Alberta Budget Analysis 2023
Alberta’s 2023 budget was released yesterday. The connection between the looming vote, just 90 days from now, and how to spend a fat surplus was clear: Danielle Smith’s budget is a thoroughly political document aimed at shoring up the governing UCP’s prospects of re-election.
By aiming Budget 2023 at the issues that polling shows are priorities for Albertans, the government is attempting to inoculate themselves on healthcare, combat the rising cost of living, and ease broader economic anxiety. To demonstrate their attention to the salient matters, the government increased the operating budget for healthcare by nearly a billion dollars in the next fiscal year, including more than $150 million to recruit and retain health workers, announced affordability measures targeting post-secondary students, and unveiled a raft of programming aimed at addressing skills shortages and incenting innovation in industry. Key capital commitments included new buildings at Grant McEwan University in Edmonton, continued buildouts of the LRT systems in the two largest cities, and continued support for flood mitigation in Calgary and other communities.
Major themes: healthcare, affordability, infrastructure and big spending
Health care is consistently cited by Albertans in polling as the top election issue. Unsurprisingly, much of the new spending was aimed at keeping government commitments on reducing surgical wait times and improving access to health care. Acute care funding will jump by 8.4 per cent in 2023/24 with a whopping 23.6 per cent increase to emergency medical service funding year-over-year. Home care funding will shoot up 20 per cent in 2023/24. This can only improve voter perceptions that the UCP government is indifferent to healthcare horror stories, a favourite topic of Alberta’s media outlets.
The second biggest voter issue is the spiking cost of living, and here again they were generous. Medium-and-low-income families with children and seniors will get $600 payments over the first six months of 2023. Tax brackets have been re-indexed to inflation for all Albertans, as have payments to those on social assistance or persons with disabilities. The gas tax is scrapped until the end of June. Students are celebrating reduced rates of interest on loans, and tuition increases were frozen at only 2%. They also made the Natural Gas Rebate Program permanent. The program will rebate consumers for gas natural gas bills that rise above $6.50 per gigajoule. Together, the “Affordability Action Plan” returns $3 billion dollars to Albertans.
Rural Alberta — exclusive UCP country – had several wins, including a three-year, $105 million health facilities revitalization program, and several new highway projects. Battleground Calgary will see shiny new cultural infrastructure at the Telus Spark Science Centre, Canada Olympic Park, Stampede Park and Lindsay Park. A 17.5% increase in funding for K-12 transports means parents will pay less for their children to ride the bus. There will be a 13.4% increase for contract policing, the sheriff’s branch, and initiatives to address organized crime, a nod to voter concerns about crime and social disorder.
In short, the UCP government blew up the perception that they are hard-hearted and stingy by going on a record-setting spending spree. Total spending for 2023/24 is projected to hit $68.3 billion – $1.8 billion more than the previous NDP government planned to spend in the same year, which gives you a sense of how much the revenue outlook has improved from four years ago.
Despite the eye-popping spending increases, the government is still preaching fiscal responsibility, announcing that it will introduce a fiscal framework to tame the swings in government revenues due to the shifting prices for oil and natural gas. This new fiscal framework will require annual balanced budgets (with exceptions for disasters and large drops in revenue), limit year-over-year spending increases to population growth plus inflation, limit in-year expense growth to a budgeted and voted contingency, and set out policies for how to spend future surpluses, which will include debt repayment and savings. In a budget that spends like no other in Alberta’s history, this is a clear sop to the UCP’s core voters who will be wondering what happened to the fiscal hawks they elected. Thanks to the framework UCP MLAs will still be able to say that they kept and even exceeded their election promise to balance the budget and get the province’s fiscal house in order.
What does the budget mean for Alberta’s key political power bases?
Battleground Calgary
There’s little doubt that Calgarians are the most important constituency in this year’s election. With the NDP well-ahead in Edmonton and the UCP running up the score in the rural ridings, Alberta’s largest city will be the crucial deciding factor in which party forms government after the May 29th election. Targeted investments in the Calgary region contained in the Budget and Capital Plan, included:
$541 million over 3 years for Calgary LRT projects.
$430 million over 3 years for Deerfoot Trail upgrades.
$282 million over 3 years for the Springbank Off-Stream Reservoir Project.
$57 million investment to modernize Bethany Care spaces.
$48.6 million over 3 years for the University of Calgary’s Veterinary Medicine expansion.
$51 million to replace the Highway 2 interchange at Balzac.
$10 million to renovate and develop space at Telus Spark.
Investments within the city from the Government’s Alberta Surgical Initiative Capital Program, which is designed to shorten waitlists and improve access to surgical care.
Continuing capital support for municipal projects and transit, including $5 million in planning and engineering funds to consider the expansion of the Blue Line to Calgary International Airport.
Much of this is funding continuing from previous budgets – even going as far back as the NDP government, but the new cash influx demonstrates strongly that the UCP understand that the election will be won or lost in Calgary and that they are making investments to shore up support in the city.
UCP stronghold of rural Alberta
The base of UCP support is in rural Alberta and in Alberta’s smaller cities, representing 41 of the legislature’s 87 seats. Their loyalty was richly rewarded with significant investments: increasing the Rural Health Facilities Revitalization Program from $45 million over three years to $105 million over three years – a 133% increase.
A 25% increase for agricultural irrigation and irrigation districts to $190 million over three years.
Frontloaded funds for the Broadband Strategy, including $229 million budgeted for 2023-24.
$3 million annually to Agricultural Societies Infrastructure Revitalization.
$27 million in additional flood mitigation for Drumheller.
But the government also taketh away. Farmers will see a 60% increase in crop insurance premium rates to replenish AFSC’s reserves after the drought of 2021.
Edmonton (NDPville)
While Edmonton voters will largely be out of reach for the UCP this spring they will still receive some significant government lolly:
$125 million to build a new facility at Grant McEwan University, and to create a business school
$63 million to modernize Good Samaritan Society spaces for continuing care.
$760 million in sustained investment in the city’s LRT projects.
A new school in Glenridding Heights.
Renovations to the Stollery Children’s Hospital.
How are key stakeholders reacting?
Rachel Notley & Alberta’s NDP
The opposition NDP has framed the Budget as a cynical ploy to buy votes ahead of the provincial election. NDP Leader Rachel Notley even called the document “fraudulent” and accused the UCP of “vote-buying.”
The opposition’s criticisms of the Budget have been focused on the expiration of many of the previously announced affordability measures immediately following the May election. Citing the expiry of over a billion dollars in affordability programs, the NDP has dubbed the Budget a plan for “The Most Expensive Summer Ever,” discussing the end of utility relief, the gas tax holiday, and the affordability payments.
They also criticized Alberta’s low corporate tax rate, the proposed abandoned well cleanup program, and expressed concern that the government’s economic projections are unrealistic, saying that the GDP and jobs forecasts contained in the Budget are significantly higher than any private sector forecast for the province’s economy. Finally, Notley took issue with the Budget’s investments in charter schools saying, “It's deeply worrying that there is more money in this budget to build new charter and private schools than for public, Catholic and francophone schools, combined."
Business Community and Energy Sector
Alberta’s business community welcomed Budget 2023’s consistent approach to economic supports and tax incentives, including no changes to Alberta’s corporate and small business tax rate. However, the CFIB hoped to see a lowering of the province’s small business tax due to high inflation and the raising cost of doing business. The Calgary Chamber of Commerce also noted the lack of clear investment in stackable credits for carbon capture utilization and storage (CCUS) projects as Alberta only announced an intent to support such investments. Energy consortium Pathways Alliance highlighted the budget’s commitment to collaboration and support to drive co-investment in CCUS and other emission reduction technologies.
What’s next: the Battle of Alberta
The official writ drop of the May 29th election is still two months away, but the Battle of Alberta is already underway, with the parties fighting over how the Budget spoils should be split, and who has the best ideas for the Alberta of tomorrow.