It seems safe to say that many Finance Ministers would envy the task of Travis Toews today, but it does a disservice to Alberta’s Minister of Finance to downplay the history and uncertainty he navigated in delivering Budget 2023.
Since the days of Premier Klein and “Paid in Full” successive waves of ups (booms) and downs (busts) have largely defeated the efforts of previous Alberta Finance Ministers to steady the province’s finances on an enduring basis, despite promises and plans to the contrary.
Critics from the right have castigated former Finance Ministers for paying down too little of the debt, while those from the centre and left have decried the failure to add more to the Alberta Heritage Savings Trust Fund. All the while, pressure has nonetheless been constant from many quarters (including the centre and right) for increased spending to support their specific interests and objectives, regardless of the boom or bust prevailing at the time.
Then, for the new UCP government, came an oil price war, a global economic downturn and COVID-19.
Operating within the confines of his mandate letter, which permitted up to an 8.6 per cent increase in spending and determined to advance his government’s commitment to three fiscal anchors (debt to GDP ratio below 30 per cent, spending in line with comparator provinces and a path to a balanced budget), Toews sought to find the elusive sweet spot in delivering his fifth provincial budget. His address read as a love letter to Albertans full of hope, prosperity, and the promise of a better future for the Nick and Jessica’s of the province (the grandkids of Ralph Klein’s Henry and Martha).
With a provincial election only weeks away, coffee shop, grocery store and hockey rink conversations have focused on the cost-of-living worries of Albertans. Add to these discussions the continuing ebb and flow in oil prices (reported like the weather each and every day in Alberta, even if they are currently on the positive side) Toews’ task was anything but easy.
Missing no opportunity to criticize the opposition NDP and the Trudeau Liberals, Toews announced a pre-election budget targeting a wide catalogue of pain points for Albertans, including:
- Health Care
- Community Safety
- Mental Health and Addictions
Budget 2023 also introduced a new Fiscal Framework to guide government fiscal planning and the use of surpluses. The framework would:
- Mandate annual balanced budgets (with exceptions permitted if revenue declines sharply or in the case of unexpected disasters)
- Limit year-over-year increases in operating expenses to population growth and inflation
- Limit in-year expense increases to a budgeted and vote contingency
- Require at least 50 per cent of surplus cash to go towards debt repayment
- Direct remaining cash to a new Alberta Fund. These funds would be used to pay down debt, make additional deposits to the Alberta Heritage Savings Trust Fund or to support one-time initiatives.
Amidst speculation on whether Toews will stand for office again, the lengthy, wide ranging and — in many cases — prematurely announced spending commitments of Budget 2023 read like an election platform of a government seeking re-election. Meanwhile, the Fiscal Framework appears to be a legacy act aimed squarely at bringing discipline to the spending roller-coaster typical of Alberta governments of all political stripes.
Four years on, Budget 2023 reflects a different kind of UCP — more pragmatic and embracing a wider range of views — than Albertans were promised in 2019. Post-election politics will reflect whether the hard earned and hard learned realities of governing will stick with the UCP or be lost to ideological disputes among political diehards.
What does this mean for you?
This is a pre-election budget meant to appeal to the broadest swath of Albertans come election day. In practice, the measures announced today are dependent on the UCP securing a majority government in the upcoming election.
Campaigns matter. With the outcome of the upcoming election still undetermined, it is best to continue working with both sides of the aisle to advance your goals, under the understanding that there is a short runway to influence any government policy.
The Big Picture
- Total revenue: Estimated to be $70.7 billion, which is $5.4 billion lower than forecasted for 2022-23
- Total expense: $68.3 billion, which is $2.6 billion more than the forecast for 2022-23
- Surplus: $2.4 billion surplus compared with $10.4 billion in 2022-23
- $1.8 billion allocated to the Alberta Heritage Savings Trust Fund
- Budget is based on WTI of $79 USD
- $24.5 billion spending on health (just over 1/3 of the total budget)
- $158 million to attract, recruit and train more doctors and nurses with a focus on family physicians for rural areas
- $196 million over three years for emergency medical services
- $3.1 billion over three years to modernize and expand health facilities
- $6.9 billion over 3 years to support municipalities to build and create vibrant communities
- $94 million to build more recovery communities, establish health-care services and community policing hubs, and establish harm reduction and recovery outreach teams with a specific focus on Edmonton and Calgary
- $5 million for the City of Calgary to proceed with needed engineering work for extending the LRT Blue Line North Growing the Economy
- $2.3 billion over 3 years for key projects and programs that expand and improve Alberta’s road and bridge network
- $369 million over 3 years for Alberta’s Broadband Strategy, supporting businesses in remote areas
- $100 million over 3 years in increased funding for the Film and Television Tax Credit
- $54 million more per year for the Alberta Petrochemicals Incentive Program
- $23 million over 3 years for the Aboriginal Business Investment Fund
- $155 million for recovery communities in communities across Alberta to offer long-term residential addiction treatment
- $634 million over 3 years for the new Edmonton Hospital
- $321 million over 3 years for the Red Deer Regional Hospital Centre redevelopment
- $246 million over 3 years for the Carbon Capture and Storage Initiative
- $316 million over 3 years for ongoing support for affordable housing
- $35 million in 2024-26 for MacEwan University’s new School of Business
- 58 new schools: new and refurbished
Authored by Tim Moro, Natalie Sigalet and Eliza Snider from H+K’s team in Edmonton and Calgary.