Federal Liberals throw Alberta a bone
The Federal Liberals unveiled their long-awaited and somewhat anti-climatic Federal Budget 2017. The federal deficit will be about $28.5 billion this fiscal year, including a $3 billion risk adjustment. The Liberals have abandoned all plans to return to balance any time in the near future and instead point out Canada's debt-to-GDP ratio is the lowest of all G7 countries, excluding provincial debt.
Buried on page 93 is a paltry sum of $30 million provided to the Government of Alberta to "stimulate economic activity and employment" in the province's resource sector. Alberta's energy sector and the province of Saskatchewan had asked for about $500 million to help tackle the thousands of orphaned wells left behind by bankrupt oil & gas producers.
Alberta Premier Rachel Notley called the small sum "good news" and plans to put the funds towards cleaning up some 3,000 "ownerless" wells that have been taken over by the province. The premier promised to release more details on clean-up efforts next week.
The federal government also reduced tax incentives for the country's oil and gas drillers, now allowing only 30% of costs to be deducted annually. The change is expected to generate $145 million in new revenues over the next 5 years. The Liberals say this change is part of Canada’s "international commitments to phase out inefficient fossil fuel subsidies.". CAPP President Tim McMillan says the move will disproportionately affect small producers, putting Canadian companies at a "further disadvantage to the US" who is moving to lower the tax burden.
Among the billions allocated to climate change initiatives and "clean energy" R&D, $74 million was allocated to Transport Canada and Environment Canada to develop a new clean fuel standard, including the retrofitting of heavy-duty vehicles for reducing emissions from the transportation sector.
The Liberals point out that the Canadian economy is quite strong, outside of the energy-producing provinces of Alberta, Saskatchewan and Newfoundland. The federal government says investment in the energy patch has "stabilized" and it expects capital expenditures to recover over the next few years. The government is banking on US$54 oil this year, rising to US$64 a barrel by 2021.