Budget 2020: A 'strong' signal to job creators but with risk0
The government’s budget is on the right track despite relying on rosy revenue projections, business associations said Friday.
“Small businesses were looking for signs that this government would improve investor confidence … so for this budget to have that large focus on bringing back investors, and encouraging economic growth, those were all great signals for business owners,” said Annie Dormuth, director of provincial affairs at the Canadian Federation of Independent Business (CFIB).
Finance Minister Travis Toews said 2020 could be a “turnaround” year for the province when he introduced the UCP government’s second budget Thursday, predicting Alberta’s nearly $50-billion revenue for the 2020-21 fiscal year would essentially hold steady at 2019-20 levels before eventually climbing to $58 billion by 2022-23.
The government has acknowledged relying on an increase in energy royalties carries some risk, but said it would be prepared to make further spending cuts if revenue takes a dive.
“Of course if the province encounters volatility, that’s really going to erode its revenue projections quite a bit, and if it happens, any fiscal restraint will need to happen. That will put the government in a position where tougher decisions need to be made,” said Dormuth.
Small businesses need tax relief, she said, so the CFIB welcomed the government’s efforts to rein in spending and red tape.
Given other economic concerns, including rail blockades and the effect of the coronavirus on oil prices, four months is too short of a period to assess whether the province’s cut to the corporate tax rate will have a positive effect, said Dormuth.
Even though only 24 per cent of CFIB members accessed the corporate tax, about 90 per cent saw it as a way to improve the economy, she said.
Educational property tax rates are going to continue to increase by 3.1 per cent for 2020-21, a budget move that prompted the CFIB to encourage all municipalities to downsize and think like a small business.
“Given the economic climate right now, they simply just can’t handle tax increases — they just can’t stomach those right now,” said Dormuth.
The Edmonton Chamber of Commerce and the Calgary Chamber of Commerce agreed that the government was sending a “strong signal” to job creators with Thursday’s budget. In a joint statement Friday, the organizations praised government’s move to break down inter-provincial trade barriers and help businesses access international markets.
“Budget 2020 recognizes that Alberta’s job creators are the economic engine of our province,” said Janet Riopel, president and CEO of the Edmonton Chamber of Commerce.
But the business organizations saw the “continued reliance on revenues from non-renewable resources as a source of risk,” according to the statement.
Sandip Lalli, president and CEO of the Calgary Chamber of Commerce said businesses need certainty.
“This budget provides stability through a continued commitment to create a fiscally responsible, job-focused climate. We would like to move even further on this path by improving our revenue mix and doubling down on innovation,” she said.
A statement from national union the Christian Labour Association of Canada (CLAC), which represents almost 60,000 workers in the construction, health care, and food industries, said it was pleased to see spending focused on job creation.
The government’s capital plan in 2020 for infrastructure, which jumps to $6.9 billion from a previously budgeted $6.572 billion, including spending on roads, bridges, hospitals and other critical services, is expected to support more than 3,000 projects by 2022, according to the budget.