Alberta
Premier Danielle Smith’s first budget adds health and education spending and forecasts a $2.4 billion surplus
Budget 2023 forecasts a surplus of $2.4 billion in 2023-24 and reflects the government decisions to invest in Alberta’s future and provide security for Alberta families and communities.
“Fiscal responsibility matters. It’s been key to achieving our strong fiscal standing and will be essential for sustainable program delivery in the future. In Budget 2023, we continue our commitment to paying down debt all while continuing to position our economy for growth and invest in the top priorities of Albertans.”
Growing jobs and the economy
Budget 2023 advances the province’s already successful Alberta at Work initiative, investing a further $176 million in 2025-26 to help Albertans build their skills and find jobs, and assisting employers in their search for workers in existing and emerging sectors.
A $111-million increase over three years will add seats to expand enrolment in areas with the highest student demand, including non-trade construction, energy, technology and business. Alberta’s government is committed to removing barriers in order to attract highliy skilled professionals and job-creating entrepreneurs to Alberta.
Investments in aviation and aerospace, agri-food manufacturing and $24.5 million this fiscal year to the Alberta Technology and Innovation Strategy will enhance emerging and innovative technologies, drive economic diversification and attract even more venture capital investments to build on successive record-breaking years. A $54-million per year increase in funding for the Alberta Petrochemicals Incentive Program starting in 2025-26 will support Air Products’ clean hydrogen facility – and continue to make Alberta a global leader in petrochemical production, bring long-term investments and create thousands of construction jobs.
Transforming health care to meet Albertans’ needs
Alberta’s government is setting a new record for spending in health care this year by committing an additional $965 million in operating expense in 2023-24 for the Ministry of Health to continue to build a stronger health-care system for Albertans. This funding will ensure the government can take the urgent action needed to improve ambulance response times, decrease emergency room wait times, reduce wait times for surgeries and attract more front-line health workers to deliver the care patients expect and deserve.
Budget 2023 includes $158 million this year to attract, recruit and train more doctors and nurses to work across the province, with a focus on family physicians for rural areas. Alberta’s primary health-care system is being strengthened and modernized with a record $2 billion over three years. Another $196 million over three years will strengthen emergency medical services and $3.1 billion over three years will modernize and expand health facilities across Alberta, including the Red Deer Regional Hospital and expanding capacity for operating rooms in 15 communities to complete more of the surgeries Albertans are waiting for. An additional $529 million in capital maintenance and renewal funding will be used to keep facilities operational and a further $732 million in self-financed investment will add to health infrastructure.
Supporting Albertans, students and families
With $2.3 billion in affordability measures in 2023-24, $1.5 billion in 2024-25 and another $1.8 billion in 2025-26, Alberta’s government is keeping more money in the pockets of Albertans and continues to provide a helping hand to those in need. New relief measures will save post-secondary students about $18 million each year with lower interest rates for student loans. Adoptive families will have access to more subsidies and tax breaks to make adoption more feasible. Workers in the social services sector will see their wages increased by 10 per cent, so they can continue to provide compassionate services to people with complex needs, those experiencing homelessness or family violence. Albertans will also receive a larger tax credit when they donate to their favourite charities to lend a helping hand.
An increase of $1.8 billion for education will help Alberta’s young people succeed and thrive in smaller classes. This increase will support the hiring of up to 3,000 education staff, including teachers, educational assistants, bus drivers and school support staff to give students the focused time and attention they need to succeed in their studies.
The government is also investing $59.3 million in 2023-24 to create thousands more licensed child-care spaces as part of opening a total of 68,700 new spaces by the end of March 2023, increasing access and choice so parents can go to school, work and participate in the economy. Affordability grants to child-care operators and subsidies for parents will further lower the cost of child care, with the Alberta federal-provincial child-care agreement already reducing fees by an average of 50 per cent in 2022 for young children.
Keeping Albertans and communities safe
All Albertans, families and children have the right to safety and security in their homes, at school, at work and in their communities, no matter where they live.
Budget 2023 keeps communities safe by increasing collaboration between first responders and community partners and increasing access for vulnerable populations to recovery-oriented mental health and addiction supports and services.
- $12.5 million in 2023-24 will support the expansion of therapeutic living units within provincial correctional facilities to help inmates access recovery-oriented treatment and recovery programs. This is a joint investment between Mental Health and Addiction and Public Safety and Emergency Services.
- $65 million over the next three years will strengthen First Nations policing to address the unique needs of their communities and members. This will secure new policing positions and the creation of another First Nations police service in addition to the Lakeshore Regional Police Service, the Blood Tribe Police Service and Tsuut’ina Nation Police Service.
- $20 million over three years is committed to combat human trafficking and ensure necessary resources are provided to survivors and victims.
The province will review options for delivering policing services with the objective of improving the safety and security of Albertans and their property.
Committing to responsible fiscal management
Budget 2023 secures Alberta’s future by staying true to responsible fiscal management and spending hard-earned tax dollars wisely to support Albertans today and tomorrow.
A new fiscal framework would require all future Alberta governments to balance their annual budgets, with certain exceptions, and use any surpluses to first pay down debt and save for the future before investing in one-time initiatives.
Taxpayer-supported debt is being reduced by $14.8 billion between 2021-22 and 2023-24, and the Alberta Heritage Savings Trust Fund is growing by $5.7 billion between 2021-22 and 2025-26. This will bring taxpayer-supported debt to $78.3 billion at the end of 2023-24, and saves Albertans estimated $260 million in this fiscal year and $551 million in 2023-24.
Mandating balanced budgets and tying operating expense increases to population growth and inflation would help control spending to prevent what could be temporarily high resource revenue being used to increase spending in an unsustainable way. Spending decisions instead would be focused on not only meeting the needs and priorities of Albertans but also on continuing to drive change, innovation and improvement of vital services and programs.
Revenue
- In 2023-24, total revenue is estimated to be $70.7 billion, which is $5.4 billion lower than the forecast for 2022-23. Commodity prices are expected to soften due to fears of a looming global recession, while investment income is expected to recover well after dropping in 2022-23.
- Revenue is expected to remain above $70 billion in following years. The revenue forecast for 2024-25 is $71.7 billion and for 2025-26 is $72.6 billion.
- In 2023-24, corporate income tax revenue is estimated at $5.9 billion, down 7.8 per cent from 2022-23, largely due to declining commodity prices.
- Non-renewable resource revenue is estimated to be $18.4 billion in 2023-24, down from the highest-ever resource revenue of $27.5 billion forecast in 2022-23.
Expense
- Total expense in 2023-24 is $68.3 billion, which is $2.6 billion more than the forecast for 2022-23.
- Total expense is expected to be $69.7 billion in 2024-25 and $71.2 billion in 2025-26.
Surplus
- A surplus of $2.4 billion is forecast for 2023-24 compared with $10.4 billion in 2022-23.
- Surpluses of $2 billion and $1.4 billion are forecast for 2024-25 and 2025-26, respectively.
Economic outlook
- In 2022, real gross domestic product (GDP) rose by an estimated 4.8 per cent, which is lower than the budget forecast of 5.4 per cent. The softer growth reflects the impact of higher interest rates and prices on consumer spending and residential investment. Even so, real GDP fully recovered from the COVID-19 downturn and surpassed the 2014 peak in 2022.
- In 2023, real GDP is expected to grow by 2.8 per cent, up slightly from the 2.7 per cent growth forecast at mid-year.
Energy and economic assumptions, 2023-24
- West Texas Intermediate oil (USD/bbl) $79.00
- Western Canadian Select @ Hardisty (CND/bbl) $78.00
- Light-heavy differential (USD/bbl) $19.50
- Natural gas (CND/GJ) $4.10
- Convention crude production (000s barrels/day) 497
- Raw bitumen production (000s barrels/day) 3,345
- Canadian dollar exchange rate (USD/CDN) $76.20
- Interest rate (10-year Canada bonds, per cent) 3.60
Budget 2023 secures Alberta’s bright future by transforming the health-care system to meet people’s needs, supporting Albertans with the high cost of living, keeping our communities safe and driving the economy with more jobs, quality education and continued diversification.
Alberta
Alberta government should eliminate corporate welfare to generate benefits for Albertans
From the Fraser Institute
By Spencer Gudewill and Tegan Hill
Last November, Premier Danielle Smith announced that her government will give up to $1.8 billion in subsidies to Dow Chemicals, which plans to expand a petrochemical project northeast of Edmonton. In other words, $1.8 billion in corporate welfare.
And this is just one example of corporate welfare paid for by Albertans.
According to a recent study published by the Fraser Institute, from 2007 to 2021, the latest year of available data, the Alberta government spent $31.0 billion (inflation-adjusted) on subsidies (a.k.a. corporate welfare) to select firms and businesses, purportedly to help Albertans. And this number excludes other forms of government handouts such as loan guarantees, direct investment and regulatory or tax privileges for particular firms and industries. So the total cost of corporate welfare in Alberta is likely much higher.
Why should Albertans care?
First off, there’s little evidence that corporate welfare generates widespread economic growth or jobs. In fact, evidence suggests the contrary—that subsidies result in a net loss to the economy by shifting resources to less productive sectors or locations (what economists call the “substitution effect”) and/or by keeping businesses alive that are otherwise economically unviable (i.e. “zombie companies”). This misallocation of resources leads to a less efficient, less productive and less prosperous Alberta.
And there are other costs to corporate welfare.
For example, between 2007 and 2019 (the latest year of pre-COVID data), every year on average the Alberta government spent 35 cents (out of every dollar of business income tax revenue it collected) on corporate welfare. Given that workers bear the burden of more than half of any business income tax indirectly through lower wages, if the government reduced business income taxes rather than spend money on corporate welfare, workers could benefit.
Moreover, Premier Smith failed in last month’s provincial budget to provide promised personal income tax relief and create a lower tax bracket for incomes below $60,000 to provide $760 in annual savings for Albertans (on average). But in 2019, after adjusting for inflation, the Alberta government spent $2.4 billion on corporate welfare—equivalent to $1,034 per tax filer. Clearly, instead of subsidizing select businesses, the Smith government could have kept its promise to lower personal income taxes.
Finally, there’s the Heritage Fund, which the Alberta government created almost 50 years ago to save a share of the province’s resource wealth for the future.
In her 2024 budget, Premier Smith earmarked $2.0 billion for the Heritage Fund this fiscal year—almost the exact amount spent on corporate welfare each year (on average) between 2007 and 2019. Put another way, the Alberta government could save twice as much in the Heritage Fund in 2024/25 if it ended corporate welfare, which would help Premier Smith keep her promise to build up the Heritage Fund to between $250 billion and $400 billion by 2050.
By eliminating corporate welfare, the Smith government can create fiscal room to reduce personal and business income taxes, or save more in the Heritage Fund. Any of these options will benefit Albertans far more than wasteful billion-dollar subsidies to favoured firms.
Authors:
Alberta
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