantment within rural Alberta. And of course the continuing fissures of the WEXIT and anti-vaxx rump within the UCP continue to haunt the UCP. All these things create conditions where the NDP could steal back some rural seats they won in 2015 with former cabinet ministers Danielle Larivee, Margaret McCuaig-Boyd and O’Neill Carlier.
For both parties the environment policy file will remain a challenge. The denialism of the UCP is strident and may make well-educated Calgarians think twice. For Notley, it will depend on how far she can go to appease the oilpatch’s Net-Zero proponents without selling out the green side of her party. Of course the NDP brain-trust probably knows there is no other Greener option.