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Alberta

Alberta’s projected surplus balloons: Mid-year budget update

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Mid-year update: Keeping Alberta’s finances on track

Alberta’s government continues to manage the province’s finances responsibly with the future in mind.

Alberta continues to lead the nation in economic growth and is forecasting a surplus of $5.5 billion in 2023-24, an increase of $3.2 billion from Budget 2023. The province’s fiscal outlook continued to improve in the second quarter of 2023-24, boosted by strong bitumen royalties and higher income tax revenues.

However, volatile oil prices, continued inflation challenges and uncertainty due to slowing global growth could still affect the province’s finances going forward. Debt servicing costs will be higher than previous years due to higher interest rates, reinforcing the importance of the government’s commitment to balance the budget.

“Alberta continues to stand out as a leader when it comes to fiscal stability and economic resilience in the midst of so much global uncertainty. Our second-quarter fiscal update is another positive report, showing strength in Alberta’s finances and economy and positioning us for future growth and prosperity.”

Nate Horner, President of Treasury Board and Minister of Finance

The government continues to spend responsibly, maintaining its commitment to keep funds in the province’s contingency for disasters and emergencies. The government’s new fiscal framework requires the government to use at least half of available surplus cash to pay down debt, freeing up money that can support the needs of Albertans for generations. The government continues to reduce the province’s debt burden and will pay down a forecasted $3.2 billion in debt this fiscal year.

Alberta’s government is turning its focus to developing next year’s budget, so it supports Albertans’ needs and the province’s economic growth while maintaining the government’s commitment to responsible spending within the fiscal framework. Budget 2024 consultations are open and Albertans are encouraged to share their feedback to help set the province’s financial priorities.

Revenue

  • Revenue for 2023-24 is forecast at $74.3 billion, a $3.7-billion increase from Budget 2023. The increase is due to increases across different revenue streams. In addition, the price of West Texas Intermediate (WTI) oil is forecast to average US$79 per barrel over the course of the fiscal year, in line with the Budget 2023 forecast.
    • Personal and corporate income tax revenue is forecast at $21.8 billion, $1.8 billion higher than at budget.
    • Bitumen royalties are forecast at $14.4 billion, an increase of $1.8 billion from budget.
    • Overall resource revenue is forecast at $19.7 billion, $1.3 billion higher than the budget forecast.
  • Beginning in 2024, Alberta’s government will continue to offer fuel tax relief when oil prices are high, even as the province transitions back to the original fuel tax relief program, which is based on average quarterly oil prices.
    • Albertans will save some or all of the provincial fuel tax on gasoline and diesel when oil prices are $80 per barrel or higher during each quarter’s review period.
    • Although oil prices have been below $80 in recent weeks, Albertans will continue to save at least four cents per litre on the provincial fuel tax in the first three months of 2024 as the tax is phased back in.
    • The government’s fuel tax relief efforts, which include the pause to the end of 2023 and additional savings over the first three months of 2024, are forecast to reduce other tax revenue by $524 million in 2023-24.

Expense

  • Expense for 2023-24 is forecast at $68.8 billion, a $481-million increase from Budget 2023.
  • Capital grants are up marginally from Budget 2023, but down from the first-quarter forecast, mainly due to funding schedules for Calgary and Edmonton LRT projects.
  • Debt servicing costs are forecast to increase $309 million from budget, a reflection of ongoing high interest rates and inflation.
  • Total expense has increased by $1.9 billion, $0.5 billion is directly offset by revenue and $1.4 billion is absorbed by the $1.5-billion contingency.
  • In total, $123 million of the 2023-24 contingency remains unallocated.
  • $1.2 billion in disaster and emergency costs are forecast for the current fiscal year.
    • $750 million for fighting wildfires in the province
    • $165 million for AgriRecovery to support livestock producers affected by dry conditions
    • $253 million to provide financial assistance to communities for uninsurable damage from spring wildfires and summer flooding
    • $61 million for evacuation and other support
  • The operating expense forecast has increased by $319 million, including an additional:
    • $301 million for Health
    • $48 million for Advanced Education
    • $48 million for Energy and Minerals
    • $33 million for Mental Health and Addiction
    • $30 million for Education
    • $14 million for Indigenous Relations
    • Offset by decreases of $187 million for lower-than-expected program take-up of affordability payments and re-profiling of TIER spending to 2024-25.

Alberta Heritage Savings Trust Fund

  • The Alberta Heritage Savings Trust Fund’s market value on Sept. 30, 2023, was $21.4 billion, up from the $21.2 billion reported at March 31, 2023.
    • The Heritage Fund returned 0.9 per cent over the first six months of 2023-24.
    • Over the five-year period ending on Sept. 30, 2023, the Heritage Fund returned 5.9 per cent, which is 0.5 per cent above the return of its passive benchmark. While the Heritage Fund is outperforming its benchmark return, it is below the long-term real return target of 6.9 per cent, again a result of interest pressures.
    • The Heritage Fund generated net investment income of $1 billion in the first half of the fiscal year.

Economic outlook

  • Alberta’s economy continues to be resilient, with continued growth projected over the three-year forecast.
  • Alberta’s real gross domestic product (GDP) is expected to grow 2.8 per cent in 2023, in line with the Budget 2023 forecast.
  • Despite interest rate increases, high prices and slower global economic growth, Alberta’s economy is forecast to keep expanding. The pace of growth, however, will be slower compared with the last two years when the province was recovering from the pandemic.

Alberta Fund

  • The amount of surplus cash available for debt repayment and the Alberta Fund is determined after a number of required cash adjustments have been made. For 2023-24, this includes $5.1 billion from the 2022-23 final results to start the year.
  • The Alberta Fund contribution for 2023-24 is forecast at $1.6 billion.
  • Money in the Alberta Fund can be used toward additional debt repayment, the Heritage Savings Trust Fund, or one-time initiatives that do not permanently increase government spending.

Related information

This is a news release from the Government of Alberta.

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Alberta

‘Weird and wonderful’ wells are boosting oil production in Alberta and Saskatchewan

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From the Canadian Energy Centre

By Deborah Jaremko

Multilateral designs lift more energy with a smaller environmental footprint

A “weird and wonderful” drilling innovation in Alberta is helping producers tap more oil and gas at lower cost and with less environmental impact.

With names like fishbone, fan, comb-over and stingray, “multilateral” wells turn a single wellbore from the surface into multiple horizontal legs underground.

“They do look spectacular, and they are making quite a bit of money for small companies, so there’s a lot of interest from investors,” said Calin Dragoie, vice-president of geoscience with Calgary-based Chinook Consulting Services.

Dragoie, who has extensively studied the use of multilateral wells, said the technology takes horizontal drilling — which itself revolutionized oil and gas production — to the next level.

“It’s something that was not invented in Canada, but was perfected here. And it’s something that I think in the next few years will be exported as a technology to other parts of the world,” he said.

Dragoie’s research found that in 2015 less than 10 per cent of metres drilled in Western Canada came from multilateral wells. By last year, that share had climbed to nearly 60 per cent.  

Royalty incentives in Alberta have accelerated the trend, and Saskatchewan has introduced similar policy.

Multilaterals first emerged alongside horizontal drilling in the late 1990s and early 2000s, Dragoie said. But today’s multilaterals are longer, more complex and more productive.

The main play is in Alberta’s Marten Hills region, where producers are using multilaterals to produce shallow heavy oil.

Today’s average multilateral has about 7.5 horizontal legs from a single surface location, up from four or six just a few years ago, Dragoie said.

One record-setting well in Alberta drilled by Tamarack Valley Energy in 2023 features 11 legs stretching two miles each, for a total subsurface reach of 33 kilometres — the longest well in Canada.

By accessing large volumes of oil and gas from a single surface pad, multilaterals reduce land impact by a factor of five to ten compared to conventional wells, he said.

The designs save money by skipping casing strings and cement in each leg, and production is amplified as a result of increased reservoir contact.

Here are examples of multilateral well design. Images courtesy Chinook Consulting Services.

Parallel

Fishbone

Fan

Waffle

Stingray

Frankenwells

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Alberta

Alberta to protect three pro-family laws by invoking notwithstanding clause

Published on

From LifeSiteNews

By Anthony Murdoch

Premier Danielle Smith said her government will use a constitutional tool to defend a ban on transgender surgery for minors and stopping men from competing in women’s sports.

Alberta Premier Danielle Smith said her government will use a rare constitutional tool, the notwithstanding clause, to ensure three bills passed this year — a ban on transgender surgery for minors, stopping men from competing in women’s sports, and protecting kids from extreme aspects of the LGBT agenda — stand and remain law after legal attacks from extremist activists. 

Smith’s United Conservative Party (UCP) government stated that it will utilize a new law, Bill 9, to ensure that laws passed last year remain in effect.

“Children deserve the opportunity to grow into adulthood before making life-altering decisions about their gender and fertility,” Smith said in a press release sent to LifeSiteNews and other media outlets yesterday. 

“By invoking the notwithstanding clause, we’re ensuring that laws safeguarding children’s health, education and safety cannot be undone – and that parents are fully involved in the major decisions affecting their children’s lives. That is what Albertans expect, and that is what this government will unapologetically defend.”

Alberta Justice Minister and Attorney General Mickey Amery said that the laws passed last year are what Albertans voted for in the last election. 

“These laws reflect an overwhelming majority of Albertans, and it is our responsibility to ensure that they will not be overturned or further delayed by activists in the courts,” he noted. 

“The notwithstanding clause reinforces democratic accountability by keeping decisions in the hands of those elected by Albertans. By invoking it, we are providing certainty that these protections will remain in place and that families can move forward with clarity and confidence.”

The Smith government said the notwithstanding clause will apply to the following pieces of legislation:

  • Bill 26, the Health Statutes Amendment Act, 2024, prohibits both gender reassignment surgery for children under 18 and the provision of puberty blockers and hormone treatments for the purpose of gender reassignment to children under 16.

  • Bill 27, the Education Amendment Act, 2024, requires schools to obtain parental consent when a student under 16 years of age wishes to change his or her name or pronouns for reasons related to the student’s gender identity, and requires parental opt-in consent to teaching on gender identity, sexual orientation or human sexuality.

  • Bill 29, the Fairness and Safety in Sport Act, requires the governing bodies of amateur competitive sports in Alberta to implement policies that limit participation in women’s and girls’ sports to those who were born female.”

Bill 26 was passed in December of 2024, and it amends the Health Act to “prohibit regulated health professionals from performing sex reassignment surgeries on minors.”

Last year, Smith’s government also passed Bill 27, a law banning schools from hiding a child’s pronoun changes at school that will help protect kids from the extreme aspects of the LGBT agenda.

Bill 27 will also empower the education minister to, in effect, stop the spread of extreme forms of pro-LGBT ideology or anything else to be allowed to be taught in schools via third parties.

Bill 29, which became law last December, bans gender-confused men from competing in women’s sports, the first legislation of its kind in Canada.  The law applies to all school boards, universities, and provincial sports organizations. 

Alberta’s notwithstanding clause is like all other provinces’ clauses and was a condition Alberta agreed to before it signed onto the nation’s 1982 constitution.

It is meant as a check to balance power between the court system and the government elected by the people. Once it is used, as passed in the legislature, a court cannot rule that the “legislation which the notwithstanding clause applies to be struck down based on the Charter of Rights and Freedoms, the Alberta Bill of Rights, or the Alberta Human Rights Act,” the Alberta government noted.

While Smith has done well on some points, she has still been relatively soft on social issues of importance to conservatives , such as abortion, and has publicly expressed pro-LGBT views, telling Jordan Peterson earlier this year that conservatives must embrace homosexual “couples” as “nuclear families.” 

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