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Alberta

Alberta government must restrain spending in upcoming budget to avoid red ink

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From the Fraser Institute

By Tegan Hill and Milagros Palacios

Whether due to U.S. tariffs or lower-than-expected oil prices, the Smith government has repeatedly warned Albertans that despite a $4.6 billion projected budget surplus in 2024/25, Alberta could soon be in the red. To help avoid this fate, the Smith government must restrain spending in its upcoming 2025 budget.

These are not simply numbers on a page; budget deficits have real consequences for Albertans. For one, deficits fuel debt accumulation. And just as Albertans must pay interest on their own mortgages or car loans, taxpayers must pay interest on government debt. Each dollar spent paying interest is a dollar diverted from programs such as health care and education, or potential tax relief. This fiscal year, provincial government debt interest costs will reach a projected $650 per Albertan.

And while many risk factors are out of the government’s direct control, the government can control its own spending.

In its 2023 budget, the Smith government committed to keep the rate of spending growth to below the rate of inflation and population growth. This was an important step forward after decades of successive governments substantially increasing spending during good times—when resource revenues (including oil and gas royalties) were relatively high (as they are today)—but failing to rein in spending when resource revenue inevitably declined.

But here’s the problem. Even if the Smith government sticks to this commitment, it may still fall into deficit. Why? Because this government has spent significantly more than it originally planned in its 2022 mid-year plan (the Smith government’s first fiscal update). In other words, the government’s “restraint” is starting from a significantly higher base level of spending. For example, this fiscal year it will spend $8.2 billion more than it originally planned in its 2022 mid-year plan. And inflation and population growth only account for $3.1 billion of this additional spending. In other words, $5.1 billion of this new spending is unrelated to offsetting higher prices or Alberta’s growing population.

Because of this higher spending and reliance on volatile resource revenue, red ink looms.

Indeed, while the Smith government projects budget surpluses over the next three fiscal years, fuelled by historically high resource revenue, if resource revenue was at its average of the last two decades, this year’s $4.6 billion projected budget surplus would turn into a $5.8 billion deficit. And projected budget surpluses in 2025/26 and 2026/27 would flip to budget deficits. To be clear, this is not a far-fetched scenario—resource revenue plummeted by nearly 70 per cent in 2015/16.

In contrast, if resource revenue fell to its average (again, based on the last two decades) but the Smith government held to its original 2022 spending plan, Alberta would still have a balanced budget in 2026/27.

Bottom line; had the Smith government not substantially increased spending over the last two years, Alberta’s spending levels today would align with more stable ongoing levels of revenue, which would put Alberta on more stable fiscal footing in the years to come.

Premier Smith has warned Albertans a budget deficit may be on the way. To mitigate the risk of red ink moving forward, the Smith government should show real spending restraint in its 2025 budget.

Tegan Hill

Director, Alberta Policy, Fraser Institute

Milagros Palacios

Director, Addington Centre for Measurement, Fraser Institute

Alberta

B.C. would benefit from new pipeline but bad policy stands in the way

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From the Fraser Institute

By Julio Mejía and Elmira Aliakbari

Bill C-69 (a.k.a. the “no pipelines act”) has added massive uncertainty to the project approval process, requiring proponents to meet vague criteria that go far beyond any sensible environmental concerns—for example, assessing any project’s impact on the “intersection of sex and gender with other identity factors.”

In case you haven’t heard, the Alberta government plans to submit a proposal to the federal government to build an oil pipeline from Alberta to British Columbia’s north coast.

But B.C. Premier Eby dismissed the idea, calling it a project imported from U.S. politics and pursued “at the expense of British Columbia and Canada’s economy.” He’s simply wrong. A new pipeline wouldn’t come at the expense of B.C. or Canada’s economy—it would strengthen both. In fact, particularly during the age of Trump, provinces should seek greater cooperation and avoid erecting policy barriers that discourage private investment and restrict trade and market access.

The United States remains the main destination for Canada’s leading exports, oil and natural gas. In 2024, nearly 96 per cent of oil exports and virtually all natural gas exports went to our southern neighbour. In light of President Trump’s tariffs on Canadian energy and other goods, it’s long past time to diversify our trade and find new export markets.

Given that most of Canada’s oil and gas is landlocked in the Prairies, pipelines to coastal terminals are the only realistic way to reach overseas markets. After the completion of the Trans Mountain Pipeline Expansion (TMX) project in May 2024, which transports crude oil from Alberta to B.C. and opened access to Asian markets, exports to non-U.S. destinations increased by almost 60 per cent. This new global reach strengthens Canada’s leverage in trade negotiations with Washington, as it enables Canada to sell its energy to markets beyond the U.S.

Yet trade is just one piece of the broader economic impact. In its first year of operation, the TMX expansion generated $13.6 billion in additional revenue for the economy, including $2.0 billion in extra tax revenues for the federal government. By 2043, TMX operations will contribute a projected $9.2 billion to Canada’s economic output, $3.7 billion in wages, and support the equivalent of more than 36,000 fulltime jobs. And B.C. stands to gain the most, with $4.3 billion added to its economic output, nearly $1 billion in wages, and close to 9,000 new jobs. With all due respect to Premier Eby, this is good news for B.C. workers and the provincial economy.

In contrast, cancelling pipelines has come at a real cost to B.C. and Canada’s economy. When the Trudeau government scrapped the already-approved Northern Gateway project, Canada lost an opportunity to increase the volume of oil transported from Alberta to B.C. and diversify its trading partners. Meanwhile, according to the Canadian Energy Centre, B.C. lost out on nearly 8,000 jobs a year (or 224,344 jobs in 29 years) and more than $11 billion in provincial revenues from 2019 to 2048 (inflation-adjusted).

Now, with the TMX set to reach full capacity by 2027/28, and Premier Eby opposing Alberta’s pipeline proposal, Canada may miss its chance to export more to global markets amid rising oil demand. And Canadians recognize this opportunity—a recent poll shows that a majority of Canadians (including 56 per cent of British Columbians) support a new oil pipeline from Alberta to B.C.

But, as others have asked, if the economic case is so strong, why has no private company stepped up to build or finance a new pipeline?

Two words—bad policy.

At the federal level, Bill C-48 effectively bans large oil tankers from loading or unloading at ports along B.C.’s northern coast, undermining the case for any new private-sector pipeline. Meanwhile, Bill C-69 (a.k.a. the “no pipelines act”) has added massive uncertainty to the project approval process, requiring proponents to meet vague criteria that go far beyond any sensible environmental concerns—for example, assessing any project’s impact on the “intersection of sex and gender with other identity factors.” And the federal cap on greenhouse gas (GHG) emissions exclusively for the oil and gas sector will inevitably force a reduction in oil and gas production, again making energy projects including pipelines less attractive to investors.

Clearly, policymakers in Canada should help diversify trade, boost economic growth and promote widespread prosperity in B.C., Alberta and beyond. To achieve this goal, they should put politics aside, focus of the benefits to their constituents, and craft regulations that more thoughtfully balance environmental concerns with the need for investment and economic growth.

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Alberta

Alberta introduces bill allowing province to reject international agreements

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From LifeSiteNews

By Anthony Murdoch

Under the proposed law, international treaties or accords signed by the federal government would not apply in Alberta unless approved through its own legislation.

Alberta’s Conservative government introduced a new law to protect “constitutional rights” that would allow it to essentially ignore International Agreements, including those by the World Health Organization (WHO), signed by the federal Liberal government.

The new law, Bill 1, titled International Agreements Act and introduced Thursday, according to the government, “draws a clear line: international agreements that touch on provincial areas of jurisdiction must be debated and passed into law in Alberta.”

Should the law pass, which is all but certain as Alberta Premier Danielle Smith’s Conservatives hold a majority government, it would mean that any international treaties or accords signed by the federal government would not apply in Alberta unless approved through its own legislation.

“As we return to the legislature, our government is focused on delivering on the mandate Albertans gave us in 2023 to stand up for this province, protect our freedoms and chart our path forward,” Smith said.

“We will defend our constitutional rights, protect our province’s interests and make sure decisions that affect Albertans are made by Albertans. The federal government stands at a crossroads. Work with us, and we’ll get things done. Overstep, and Alberta will stand its ground.”

According to the Alberta government, while the feds have the “power to enter into international agreements on behalf of Canada,” it “does not” have the “legal authority to impose its terms on provinces.”

“The International Agreements Act reinforces that principle, ensuring Alberta is not bound by obligations negotiated in Ottawa that do not align with provincial priorities,” the province said.

The new Alberta law is not without precedent. In 2000, the province of Quebec passed a similar law, allowing it to ignore international agreements unless approved by local legislators.

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