The fossil industry’s worst recession in decades will make a difference of less than 1.7% when Finance Minister Bill Morneau tables his anticipated $300-billion federal budget in the House of Commons today.
It’s not that the impact of the downturn in world oil prices since 2014 has been negligible. “Over the last few years, the decline has cost the Canadian economy $112 billion, which works out to $6,200 for every working person,” CBC News reports.
But that figure is a nominal mathematical average. Most of the real loss has been sustained in oil-producing regions—and most especially Alberta, which faces a $10-billion budget deficit as it waits for oil-based revenues to pick up. Meanwhile other sectors, notably manufacturing, have benefitted as the Canadian dollar fell along with oil activity, with auto manufacturing resuming its place as the country’s leading exporter.
The slump has had an undeniable impact on the federal government’s finances, CBC concedes. Ottawa has given nearly a billion dollars in extraordinary direct aid to Alberta, and seen outlays for social services and employment insurance payouts increase. Its own substantial fuel costs have dropped, however.
As a net result, CBC calculates that world crude prices of around US$50 a barrel cost the federal government about C$5 billion a year in revenue compared to prices at US$80 a barrel—out of a roughly $300-billion budget. That is, 1.666…%.