Western Canada: Alberta releases plan to rebuild economy after COVID-19, oil price crash

Good morning. It’s James Keller in Calgary.

Alberta’s economy has faced one crisis after another.

The province has been in an economic trough for more than five years since oil prices collapsed in late 2014. Tens of thousands were out of work and unemployment rates were stubbornly high.

The economy was showing signs of life at the start of 2020 when that progress – and so much more – was wiped away.

There was a price war between Russia and Saudi Arabia that pushed oil prices down to historic lows. The COVID-19 pandemic made that worse, as economies around the world shut down and global demand for oil plummeted, further constraining prices.

And at the same time, restrictions designed to slow the pandemic in Alberta have pushed even more people out of work, threatened the future of many businesses and ripped a multibillion-dollar hole in the province’s finances.

Premier Jason Kenney’s government unveiled its plans this week to confront those challenges and set the province’s economy on the path to recovery.

The central plank of that plan is a corporate tax cut, speeding up plans to cut the rate by two percentage points to 8 per cent. Instead of waiting until January, 2022, the rate cut takes effect today, leaving Alberta with by far the lowest corporate tax rate in the country.

Kenney also announced an increase to infrastructure spending this year to put people to work immediately building bridges, highways and other projects. The government is adding more than $1-billion to previously announced commitments, bringing the infrastructure budget for the current fiscal year to more than $10-billion.

But the most difficult work for the government – diversifying an economy that for too long has been at the mercy of oil and gas prices – will come later.

Kenney says the province is committed to diversifying the economy, whether that means expanding what the energy sector produces or growing tech and financial services in Alberta. The details for exactly how it will do that will be rolled out sector by sector in the coming weeks.

He offered a hint of that work this week, introducing a hiring grant designed to help the tech and innovation sector, particularly startups that can’t benefit from corporate tax cuts because they aren’t generating profit. The province also announced $175-million through the Alberta Enterprise Corp. to help provide access to capital for early-stage companies.

Rachel Notley, the leader of the Opposition New Democrats, dismissed the plan as the “bare minimum” and said it falls short of the bold vision required to get Alberta’s economy back on track.

The province has a long way to go to get out of its current malaise, underscored the day after the announcement when major credit rating agency Fitch Ratings downgraded the province’s credit rating.

Fitch Ratings downgraded Alberta to a double-A-minus from double-A, citing higher provincial borrowing during the pandemic-driven economic crisis and a debt burden relative to GDP that is “incompatible” with a double-A rating.

The New York-based agency also pointed to the lack of details from the government about the extent of damage to Alberta’s bottom line, and the province’s lack of a planned path toward economic recovery.

This is the weekly Western Canada newsletter written by B.C. Editor Wendy Cox and Alberta Bureau Chief James Keller. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here. This is a new project and we’ll be experimenting as we go, so let us know what you think.

AROUND THE WEST

LONG-TERM CARE: British Columbia has opened the door to visitors at long-term care facilities, ending a ban that was implemented in March to protect elderly people from COVID-19 but that also put residents at risk because of isolation and lack of family support. The new policy, which requires visitors to book appointments in advance and wear masks, among other precautions, weighs the risks of COVID-19 against unintended negative consequences, says Provincial Health Officer Bonnie Henry.

In Alberta on Tuesday, that province’s Chief Medical Officer, Deena Hinshaw, said Alberta will update its long-term care visitor policy within the “next several weeks.” Starting Thursday, Alberta Health Services will permit some patients at acute care facilities such as hospitals to visit people outdoors, so long as they remain on the property. AHS will also grant unaccompanied outdoor access to some patients at certain facilities, and issue day, overnight or weekend passes for patients in select programs.

ENVIRONMENTAL FUNDING: The Alberta government has revised the mandate of a public inquiry investigating the funding of environmental charities, which is currently facing a legal challenge that is attempting to derail the entire process. The provincial cabinet changed the terms of reference last week to instruct the inquiry, led by forensic accountant Steve Allan, to look at the “the role of foreign funding, if any,” which appears to leave open the possibility of the inquiry concluding that there is none. The change was made as the government gave the inquiry a four-month extension and an extra $1-million, which represents a budget increase of 40 per cent over the original cost of $2.5-million. Devon Page, the executive director of Ecojustice, said the changes appear to be an attempt to save the inquiry from his group’s legal challenge. However, he said the new terms of reference don’t make the inquiry any less problematic.

SPILL RESPONSE: The Canadian Coast Guard has partnered with an Indigenous group on Vancouver Island to build a marine facility in Port Renfrew, B.C., aimed at improving its response in the event of an oil spill. The memorandum of understanding with the Pacheedaht First Nation is in part a response to 156 conditions the National Energy Board said must be met before the Trans Mountain Pipeline expansion project can go ahead.

KENNEY’S SPEECHWRITER: Alberta Premier Jason Kenney is facing renewed calls to fire his speechwriter after more of Paul Bunner’s columns about race and LGBTQ people surfaced. The Opposition New Democrats have unearthed more pieces of Bunner’s writing, mostly from his time at the conservative magazine Alberta Report in the 1990s, that included comments the NDP said were disparaging to First Nations and LGBTQ people. NDP MLA David Shepherd said the columns were more proof that Bunner has to go. “The sheer volume of hateful writing has taken us some time to sift through,” Shepherd told reporters. “We cannot have any trust that Jason Kenney is sincere about confronting systemic racism as long as he continues to have Paul Bunner working in his office. He must fire him.” Kenney has rejected calls to fire of Bunner.

CHOIRS SILENCED: With health authorities warning that singing spreads coronavirus-carrying droplets at a high rate – because it involves deep breathing and voice projection – choirs have been forced to cease in-person rehearsals and cancel concerts. Since early March, the more than 3.5 million Canadians who sing in choirs have been searching for ways to practise without getting together and struggling to make do without ticket revenue from performances.

It has meant choirs have been resorting to virtual concerts and practices, coming together with the help of digital editing software because no technology currently exists to allow choristers to sing together in unison online. But directors like Lonnie Delisle of the Universal Gospel Choir in Vancouver say choirs like his will find their voice. “We know that the arts plays a role in providing a presence of healing and hopefulness – things that we’re all reaching for right now.”

ALBERTA’S NEW LIEUTENANT-GOVERNOR: Prime Minister Justin Trudeau has named business owner and philanthropist Salma Lakhani as Alberta’s new lieutenant-governor, replacing Lois Mitchell as the Queen’s representative in the province. When she formally takes over the role, Lakhani will become Canada’s first Muslim lieutenant-governor. She has been long recognized for her work and philanthropy in a range of fields, including health care and human rights.

OFFICE SPACE: Approvals and applications for new towers in Vancouver have continued since March, with two downtown office towers approved in May and two new applications received for office buildings for the Broadway corridor. The projects are moving ahead even as several other tower developers have continued unchecked with construction on their downtown projects.

MANITOBA TAX CUT ON HOLD: Manitoba Premier Brian Pallister says he may not fulfill a promise to cut the provincial sales tax next year because of the fiscal fallout from COVID-19. Pallister originally promised to cut the tax to 6 per cent from 7 by this summer and introduce a provincial carbon tax at the same time. But when the pandemic started, he pushed the plan back to 2021. With economic uncertainty continuing, Pallister said Tuesday the tax change may be off the table. The Progressive Conservative government released updated budget figures Tuesday that showed another wide swing in Manitoba’s finances. In early March, the government forecast a $220-million deficit. Three weeks later, as COVID-19 numbers grew across Canada, the government warned the deficit could reach $5-billion. The fiscal update said a more likely scenario is a deficit of $2.9-billion based on new economic projections from banks and other institutions.

SASKATCHEWAN’S LEGISLATURE: Saskatchewan’s Premier has rejected a call by the Opposition to reconvene the legislature in the weeks leading up to the fall provincial election. On Tuesday, during the final stretch of a three-week spring sitting, NDP Leader Ryan Meili asked Premier Scott Moe to have legislature members return in September. Meili said the Saskatchewan Party government’s 2020-21 budget fails to meet the needs of residents hurting because of the COVID-19 pandemic. And he wants members to return in the fall so the government can spell out how it has spent a $200-million contingency fund established to respond to the health crisis. Moe responded outside the assembly, saying Meili just wants a “do-over” of the spring sitting.

OPINIONS

Adam Radwanski on Jason Kenney’s economic recovery plan for Alberta: “And yet, for those willing to squint a little, it’s possible to see this announcement as a potential first step in Mr. Kenney’s reckoning with forces – a global fight against climate change that threatens to decimate Alberta’s resource sector in the long run – toward which he was highly dismissive after coming to office last year. And it could even signal some fresh willingness to work with Ottawa to confront that reality. Not that Mr. Kenney is about to say any such thing, explicitly. While making room for an assertion that oil prices will soon return to $60 a barrel, and that ‘every credible forecast of future world energy consumption sees oil and gas continuing to dominate the supply mix for the next several decades,' his government’s new 29-page strategy does not include the words ‘climate change’ anywhere.”

Mackenzie Moir, Alex Whalen and Bacchus Barua on B.C.‘s surgery backlog: “B.C.‘s COVID-19 backlog response will include limited partnership with private clinics, however – and that’s a good thing. This type of initiative has precedents in Canada. In 2010, the aptly-named Saskatchewan Surgical Initiative used private clinics to provide publicly funded surgeries and helped Saskatchewan lower its wait times from Canada’s longest (28.8 weeks in 2008) to the shortest by 2015 (13.6 weeks). "