Alberta
Alberta government’s fiscal update underscores need for rainy-day account
From the Fraser Institute
By Tegan Hill
According to the Smith government’s recent fiscal update, the government’s $2.9 billion projected budget surplus has increased to a $4.6 budget surplus in 2024/25 mainly due to higher-than-expected resource revenue. But the resource boom that fuels Alberta’s fiscal fortunes could end at any moment and pile more government debt on the backs of Albertans.
Resource revenue, fuelled by commodity prices (including oil and gas), is inherently volatile. For perspective, in just the last decade, the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and accounted for just 6.5 per cent of total government revenue. In contrast, according to the Smith government’s fiscal update, projected resource revenue is $20.3 billion this fiscal year and will account for more than a quarter (26.1 per cent) of total government revenue.
But here’s the problem.
Successive Alberta governments—including the Smith government—have included nearly all resource revenue in the budget. In times of relatively high resource revenue, such as we’re currently experiencing, the government typically enjoys surpluses and, flush with cash, increases spending. But when resource revenues decline, the province’s finances turn to deficits.
The last time this happened Alberta ran nearly uninterrupted deficits from 2008/09 to 2020/21 while the province’s net financial position deteriorated by nearly $95 billion. As a result, Albertans went from paying $58 per person on annual provincial government debt interest costs to nearly $600 per person.
So how can the Smith government avoid the same fate as past Alberta governments who wallowed in red ink when the boom-and-bust cycle inevitably turned to bust?
The answer is simple—save during good times to help avoid deficits during bad times. The provincial government should determine a stable amount of resource revenue to be included in the budget annually and deposit any resource revenue above that amount automatically in a rainy-day account to be withdrawn in years when resource revenue falls below that stable amount.
This wouldn’t be Alberta’s first rainy-day account. In fact, the Alberta Sustainability Fund (ASF), established in 2003, was intended to operate this way. A major problem with the ASF, however, was that it was based in statutory law, which meant the Alberta government could unilaterally change the rules governing the fund. Consequently, the stable amount was routinely increased and by 2007 nearly all resource revenue was used for annual spending. The ASF was eventually drained and eliminated entirely in 2013. This time, the government should make the fund’s rules constitutional, which would help ensure it’s sustained over time.
Put simply, funds in a resurrected ASF will provide stability in the future by mitigating the impact of cyclical declines on the budget over the long term.
In the recent fiscal update, the Alberta government continues to risk relying on relatively high resource revenue to balance the budget. To avoid deficits and truly stabilize provincial finances for the future, the Smith government should reintroduce a rainy-day account.
Tegan Hill
Director, Alberta Policy, Fraser Institute
From Danielle Smith on X
Over the last 24 hours I had the opportunity to meet President @realdonaldtrump at Mar-a-Lago last night and at his golf club this morning. We had a friendly and constructive conversation during which I emphasized the mutual importance of the U.S. – Canadian energy relationship, and specifically, how hundreds of thousands of American jobs are supported by energy exports from Alberta.
I was also able to have similar discussions with several key allies of the incoming administration and was encouraged to hear their support for a strong energy and security relationship with Canada.
On behalf of Albertans, I will continue to engage in constructive dialogue and diplomacy with the incoming administration and elected federal and state officials from both parties, and will do all I can to further Alberta’s and Canada’s interests.
The United States and Canada are both proud and independent nations with one of the most important security alliances on earth and the largest economic partnership in history. We need to preserve our independence while we grow this critical partnership for the benefit of Canadians and Americans for generations to come.
Refocusing acute care leadership for the future
Alberta’s government is bringing in the expertise and experience needed to continue refocusing the health care system for the benefit of all Albertans.
Alberta’s government is committed to refocusing the health care system so that Albertans can access the health care services they need when and where they need them. The work to transform the system is making significant progress, particularly with the recent launch of Primary Care Alberta in November 2024, and the continued advancement in establishing Alberta’s new acute care provincial health agency.
Acute care, which includes hospitals, emergency services and surgery care, is a significant part of the health care system, providing critical care to Albertans when they need it most. Acute Care Alberta, the new acute care provincial health agency, will work to speed up access to high-quality care, reduce wait times and make sure the patient’s journey through the system is efficient and effective across the province.
As progress is made to establish Acute Care Alberta, Alberta’s government is appointing Dr. Chris Eagle as chair and interim president and CEO. This appointment will take effect Feb. 1 to coincide with the establishment of Acute Care Alberta as a legal entity. Dr. Eagle’s focus will be on preparing the organization for its first day of operations later this spring. His appointment to the position is pending finalization of his contract.
Dr. Eagle has significant experience supporting and leading health care organizations and projects across Alberta, including his time as president and CEO of Alberta Health Services (AHS) from 2010 to 2013. His extensive experience in the health field will allow him to guide the work to operationalize Acute Care Alberta.
To help support Dr. Eagle’s work and to lead AHS through its transition from a regional health authority to a hospital-based service provider, Andre Tremblay, deputy minister of Alberta Health, has been appointed interim president and CEO of AHS.
“Acute care is the most complex part of the health care system, and it’s critical that we have the right leadership in place to see this work through and make positive changes to the health care system for Albertans now and into the future. I want to extend my sincerest gratitude to Athana Mentzelopoulos for the work she has done during her time leading Alberta Health Services.”
Tremblay brings a wealth of public service and health care delivery experience to the position. With more than 20 years of public sector leadership, he has served in several senior leadership positions. Prior to joining Health in June 2023, Tremblay has been deputy minister at Education, Agriculture and Forestry, and Transportation. This is also his second leadership role at Alberta Health, having previously served as an associate deputy minister. He was also previously appointed as the deputy clerk of executive council and deputy secretary to cabinet. In his role as interim president and CEO, Tremblay will not receive a salary. His salary as deputy minister will remain the same.
Tremblay will continue as deputy minister through this critical period of transition and change for Alberta’s health care system. He will also oversee the recruitment of a permanent president and CEO for Acute Care Alberta. He is best positioned to continue leading efforts to refocus the health care system while supporting the transition of Alberta Health Services to an acute care service provider.
While in the interim role, Tremblay will work with AHS leadership to oversee operations, support staff transitions to Primary Care Alberta and establish Acute Care Alberta as a legal entity ahead of its operationalization this spring. Throughout this work, Albertans will continue to access acute care services as they always have and there will be no impact to front-line health care workers.
The AHS board of directors will begin the search for a permanent president and CEO immediately, and more details will be provided once the hiring process is complete.
“I am excited to take on this role and support the efforts to refocus Alberta’s health care system and to create an improved acute care system that will make sure Albertans have access to the best health care services they need, no matter where they live in the province.”
“We are at a critical time in the work that is underway to refocus the health care system. I am confident we can continue to make great strides to achieve the goal of making health care better for everyone in Alberta. I want to thank Athana Mentzelopoulos for her hard work, commitment and leadership during her time in the role.”
“We have made great progress refocusing the health care system and I am eager to take on this new role and support the work being done to improve health care across the province. I look forward to leading AHS as it transitions to a service delivery provider and engaging with front-line workers and staff across the system in the coming months.”
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