Alta Cuts Deficit, Adds 33,000 Jobs in 12 Months, while Sask Falls Behind

Alberta has seen an increase of thirty-three thousand jobs in twelve months ending June 2018, and a two-and-a-half billion dollar decrease in its provincial deficit from March projections, as Saskatchewan falls behind with the worst job numbers since the early 1990s, and the highest provincial debt in the Province’s history.

Alberta Pulls Ahead

The 2.5 billion dollar deficit reduction in Alberta comes as resource investment has improved and employment numbers recovered across the western province. Stronger job numbers have boosted efforts to reduce an Alberta provincial deficit inherited from the province’s Progressive Conservative government, and worsened as the Province suffered reduced employment numbers stemming from the 2014 crash in oil prices.

Economists have noted that the Alberta Government’s refusal to engage in an austerity approach has improved the position of the province, by maintaining employment, and keeping income tax revenue stable through the crash. In contrast, Saskatchewan’s austerity approach has seen a near-doubling of the unemployment rate, and the highest number of unemployed in Saskatchewan history.

Debt-to-GDP Puts BC, Alta In Lead Across Canada

While debt size will be different between provinces with different populations and economic outlooks, debt-to-GDP ratio is the main indicator of the seriousness of a jurisdiction’s debt/deficit situation. The western provinces show a wide variance in debt-to-GDP. NDP Alberta’s debt-to-GDP number will sit at 8.7 percent in fiscal 2018/2019 – the best level in Canada. NDP B.C.’s debt-to-GDP ratio is the second-best in the nation at 15 percent.

The conservative-governed provinces in Western Canada do not fare as well. Sask Party Saskatchewan’s debt-to-GDP ratio is 16 percent, while Progressive Conservative Manitoba’s sits at a whopping 34 percent.

Different Approaches Between Neighbours

Analysts have pointed out that the anti-austerity approach taken by Alberta has permitted more people in the Province to stay employed, with good government and private sector jobs paying money back into provincial income tax coffers, and keeping citizens off of employment insurance and welfare rolls.

As Saskatchewan’s debt-to-GDP ratio is twice Alberta’s, questions abound as to Saskatchewan’s plans to reverse the trend. An attempt by the Brad Wall government to cut deficit in 2017 was largely panned by the public, and cuts in a number of areas were soon reversed — although major tax increases remained in place — keeping Saskatchewan squarely in a deficit situation until at least 2021, without accounting for the cost of impending P3 projects. Additionally, mega-projects like the failed CCS experiment at Boundary Dam, the ill-fated Regina bypass, and the unnecessary Children’s Hospital have significantly added to the provincial debt, with billions spent as the public questions whether the projects are worthwhile or even prudent.

Rachel Notley’s government has seen employment return to historical levels in Alberta, with the Notley government benefiting from the highest growth in the country, while Saskatchewan lags behind all of the other major provinces. In asking for equalization from the federal government, Saskatchewan Premier Scott Moe recently acknowledged that Saskatchewan should be recognized as a have-not province. The level to which government intervention has affected each province is a continued source of debate. The numbers, however, do show that Alberta is well ahead of Saskatchewan in recovering from the oil crash — and, ironically, Sask Party Premier Brad Wall has started working in NDP Alberta.

Fiscal updates from both Alberta and Saskatchewan are expected in the early fall.