Alberta is forecasting a $2.4 billion budget surplus for its oil-fueled economy this year, with plans to take a big bite out of its debt and put in place guardrails to avoid spectacular deficits when the oil booms end.
“This plan achieves the priorities of Albertans, which include ensuring the government lives within its means,” Finance Minister Travis Toews told reporters Tuesday before introducing the 2023-24 budget to the legislature.
“Our relentless focus on attracting investment, creating jobs and diversifying has secured our position as Canada’s economic engine.”
It is United Conservative Party Prime Minister Danielle Smith’s first budget and the last before a provincial election scheduled for May.
The document increases spending at almost every level, especially in the key areas of health, education and justice.
There are billions of dollars for new schools, new roads and bridges, a new business school in Edmonton, more ambulances and Crown prosecutors and training in schools for in-demand fields such as health, energy, business and innovation.
Many major spending initiatives have been unveiled in recent weeks, including $158 million to hire and retain health care workers and $243 million over three years to boost primary care to reduce emergency room bottlenecks.
The budget promises a cap on postsecondary tuition increases starting in 2024.
Toews said there would be $1.8 billion over three years to fund kindergarten through 12th grade enrollment, reduce class sizes and improve bus transportation.
There is a combined 12% increase in the Justice and Public Safety budgets to pay more sheriffs and prosecutors and more staff to clear courtroom backlogs.
The province is also investing nearly $2 billion to round out the Heritage Savings Fund’s nest egg to $20 billion. Legislative changes must also be made to allow the fund to keep all of its net income rather than allowing the government to withdraw a portion in certain circumstances.
NDP Opposition Leader Rachel Notley called it a farcical budget of false promises, cynical policy changes, hidden agendas and unrealistic growth projections.
He said previously announced anti-inflation measures end soon after the election and funding returns, particularly in health, do not come close to the debilitating cuts of recent years under the UCP.
Notley added that the budget is also silent on Smith’s controversial and expensive promises to explore an Alberta police force, a provincial pension plan and to reward oil companies with potentially billions of dollars in duty relief for clean up unused wells.
“This is a fraudulent budget designed to buy votes before the election and then drive the costs to Albertans after the polls have closed,” Notley said.
“It hides Danielle Smith’s worst ideas while flattening the real priorities of Alberta families.”
The Alberta Union of Provincial Employees, the province’s largest public sector employer, said reinvestment in public services does not make up for the 2019 cuts, noting that funding for children’s services has reduced by seven percent compared to four years ago.
“Premier Smith had a chance to break with three years of neglect and privatization. Instead, he wants Albertans to believe he’s righted the ship while sending us more of the same,” said the president of the syndicate Guy Smith.
The Canadian Federation of Independent Business said that while it expected a reduction in the small business tax rate, the overall budget keeps the province on a fiscally prudent growth-oriented path.
Alberta, with a population of 4.4 million, is on track to bring in $70.7 billion in revenue and spend nearly $67 billion. Another $1.5 billion is being set aside for unforeseen spending emergencies.
Oil sands money remains the key driver, with bitumen royalties alone expected to contribute $12.6 billion.
Oil prices fell into negative territory early in the COVID-19 pandemic only to recover over the past 24 months as the global economy rebounded and Russia’s invasion of Ukraine pushed prices higher .
West Texas Intermediate, the benchmark price for US oil, is expected to remain strong around $70 to $80 a barrel for the next few years.
Alberta’s oil booms have allowed it to pay the bills while maintaining Canada’s lowest tax regime and no provincial sales tax.
However, as successive governments linked operating spending to the ups and downs of oil prices, oil booms have seen sky-high surpluses accompanied by equally skyrocketing deficits during bad times.
Toews also introduced a plan for legislative balanced budgets that can only go into the red when there are emergencies, such as COVID-19 or sharp last-minute revenue drops.
Even if these events occur, the government should break even within two years. Spending increases would also be limited to inflation plus population growth.
Toews said it would be “far beyond embarrassing” if the government violated its own balanced budget law.
“It would be a public spectacle and there would be a huge political cost to bear,” he said.
“Simply passing legislation around these tax rules provides real teeth in terms of the impetus for governments to follow them.”
The surplus for the fiscal year that is about to end had been on track to be $12.3 billion, but will now reach $10.4 billion.
The change is to help pay for $3.5 billion in inflation aid programs along with a new deal for doctors and wages in negotiations with public sector unions.
Inflation relief programs have seen the province pause its share of the gasoline tax and re-index personal income tax brackets to inflation. There are also rebates on electricity bills and direct payments for young families, the elderly and the needy.
© 2023 The Canadian Press
