Finance Minister Travis Toews presents the 2021 Alberta budget.

By David Opinko

2021 Alberta budget revealed with “record” health spending, no new taxes

Feb 25, 2021 | 3:48 PM

EDMONTON, AB – The Government of Alberta has unveiled the 2021 provincial budget.

Finance Minister Travis Toews presented the budget document in the legislature Thursday.

The provincial deficit for the 2021-22 fiscal year is projected at $18 billion. This is less than the $21 billion that was forecast last year but more than what Premier Jason Kenney had said earlier this week.

The overall debt was about $5 billion a decade ago and is expected to reach $116 billion next year and $132 billion by 2024.

Toews says oil prices, more COVID-19 vaccinations, and other indicators suggest the economy will begin to rebound by the latter half of this year.

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Those who were hoping that this would mean the provincial budget would be balanced in the next couple of years might be left disappointed.

“While balancing the budget remains a high priority for this government, the pandemic and the resulting economic realities have significantly impacted the revenues of the province and will delay the timing of a balanced budget.”

He said overall spending has increased especially in areas like healthcare.

Recently, the Business Council of Alberta had suggested creating a new sales tax in the province as a means of maintaining investments while further paying down the debt.

Toews said this will not happen.

“To those who would suggest we should simply raise taxes – I say no. Raising taxes at the best of times impedes economic growth, and with the challenges we face today, it would undermine the economic recovery that is so essential.”

The budget includes three main categories – investing in healthcare, preparing for recovery, and maintaining responsible spending.

Highlights from these categories include:

Healthcare:

• Increase health spending by $900 million to $23 billion:
  • 5.4 billion for physician compensation and development (including academic medicine)
  • $3.5 billion for community care, continuing care and home care programs, including $20 million over 4 years for palliative and end of life care
  • $1.9 billion for drugs and supplemental health benefits.
  • $34 million for children’s health supports to expand mental health and rehabilitation services for children and youth
  • $140 million over 4 years for mental health and addiction services
• $1.25 billion “COVID-19 Contingency” to address costs related to responding to the pandemic including surgical wait times and backlogs
• $16 billion for Alberta Health Services operations
• $3.4 billion over three years for health-related capital projects and programs:
  • $2.2 billion for health facilities, with $143 million for five new projects
  • $766 million for Alberta Health Services self-financed capital, for parkades, equipment, and other capital requirements
  • $343 million for capital maintenance and renewal of existing facilities
  • $90 million for health department IT projects

Preparing for Recovery:

• Accelerating the decrease in corporate taxes from 12 per cent to eight per cent
• An additional $3.1 billion to support recovery plan initiatives
• $1.7 billion more in capital funding in 2021-22 than in 2020
  • Now totals $20.7 billion
• Investing $1.5 billion to diversify the economy in 2021-24 including investments in established and emerging sectors
• Innovation Employment Grants to support small and medium-sized businesses inventing in research and development
• Developing a framework to protect intellectual property in Alberta

Maintaining Responsible Spending:

• A “careful” approach to spending will mean more investments in priority areas like healthcare, education, and job creation
• Three fiscal anchors:
  • Keeping net debt below 30 per cent of GDP
  • Deliver services more cost-effectively by bringing spending in line with other comparator provinces
  • Re-establish a plan to balance the budget post-pandemic
• Operating expense is $1 billion higher than the 2020-21 forecast
• $18.2 billion deficit is targeted for 2021-22. This is $2 billion less than forecast
  • Targeted deficit of $11 billion in 2022-23 and $8 billion in 2023-24

General Budget 2021 funding highlights:

• $23 billion for health services
• $8.2 billion operating expense for kindergarten to grade 12 (K to 12) education services
• $6.3 to $6.4 billion operating expense for social services ministries
• $136 million over 3 years for the Alberta Jobs Now program
• $166 million over 3 years for the Innovation Employment Grant
• $500 million in 2021–22 for additional investments in economic recovery

Despite being optimistic that things will get better in the coming years from an economic perspective, Toews was clear to state that there are several challenges that lie ahead.

In fact, he said the federal government might just be the biggest one due to implementing new business regulations, increasing the carbon tax, and have otherwise “chased away” investments.

You can read more details on the Budget 2021 highlights here while the full 2021-24 Fiscal Plan is available here.