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Alberta government must further restrain spending to stabilize provincial finances


4 minute read

From the Fraser Institute

By Tegan Hill

This year, program spending will reach a projected $14,334 per Albertan, which is $1,603 more per person (inflation-adjusted) than the Smith government originally planned to spend this year as outlined in the 2022 mid-year budget update.

Despite recording a $4.3 billion surplus last year, Premier Danielle Smith remains committed to a new approach to Alberta finances that relies less heavily on resource revenue, which includes restraining spending levels below the rate of inflation and population growth. That’s a big step forward, but is it enough to stabilize Alberta’s boom and bust rollercoaster?

First, some background.

After nearly a decade and a half of routine budget deficits, Alberta swung to a budget surplus when resource revenue (which includes includes oil and gas royalties) skyrocketed from $3.1 billion in 2020/21 to $16.2 billion in 2021/22. In 2022/23, the government enjoyed the highest level of resource revenue on record and relatively high levels have continued in recent years. Correspondingly, Alberta’s surpluses have continued.

Alberta governments have a habit of increasing spending during times of high resource revenue, such as the province is currently experiencing, to levels that are unsustainable without incurring deficits when resource revenue inevitably declines. That’s why the Smith government’s commitment to spending restraint is an important one.

Unfortunately, however, due to the Smith government’s spending increases in previous years, this restraint won’t go as far in stabilizing provincial finances. Moreover, there are a number of limitations and exceptions to these new spending rules that may impede their effectiveness.

Consider that this year, program spending will reach a projected $14,334 per Albertan, which is $1,603 more per person (inflation-adjusted) than the Smith government originally planned to spend this year as outlined in the 2022 mid-year budget update.

As shown above, program spending (inflation-adjusted) will reach a projected $14,041 per person in 2025/26 and a projected $13,750 per person in 2026/27, which is equivalent to per-person increases of $1,571 and $1,538, respectively, compared to the original plan in 2022.

So while per-person (inflation-adjusted) spending is set to decline, which aligns with the Smith government’s commitment, this restraint is starting from a higher base level due to spending decisions thus far. That means more work needs to be done to rein in spending.

Indeed, for perspective, if the Smith government had simply stuck to its original plan, spending would be closely aligned with stable, more predictable sources of revenue. And ultimately, that’s the way to avoid deficits.

There’s also several limitations and exceptions for the government’s new spending rule. For example, the spending limit applies only to “operating expense,” which does not include longer-term spending, disaster and emergency assistance, spending related to dedicated revenue, or contingencies. As a result of various limits and exceptions, total program spending growth in 2023/24 exceeds inflation and population growth by 1.8 percentage points. Put simply, these limitations and exceptions add to the risk of budget deficits.

Sustainable finances have been impeded by increases in per person spending since 2022. So while the Smith government deserves credit for its commitment to restrain spending moving forward, Alberta’s fiscal challenges aren’t over.

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New surveillance teams led by the Alberta Sheriffs working with local police in rural communities

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More boots on the ground to fight rural crime

Rural crime continues to be a top concern among residents and businesses in rural Alberta, which is why Alberta’s government remains committed to addressing it through enhanced surveillance and other crime reduction initiatives. Alberta’s government invested $4.3 million for the Alberta Sheriffs to put more boots on the ground. This investment supported the establishment of two plainclothes teams – one in northern Alberta and one in southern Alberta – to support police in carrying out surveillance on criminal targets in rural areas.

Both teams are now fully staffed and operational, ready to fight crime in rural areas across Alberta. These rural surveillance teams will work to prevent crime, monitor agricultural theft and work in collaboration with local law enforcement to share intelligence and resources to keep Albertans and their property safe and secure.

“Criminals and organized crime are not welcome in Alberta. Full stop. The addition of two new surveillance teams will further support our law enforcement partners in stamping out criminal activity in Alberta’s rural areas. This is about supporting local investigations to address local crime in our smaller communities. Together, both teams will form another key component of Alberta’s efforts to combat crime and ensure Albertans feel safe at home and in their communities, regardless of where they live.”

Mike Ellis, Minister of Public Safety and Emergency Services

The Alberta Sheriffs have an existing surveillance unit that is part of the Alberta Law Enforcement Response Teams (ALERT) and focused mainly on serious and organized crime investigations. The new surveillance teams will fill a gap by helping rural RCMP detachments with local investigations.

“Through their specialized knowledge, training and experience, Alberta’s new surveillance teams are providing another important mechanism in the fight against crime in Alberta’s rural communities. Working in close collaboration with the RCMP and other policing agencies, their efforts will play a key role in gathering evidence and information that will help disrupt crime throughout the province.”

Mike Letourneau, superintendent, Alberta Sheriffs

“This announcement by the Alberta government and Minister Ellis is a positive step forward for the residents of Alberta, especially in rural areas. Targeting known criminals is a very effective way to reduce the level of crime taking place and will greatly assist the RCMP who have a vast area to police.”

Lance Colby, mayor, Town of Carstairs

“We are happy to hear about increased resources being allocated to assist our communities. Addressing rural crime is one of the top priorities of the Alberta RCMP, and our partners at the Alberta Sheriffs already play a vital role in keeping Albertans safe. The creation of these new surveillance teams will help augment our ongoing crime reduction strategies in Alberta communities, and we look forward to working with them going forward.”

Trevor Daroux, assistant commissioner, criminal operations officer, Alberta RCMP

The new surveillance teams are part of a suite of measures to expand the role of the Alberta Sheriffs and make Alberta communities safer. Other actions include the expansion of the Safer Communities and Neighbourhoods (SCAN) unit – which uses legal sanctions and court orders to target problem properties where illegal activities are taking place – and the expansion of the RAPID Response initiative with funding for the Sheriff Highway Patrol to train and equip members to assist the RCMP with emergencies and high-priority calls.

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