Provincial Budget 2025: Meeting the challenge

To help Albertans with the high cost of living, Budget 2025 delivers on the promised tax cut that will save Albertans hundreds of dollars starting this year. The new eight per cent personal income tax bracket for income up to $60,000 is starting two years ahead of schedule and will save Albertan families up to $1,500 in 2025.

To meet the needs of a population that has grown rapidly in the last few years, Budget 2025 also makes the highest-ever investment in health care and education while moving forward with the Alberta government’s commitment to build schools and classroom spaces faster. The budget continues to support vulnerable Albertans and keep communities and provincial borders safe while supporting the economy, communities and sectors outside the oil and gas industry.

“Budget 2025 is a budget of tough but measured choices that meet the needs of Albertans and maintains our Alberta advantage. It cuts taxes, steadfastly supports public services and solidifies our economic foundation so it can withstand future headwinds.”

Nate Horner, President of Treasury Board and Minister of Finance

Budget 2025 takes a cautious approach in its economic outlook, reflecting the high risk of a Canada-U.S. trade conflict and the potential significant impact on the Alberta economy. The outlook assumes a moderate trade conflict where Canada will face an average 15 per cent tariffs on all goods, while energy products will face a 10 per cent tariff. Alberta will continue to work with federal, provincial and territorial partners to find solutions. Even in light of tariffs, the province expects moderate but continued growth in oil production and investment to keep the province’s economic engine humming. Alberta’s responsible crude oil exports are expected to continue to meet critical U.S energy needs, and the Trans Mountain Pipeline expansion will provide more export capacity for producers.

Investment will continue in existing major projects that are driving activity in industrial building construction, including Dow’s Path2Zero project, Air Products’ new hydrogen facility and Imperial Oil’s Strathcona Refinery renewable diesel expansion project.

Alberta’s housing market is expected to stand out as a bright spot in the economy as homebuilders work to meet the needs of a growing population A slower population growth will help the labour market gradually rebalance over the next few years.

While the province is facing significant economic uncertainty and revenue volatility, the government remains committed to making prudent spending decisions to keep operating expense growth below population growth plus inflation and to sustainably deliver important programs and services to Albertans and Alberta businesses.

Budget 2025 invests:

$9.9 billion in operating expenses for education, an increase of 4.5 per cent from 2024-25, to help with enrolment pressures, hire more teachers and other educational staff, and support complex classrooms and students.
$2.6 billion over three years for educational (K-12) infrastructure, an increase of $505 million or 23.9 per cent from Budget 2024. This funding will support the construction of more than 200,000 new and modernized student spaces over the next seven years (almost 90,000 within the next four years).
$28 billion in operating expense, an increase of $1.4 billion or 5.4 per cent, across the refocused health care system including:
- $22.1 billion to health care to improve access to quality health services close to home, prioritize patients, build capacity at hospitals and rural facilities, expand surgeries and compensate and retain health professionals.
- $1.7 billion for implementing the compassionate intervention framework and Recovery Alberta Services.
- $3.8 billion to focus on making the full continuum of care available to all Albertans, from assisted living, home care and community care, to housing and social supports with wraparound social services.
$1.3 billion for operating expense for Public Safety and Emergency Services, an increase of 3.7 per cent from 2024-25, to support Alberta Sheriffs, Correctional Services and emergency management in the work to keep Alberta communities safe and secure the southern border.
$1.6 billion, or a six per cent increase from last year, for Children and Family Services to strengthen the programs vulnerable children and families rely on.
$6.2 billion, or an 8.8 per cent increase from 2024-25, to support core social programs, including a short-term bump to support more people affected by potential U.S. tariffs and rising grants for housing programs.
Overall, Budget 2025’s Capital Plan includes $26.1 billion over three years, an increase of 4.4 per cent or $1.1 billion more than Budget 2024, to meet the challenge of growth and build and enhance schools, hospitals, roads and bridges in the province. The plan is projected to support an average of 26,500 direct and 12,000 indirect jobs annually through 2027-28.

The province is also continuing to focus on building the Heritage Fund to $250 billion by 2050. The fund was valued at $25 billion in the third fiscal quarter of 2024-25 and is expected to grow to about $27 billion by the end of the fiscal year. A renewed Heritage Fund that earns money year over year will secure a resilient and prosperous Alberta for generations to come and lessen the province’s reliance on natural resource revenues. An independent board of directors and a new Heritage Fund Opportunities Corporation will unlock access to new opportunities and partnerships with global sovereign wealth funds.

Revenue

Total revenue in 2025-26 is forecast at $74.1 billion, a decrease of $6.6 billion from the 2024-25 forecast of $80.7 billion. Total revenue is forecast to grow to $77.4 billion in 2026-27 and $80 billion by 2027-28, with broad-based revenue growth led primarily by income taxes.
- The decrease in 2025-26 comes mainly from a $4.4 billion drop in non-renewable resource revenue, driven by an anticipated decline in oil prices. This revenue source is forecast at $17.1 billion in 2025-26, compared to the $21.5 billion forecast for 2024-25.
- Revenue from personal income taxes is estimated to decrease to $15.5 billion in 2025-26, down from the $16.1 billion at the third quarter, due to the new eight per cent income tax bracket and negative impacts associated with potential tariffs. Personal income tax revenue is forecast to grow moderately in the following two years as more people continue to move to Alberta.
- Corporate income tax revenue is estimated at $6.8 billion in 2025-26, down $586 million from the third-quarter forecast for 2024-25, but rising over the next two years.

Expense

Total expense in 2025-26 is forecast at $79.3 billion, an increase of $4.4 billion or 5.9 per cent from the 2024-25 third quarter forecast.
- Total expense is expected to be $79.8 billion in 2026-27 and $82 billion in 2027-28, or an increase of about 1.7 per cent per year.
Operating expense is estimated at $64.3 billion, an increase of $2.2 billion or 3.6 per cent from the 2024-25 third quarter forecast.
- Operating expense grows to $64.8 billion in 2026-27 and $66.5 billion in 2027-28, an average increase of 1.7 per cent per year.
A contingency of $4 billion will help to provide government with more flexibility to address unforeseen implications of increased economic uncertainty as well as compensation expense for collective bargaining currently underway.

Deficit

A deficit of $5.2 billion is forecast for 2025-26.
The deficit is forecast to drop to $2.4 billion and $2 billion for 2026-27 and 2027-28, respectively.
The government’s fiscal framework includes allowable exceptions for when the government can run a deficit, including when there is a significant drop in revenue.
This deficit is largely the result of falling non-renewable resource revenues and increases in costs necessary to provide world-class services to Albertans.

Debt

Debt servicing costs are forecast to decrease by $231 million in 2025-26 from the 2024-25 forecast, to $3 billion, as funds pre-borrowed in 2024-25 will be used to repay sizeable debt maturities coming due in early 2025-26.

Economic Outlook

In 2025, real gross domestic product is expected to decelerate to 1.8 per cent, then 1.7 per cent in 2026.
Population growth is expected to moderate, growing at 2.5 per cent in the 2025 census year, down from the record 4.4 per cent growth in 2024. Growth will shift down to 1.4 per cent over the following two years, then 1.6 per cent in 2028.

Energy and economic assumptions, 2025-26

West Texas Intermediate oil (USD/bbl) $68
Western Canadian Select @ Hardisty (CND/bbl) $73.10
Light-heavy differential (USD/bbl) $17.10
ARP natural gas (CND/GJ) $2.50
Conventional crude production (000s barrels/day) 519
Raw bitumen production (000s barrels/day) 3,558
Canadian dollar exchange rate (USD¢/CAD$) 69.60
Interest rate (10-year Canada bonds, per cent) 3.10

Related information

Budget 2025

Related Topics:AlbertaBudget2025 feature

Up Next

Alberta Budget 2025: Health and education

Don't Miss

Appointment of Archbishop Smith as the next Archbishop of Vancouver

Government of Alberta

This is a news release from the Government of Alberta.

Follow Author

Alberta providing additional $7 million to Grande Prairie to help transition to municipal police service

Alberta / 3 weeks ago

New teams will boost Alberta wildfire preparedness

Alberta / 1 month ago

Alberta Cabinet shuffle reflects new ministries. Adriana LaGrange in charge of “health care refocusing”

Alberta

Alberta’s grand bargain with Canada includes a new pipeline to Prince Rupert

Published on June 15, 2025

Todayville

From Resource Now

By Nelson Bennett

Alberta renews call for West Coast oil pipeline amid shifting federal, geopolitical dynamics.

Just six months ago, talk of resurrecting some version of the Northern Gateway pipeline would have been unthinkable. But with the election of Donald Trump in the U.S. and Mark Carney in Canada, it’s now thinkable.

In fact, Alberta Premier Danielle Smith seems to be making Northern Gateway 2.0 a top priority and a condition for Alberta staying within the Canadian confederation and supporting Mark Carney’s vision of making Canada an Energy superpower. Thanks to Donald Trump threatening Canadian sovereignty and its economy, there has been a noticeable zeitgeist shift in Canada. There is growing support for the idea of leveraging Canada’s natural resources and diversifying export markets to make it less vulnerable to an unpredictable southern neighbour.

“I think the world has changed dramatically since Donald Trump got elected in November,” Smith said at a keynote address Wednesday at the Global Energy Show Canada in Calgary. “I think that’s changed the national conversation.” Smith said she has been encouraged by the tack Carney has taken since being elected Prime Minister, and hopes to see real action from Ottawa in the coming months to address what Smith said is serious encumbrances to Alberta’s oil sector, including Bill C-69, an oil and gas emissions cap and a West Coast tanker oil ban. “I’m going to give him some time to work with us and I’m going to be optimistic,” Smith said. Removing the West Coast moratorium on oil tankers would be the first step needed to building a new oil pipeline line from Alberta to Prince Rupert. “We cannot build a pipeline to the west coast if there is a tanker ban,” Smith said. The next step would be getting First Nations on board. “Indigenous peoples have been shut out of the energy economy for generations, and we are now putting them at the heart of it,” Smith said.

Alberta currently produces about 4.3 million barrels of oil per day. Had the Northern Gateway, Keystone XL and Energy East pipelines been built, Alberta could now be producing and exporting an additional 2.5 million barrels of oil per day. The original Northern Gateway Pipeline — killed outright by the Justin Trudeau government — would have terminated in Kitimat. Smith is now talking about a pipeline that would terminate in Prince Rupert. This may obviate some of the concerns that Kitimat posed with oil tankers negotiating Douglas Channel, and their potential impacts on the marine environment.

One of the biggest hurdles to a pipeline to Prince Rupert may be B.C. Premier David Eby. The B.C. NDP government has a history of opposing oil pipelines with tooth and nail. Asked in a fireside chat by Peter Mansbridge how she would get around the B.C. problem, Smith confidently said: “I’ll convince David Eby.”

“I’m sensitive to the issues that were raised before,” she added. One of those concerns was emissions. But the Alberta government and oil industry has struck a grand bargain with Ottawa: pipelines for emissions abatement through carbon capture and storage.

The industry and government propose multi-billion investments in CCUS. The Pathways Alliance project alone represents an investment of $10 to $20 billion. Smith noted that there is no economic value in pumping CO2 underground. It only becomes economically viable if the tradeoff is greater production and export capacity for Alberta oil. “If you couple it with a million-barrel-per-day pipeline, well that allows you $20 billion worth of revenue year after year,” she said. “All of a sudden a $20 billion cost to have to decarbonize, it looks a lot more attractive when you have a new source of revenue.” When asked about the Prince Rupert pipeline proposal, Eby has responded that there is currently no proponent, and that it is therefore a bridge to cross when there is actually a proposal. “I think what I’ve heard Premier Eby say is that there is no project and no proponent,” Smith said. “Well, that’s my job. There will be soon. “We’re working very hard on being able to get industry players to realize this time may be different.” “We’re working on getting a proponent and route.”

At a number of sessions during the conference, Mansbridge has repeatedly asked speakers about the Alberta secession movement, and whether it might scare off investment capital. Alberta has been using the threat of secession as a threat if Ottawa does not address some of the province’s long-standing grievances. Smith said she hopes Carney takes it seriously. “I hope the prime minister doesn’t want to test it,” Smith said during a scrum with reporters. “I take it seriously. I have never seen separatist sentiment be as high as it is now. “I’ve also seen it dissipate when Ottawa addresses the concerns Alberta has.” She added that, if Carney wants a true nation-building project to fast-track, she can’t think of a better one than a new West Coast pipeline. “I can’t imagine that there will be another project on the national list that will generate as much revenue, as much GDP, as many high paying jobs as a bitumen pipeline to the coast.”

Alberta

Albertans need clarity on prime minister’s incoherent energy policy

Published on June 15, 2025

Todayville

From the Fraser Institute

By Tegan Hill

The new government under Prime Minister Mark Carney recently delivered its throne speech, which set out the government’s priorities for the coming term. Unfortunately, on energy policy, Albertans are still waiting for clarity.

Prime Minister Carney’s position on energy policy has been confusing, to say the least. On the campaign trail, he promised to keep Trudeau’s arbitrary emissions cap for the oil and gas sector, and Bill C-69 (which opponents call the “no more pipelines act”). Then, two weeks ago, he said his government will “change things at the federal level that need to be changed in order for projects to move forward,” adding he may eventually scrap both the emissions cap and Bill C-69.

His recent cabinet appointments further muddied his government’s position. On one hand, he appointed Tim Hodgson as the new minister of Energy and Natural Resources. Hodgson has called energy “Canada’s superpower” and promised to support oil and pipelines, and fix the mistrust that’s been built up over the past decade between Alberta and Ottawa. His appointment gave hope to some that Carney may have a new approach to revitalize Canada’s oil and gas sector.

On the other hand, he appointed Julie Dabrusin as the new minister of Environment and Climate Change. Dabrusin was the parliamentary secretary to the two previous environment ministers (Jonathan Wilkinson and Steven Guilbeault) who opposed several pipeline developments and were instrumental in introducing the oil and gas emissions cap, among other measures designed to restrict traditional energy development.

To confuse matters further, Guilbeault, who remains in Carney’s cabinet albeit in a diminished role, dismissed the need for additional pipeline infrastructure less than 48 hours after Carney expressed conditional support for new pipelines.

The throne speech was an opportunity to finally provide clarity to Canadians—and specifically Albertans—about the future of Canada’s energy industry. During her first meeting with Prime Minister Carney, Premier Danielle Smith outlined Alberta’s demands, which include scrapping the emissions cap, Bill C-69 and Bill C-48, which bans most oil tankers loading or unloading anywhere on British Columbia’s north coast (Smith also wants Ottawa to support an oil pipeline to B.C.’s coast). But again, the throne speech provided no clarity on any of these items. Instead, it contained vague platitudes including promises to “identify and catalyse projects of national significance” and “enable Canada to become the world’s leading energy superpower in both clean and conventional energy.”

Until the Carney government provides a clear plan to address the roadblocks facing Canada’s energy industry, private investment will remain on the sidelines, or worse, flow to other countries. Put simply, time is up. Albertans—and Canadians—need clarity. No more flip flopping and no more platitudes.