Alberta government’s fiscal update underscores need for rainy-day account

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in the budget annually and deposit any resource revenue above that amount automatically in a rainy-day account to be withdrawn in years when resource revenue falls below that stable amount.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

Related Topics:#AlbertaBudgetSurplus #AlbertaFiscalUpdate #FraserInstitute #TeganHill AlbertaRainyDayAccount

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Alberta

Former AHS head, Dr. Chris Eagle will lead Acute Care Alberta

Published on January 10, 2025

Government of Alberta

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.”

Adriana LaGrange, Minister of Health

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.”

Dr. Chris Eagle, chair, and interim president and CEO, Acute Care Alberta

“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.”

Angela Fong, board chair, Alberta Health Services

“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.”

Andre Tremblay, interim president and CEO, Alberta Health Services, and deputy minister, Alberta Health

Alberta

Alberta Infrastructure reviews 2024 progress

Published on January 10, 2025

Government of Alberta

Hundreds of infrastructure projects completed or underway throughout 2024 helped build Alberta communities, boost the economy and support thousands of jobs.

Throughout the province, Infrastructure worked in collaboration with industry, school jurisdictions, Alberta Health and municipal and community partners to deliver the new, modernized and well-maintained public facilities that house the vital programs and services Alberta families and communities rely on.

“This past year, we completed hundreds of projects across Alberta, providing growing communities with new and modernized facilities. We also passed the Real Property Governance Act, a piece of legislation that helps the government better manage assets for Albertans and ultimately provides better value for our tax dollars. As we move into 2025, our team is committed to delivering the essential infrastructure needed to support the demands of our growing and robust economy.”

Pete Guthrie, Minister of Infrastructure

With a strong outlook for Alberta’s construction market, 2025 is shaping up to be another productive year. Alberta Infrastructure remains committed to completing work on schedule and on budget, while maximizing the value of taxpayer money.

This past year saw a focus on further developing relationships with industry partners across various trades, backgrounds, specialities and sectors. In 2025, this work will continue through Industry Liaison Committees, roundtables and other opportunities that will maximize collaboration and productivity. Alberta’s future is strong, competitive and full of opportunity.

2024 Infrastructure highlights

Schools

In September, Alberta’s government announced a generational commitment of $8.6 billion to build schools now. This investment will award up to 90 new schools and up to 24 modernizations or replacements over the next three years.
- In addition, a new in-budget approval process has been introduced for school construction that will accelerate project progression through development stages, reducing project timelines by as much as six months.
In 2024, 10 schools were built across the province, creating space for more than 9,600 students in nine communities, including:
- Blackfalds, Calgary, Coaldale, Edmonton, Fort Vermillion, Grande Prairie, Langdon, Leduc and Wabasca-Desmarais.
Entering the new year, another 82 school projects are underway, progressing through various stages of planning, design and construction.

Health Facilities

As announced in Budget 2024, a modern, standalone Stollery Children’s Hospital in Edmonton remains a key priority with $20 million budgeted over the next three years for early planning.
Redevelopment of Calgary’s Rockyview General Hospital Intensive Care Unit, Coronary Care Unit and Gastrointestinal Clinic were completed in 2024.
Renovations of operating rooms and support areas in Rocky Mountain House through the Alberta Surgical Initiative (ASI) wrapped up this past spring.
- Through the ASI, 31 projects are underway in planning, design or construction in Brooks, Calgary, Edmonton, Innisfail, Lethbridge and Olds.
Another 53 health projects are underway going into 2025.
- This includes awarding the construction manager contract for the Red Deer Regional Hospital Centre (RDRHC) this past summer and making progress on the new patient tower and redevelopment.
  - The procurement process for the RDRHC Ambulatory building is ongoing, with contractor selection expected in spring 2025 and groundbreaking in summer 2025.

Government Facilities

The Lakeview Recovery Community in Gunn completed construction and was handed over to Mental Health and Addiction for operations.
- Construction of the Calgary Recovery Community is anticipated to be complete in early 2025.
The new $203-million Red Deer Justice Centre completed construction and will provide the community with 12 courtrooms when it officially opens in the first quarter of 2025.
Another 20 new government facility projects are underway, such as recovery community facilities in Grande Prairie and Edmonton, and campus upgrades to the Yellowhead Youth Centre.

Capital Maintenance and Renewal

Work done through Capital Maintenance and Renewal (CMR) helps upgrade existing government facilities and assets. In 2024, work finished on 85 CMR projects, including construction of the new reflecting pool and fountain at the Alberta legislature grounds in time for Canada Day celebrations.
Another 212 CMR projects are underway at government facilities going into the new year, with an additional 516 specifically at health facilities.

Public-Private Partnership (P3) Awards

In May, Alberta’s government completed construction of five high schools in Blackfalds, Langdon, Leduc and two in Edmonton. All finished on schedule, on budget and ready for the 2024-25 school year.
- This bundle received a Silver Award for Design & Construction at the 2024 National Awards for Innovation and Excellence in P3s.
Procurement is underway to deliver another bundle of new Alberta schools in Airdrie, Blackfalds, Calgary, Chestermere, Edmonton and Okotoks.
The Evan-Thomas Water and Wastewater Treatment Plant in Kananaskis won Best Operational Project at the P3 Partnerships Bulletin awards.

Legislation

In May 2024, Infrastructure’s Real Property Governance Act received royal assent. The act helps increase transparency and reduce red tape by creating consistent rules across government for the disposal of property and creates a centralized inventory of public lands and buildings to help government better manage these assets for Albertans.
In November 2024, Alberta’s government introduced amendments to the Public Works Act (PWA) that mandate payment timelines and invoicing provisions for public infrastructure work, helping ensure contractors and subcontractors are paid fairly and promptly.