Alberta will post the largest deficit in its history when it provides an economic update later this week, Premier Jason Kenney says, warning that a “great fiscal reckoning” is coming.
Mr. Kenney’s declarations came as part of a small cabinet shuffle that he said will help steer the province through its recovery from the economic devastation of the coronavirus and slumping energy prices. He compared Tracy Allard, incoming Minister of Municipal Affairs, to the U.K.’s Margaret Thatcher, the former prime minister known for her distaste for large governments and taxes.
On Thursday, Alberta will release a first-quarter update with a revised deficit projection for 2020-2021 of more than $20-billion, Mr. Kenney told reporters.
“This is going to be the biggest deficit in the history of Alberta by a country mile,” the Premier said on Tuesday. “There is a great fiscal reckoning on the horizon.”
In February, the United Conservative Party government forecast a deficit of $6.8-billion for the 2020-2021 fiscal year. That was before the coronavirus caused scores of businesses to be shuttered and put thousands of people out of work. Trevor Tombe, an economist at the University of Calgary, said he expects Thursday’s update will put the deficit at 7 per cent to 8 per cent of GDP, up from the February forecast of 1.9 per cent. The previous record, he noted, was 6.8 per cent in 1986, and even during the Great Depression, the deficit never exceeded 4 per cent of GDP.
In shuffling his cabinet, Mr. Kenney promoted Kaycee Madu to Justice Minister. Mr. Madu, a lawyer from Nigeria who had served as municipal affairs minister, is the first Black person in Canada to become a provincial justice minister, the Premier noted. He represents Edmonton-South.
Ms. Allard, who represents an area rich in energy, has an “iron fist in a velvet glove,” and that will help in her new role, Mr. Kenney said.
The provincial government has clashed with its municipal counterparts over money. Alberta, for example, last year demanded rural municipalities cut taxes for oil and gas firms, which created a stir as local politicians struggle to balance their books.
“It is critical that our municipal governments stop raising taxes, stop adding red tape that inhibits job creation, and focus with Alberta’s government on the overriding goal of economic growth, of job creation, of diversification, and of competitiveness,” Mr. Kenney said.
Lisa Young, a political scientist at the University of Calgary, said Mr. Kenney’s characterization of Ms. Allard as Alberta’s Margaret Thatcher foreshadows further conflict with municipalities.
“It doesn’t suggest a peaceful fall,” she said. “There’s going to be a lot of saying ‘no’ on this file.”
Mr. Madu, the new Justice Minister, replaces Doug Schweitzer, a high-profile Calgary representative, who was appointed Minister of Jobs, Economy and Innovation. This new ministry replaces Economic Development, Trade and Tourism. Tanya Fir, who held that portfolio, was bumped out of cabinet.
Janet Brown, an independent pollster and political analyst in Calgary, said the Premier is signalling a shift in priorities due to COVID-19 with the move of Mr. Schweitzer to the newly named department.
“This whole idea of jobs, economy and innovation – I think those are the three words that might even end up replacing jobs, economy, pipelines,” she said.
“Jobs, economy, pipelines was the exact right message for the time in 2019 – it won the election,” she said. “But in a COVID world, there’s a different set of priorities.”
Mr. Kenney left three major portfolios that have been affected by the pandemic untouched: Tyler Shandro remains Minister of Health, leading UCP’s fight with physicians over pay and a strategy to reduce waiting lists by increasing the number of private clinics the government covers to perform surgery; Adriana LaGrange continues as Education Minister, overseeing the reopening of primary and secondary schools while trying to cut costs; and Travis Toews is still in charge of the Finance Ministry.
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