Alberta
With spending restraint, Alberta can re-introduce a rainy-day fund worth $9.8 billion by 2025/26
From the Fraser Institute
It’s Time to Get Off the Resource Revenue Rollercoaster: Re-establishing the Alberta Sustainability Fund
With spending restraint, Alberta can re-introduce a rainy-day fund worth $9.8 billion by 2025/26 that could help insulate the province’s budget from swings in resource revenue, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“Alberta has an ongoing fiscal problem fueled by volatile resource revenues, but reintroducing a rainy-day fund, based on the previously successful Alberta Sustainability Fund, would help get Alberta off this resource revenue rollercoaster and stabilize provincial finances for the long-term,” said Tegan Hill, associate director of Alberta policy at the Fraser Institute and co-author of There’s time to get off the resource revenue rollercoaster: Re-establishing the Alberta Sustainability Fund.
Alberta governments typically include all resource revenue in the budget, meaning that during periods of relatively high resource revenue, the province enjoys budget surpluses but faces pressure to increase spending, and when resource revenues decline, with comparatively high levels of spending, the province’s finances turn to deficits.
Consider that amid the windfall in resource revenue, in Budget 2023, the Alberta government increased cumulative spending by $10.1 billion from 2022/23 through 2024/25 compared to the 2022 Mid-Year Fiscal update just three months earlier.
Rather than continue to spend relatively high one-time resource revenue, the Alberta government can use this opportunity to stabilize provincial finances over the long-term.
By limiting resource revenue included the budget to a stable amount, it will thereby limit the amount of money available for annual spending. Any resource revenue above the set stable amount would be automatically saved in a rainy-day fund to be withdrawn to maintain that stable amount in years with relatively low resource revenue, thus, helping to avoid budget deficits.
The study calculates that with spending restraint Alberta can fund a rainy-day fund worth $9.8 billion by 2025/26.
“The rainy-day fund could be implemented all while still maintaining a balanced budget for Alberta,” Hill said.
Summary
- Alberta’s volatile resource revenues are fueling its ongoing fiscal problem. The provincial government typically includes all resource revenue in its budget. When resource revenue is relatively high, the province enjoys budget surpluses but faces pressure to increase spending; when resource revenues drop, spending remains high and the province turns to deficits.
- Despite efforts to better manage Alberta’s finances, the Smith government is largely repeating past mistakes by increasing spending during a period of relatively high resource revenue.
- In the 2022 mid-year update, the Smith government increased the plan for nominal program spending from Budget 2022 every year from 2022/23 through 2024/25 for a cumulative increase of $5.9 billion. In Budget 2023, the Smith government increased the plan further with a cumulative increase of $10.1 billion from 2022/23 through 2024/25 compared to the 2022 mid-year update.
- Rather than spend all of the resource revenue in years when it is relatively high, the Alberta government should use this opportunity to stabilize provincial finances over the long-term by re-introducing a rainy-day account based on the earlier Alberta Sustainability Fund (ASF).
- To do so, it would limit the resource revenue included the budget to a stable amount, thereby limiting the amount of money available for annual spending. Any resource revenue above the set stable amount would be automatically saved in the ASF to be withdrawn to maintain that stable amount in years with relatively low resource revenue. The government could implement the ASF while maintaining a balanced budget and without an annual reduction in nominal spending.
- Based on 2023 budget projections, with spending restraint, the provincial government could re-introduce an ASF worth $9.8 billion by 2025/26.
Authors:
Minister of Public Safety and Emergency Services Mike Ellis issued the following statement on the upcoming Alberta Emergency Alert test:
“On Nov. 19, 2025, Alberta will take part in a scheduled test of the National Public Alerting System. At 1:55 p.m., an Alberta Emergency Alert test will be issued across multiple channels including television, radio, wireless devices, websites, social media, the Alberta Emergency Alert mobile app and directly to compatible cellphones across the province.
“While alert interruptions can be inconvenient, these tests are essential. They help us identify and resolve technical issues, ensuring the system functions properly when it matters most. Regular testing, typically held in May and November, is a key part of keeping Albertans informed during real emergencies such as tornadoes, wildfires, floods and Amber Alerts.
“To stay connected, I urge all Albertans to download the Alberta Emergency Alert app, which delivers critical warnings directly to your phone. To receive alerts, your mobile device must be compatible, connected to an LTE 4G network or higher, or connected to Wi-Fi with the app installed. If your phone is on silent, the alert will still appear but may not produce sound.
“This test is also a valuable opportunity to talk with your household, friends and coworkers about emergency preparedness. Questions to ask:
- Do you have an emergency kit with enough supplies for at least 72 hours?
- Have you included essentials like water, non-perishable food, flashlights, batteries and a first aid kit?
- Do you have copies of important documents and a list of emergency contacts?
- Is your kit stored in an easy-to-access location and does everyone know where it is?
“Preparedness doesn’t have to be complicated. Simple steps like having an emergency plan and essential supplies can make a big difference to protect yourself and your household.”
Related information
From the Fraser Institute
The Carney government, which on Monday survived a confidence vote in Parliament by the skin of its teeth, recently released a “second tranche of nation-building projects” blessed by the Major Projects Office. To have a chance to survive Canada’s otherwise oppressive regulatory gauntlet, projects must get on this Caesar-like-thumbs-up-thumbs-down list.
The first tranche of major projects released in September included no new oil pipelines but pertained largely to natural gas, nuclear power, mineral production, etc. The absence of proposed oil pipelines was not surprising, as Ottawa’s regulatory barricade on oil production means no sane private company would propose such a project. (The first tranche carries a price tag of $60 billion in government/private-sector spending.)
Now, the second tranche of projects also includes not a whiff of support for oil production, transport and export to non-U.S. markets. Again, not surprising as the prime minister has done nothing to lift the existing regulatory blockade on oil transport out of Alberta.
So, what’s on the latest list?
There’s a “conservation corridor” for British Columbia and Yukon; more LNG projects (both in B.C.); more mineral projects (nickel, graphite, tungsten—all electric vehicle battery constituents); and still more transmission for “clean energy”—again, mostly in B.C. And Nunavut comes out ahead with a new hydro project to power Iqaluit. (The second tranche carries a price tag of $58 billion in government/private-sector spending.)
No doubt many of these projects are worthy endeavours that shouldn’t require the imprimatur of the “Major Projects Office” to see the light of day, and merit development in the old-fashioned Canadian process where private-sector firms propose a project to Canada’s environmental regulators, get necessary and sufficient safety approval, and then build things.
However, new pipeline projects from Alberta would also easily stand on their own feet in that older regulatory regime based on necessary and sufficient safety approval, without the Carney government additionally deciding what is—or is not—important to the government, as opposed to the market, and without provincial governments and First Nations erecting endless barriers.
Regardless of how you value the various projects on the first two tranches, the second tranche makes it crystal clear (if it wasn’t already) that the Carney government will follow (or double down) on the Trudeau government’s plan to constrain oil production in Canada, particularly products derived from Alberta’s oilsands. There’s nary a mention that these products even exist in the government’s latest announcement, despite the fact that the oilsands are the world’s fourth-largest proven reserve of oil. This comes on the heels on the Carney government’s first proposed budget, which also reified the government’s fixation to extinguish greenhouse gas emissions in Canada, continue on the path to “net-zero 2050” and retain Canada’s all-EV new car future beginning in 2036.
It’s clear, at this point, that the Carney government is committed to the policies of the previous Liberal government, has little interest in harnessing the economic value of Canada’s oil holdings nor the potential global influence Canada might exert by exporting its oil products to Asia, Europe and other points abroad. This policy fixation will come at a significant cost to future generations of Canadians.
Kenneth P. Green
Senior Fellow, Fraser Institute
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