Alberta Budget 2023 – The Road to the May Election

With a May election looming, Alberta Finance Minister Travis Toews brought in another balanced budget. Alberta continues to ride the wave of higher energy prices, with projections that include the second-highest resource revenues in Alberta’s history. This, the final budget in the current government’s four-year mandate, is also the first budget for new UCP Leader Premier Danielle Smith, and importantly, is also a pre-election budget.

Budget Overview

Alberta’s economic fundamentals are expected to remain strong with GDP growth forecast to be a respectable 2.8 per cent in 2023. Finance Minister Toews is predicting a surplus of $2.4 billion for 2023/24, a significant reduction from the $10.4 billion surplus forecast for 2022/23. The reduced surplus results in part from an expected drop in resource revenues as the global economy cools, as well as increased operating expenses proportionate to inflation.

With $13.4 billion of debt repaid in 2022/23, the province’s outstanding debt is expected to total $79.7 billion at the end of 2022-23; but despite the reducing outstanding debt, rising interest rates will see debt servicing costs increase slightly, reaching $2.8 billion in 2023/24.

The Budget also introduces a new “Fiscal Framework” that mandates balanced budgets, unless certain conditions apply, for example the province is hit with costs resulting from a disaster, a sharp decline in revenue, or increased costs to support the Alberta Petrochemicals Incentive Program which provides grants for private sector petrochemical manufacturing facilities.

The Framework also sets out rules for using surplus cash, with 50 per cent of available surplus cash required to be allocated to a new “Alberta Fund”. This Alberta Fund will allow the government to park surplus cash for use either in debt repayment, topping up the Heritage Savings Trust Fund, or for one-time initiatives that do not create a permanent increase in government spending. Additionally, the budget proposes to grow the Heritage Savings Trust Fund by allowing the Fund to retain its net investment earnings, rather than transferring them to the General Revenue Fund.

The three fiscal anchors established in prior budgets remain in place. These include balanced or surplus budgets, per capita spending aligned with comparator provinces, and a debt to GDP ratio below 30 per cent.

Notably for municipalities, Budget 2023 doubles the Municipal Sustainability Initiative (MSI) / Local Government Fiscal Framework (LGFF) operating and capital grants to help municipalities address rising costs and long-term sustainability of communities.

The budget is light on new tax measures other than a non-refundable tax credit for agriculture-processing and manufacturing investment, the indexation of personal income taxes, and previously announced measures to increase to the value of the Charitable Donations Tax Credit.

Health Care

Access to timely health care and emergency services has been a top issue in Alberta. Today’s budget announced new dollars for a wide range of health care services including $3.1 billion over three years for capital projects. Additionally, the budget includes investments designed to strengthen the EMS system, decrease emergency department wait times and reduce surgical wait times.

Alberta’s approach to mental health and addictions has been newsworthy, particularly in contrast to recent changes in British Columbia. The budget includes $155 million funding for three new recovery communities; two in Northern Alberta and one in Central Alberta.

Additional funding has also been provided to train new doctors, nurses, and health care aides.

The “Alberta Advantage”

The budget aims to boost the so-called “Alberta Advantage” with a focus on job creation, economic growth, diversification, and investment attraction. It includes:

• $2.7 billion over three years for infrastructure like roads, bridges, and broadband
• $176 million to address labour shortages in key economic sectors
• $100 million over three years in increased funding for the Film and Television Tax Credit,
• $95 million for Career and Employment Services, and
• $111 million more over three years to support targeted post-secondary enrollment expansion in high-demand sectors.

In order to support Albertans through this high inflation period the province will continue the 13-cent provincial fuel tax holiday until June 30, 2023, as well as the electricity and heating rebates, and affordability payments for seniors and families with children.

Increased Public Safety Dollars

In response to public safety challenges, the budget focuses on improving enforcement and reducing crime, allocating more dollars for policing (including community policing), addressing serious and organized crime, court services and the Alberta Crown Prosecutors. Additionally, $65 million will go to First Nations policing, specifically to improve community and officer safety. Up to 35 new First Nations policing positions will be added across the province.

The budget establishes an Alberta Office to Combat Trafficking in Persons and a Centre of Excellence for research; as well as $15 million to operate the newly created Chief Provincial Firearms Office, certain to be a popular initiative with some in the UCP’s support base.

Toews has confirmed that the controversial proposal to create a stand-alone Alberta Police Force is off the table and has not been funded in this budget.

What Does it Mean Politically?

With just 90 days until the election, every action and reaction by Alberta’s political actors has major implications for the campaign. With a tight race, and no real “third” option, Premier Smith is keen to position herself as the leader who will stand up for the Albertan’s interests against federal incursions, a tried-and-true political tactic in the province.

The budget includes key spending pledges designed to woo Calgary voters whose votes will be critical in the May election. Planned spending in Calgary includes $134 million to complete the Ring Road, and $300 million for hospital capital projects.

Notley was quick to respond to the budget, alleging that much of the spending announced today was an attempt to “buy” the votes of Albertans, coupled with “rosy” economic numbers. Notley hit again on one of her key themes – that the UCP under Smith have presided over chaos in the health care system, and that the budget does not do enough to increase access to healthcare, or keep Albertans out of hospitals.

While the pre-election campaign started with Smith’s ascension to the Premier’s Office in October, today’s budget is really the kick off to the campaign. With the polls tight and a two-horse race in the offing, the upcoming election is still too close to call, but it is clear that both the UCP and NDP are going to fight for every vote.