Today, President of the Treasury Board and Minister of Finance Nate Horner tabled Alberta’s 2024 Budget, entitled A Responsible Plan for a Growing Province.
Beyond the title, the frame of Budget 2024 is a responsible plan to strengthen health care and education, build safe and supportive communities, and manage the province’s resources wisely.
This is the first provincial budget since Premier Danielle Smith’s United Conservative Party won re-election last year. It builds on themes laid out in the October Throne Speech – namely balancing new policies and spending to affordability and population growth against a firm commitment to fiscal responsibility.
This is also Alberta’s first Budget since the province adopted a new fiscal framework and anchors last year.
In advance of its release, Premier Danielle Smith framed the budget on a televised address around a long-term vision to rapidly grow Alberta’s Heritage Savings Trust Fund and reduce annual reliance on royalty revenues from non-renewable resources. It’s the theme that animates the budget, with Finance Minister Nate Horner calling it a “beer” budget instead of a “champagne” budget during his address in the legislature.
The forecast surplus of $367-million for 2024-25 and $5.2-billion over the next three years sets expectations for balanced budgets into the foreseeable future. Cash surplus allocation is squarely dedicated toward debt repayment, additional deposits into the Heritage Fund, and one-time initiatives that do not lead to permanent increases in government spending.
Budget 2024 invests an additional $2-billion into each capital infrastructure spending and the Heritage Savings Trust Fund – a plain indication that Premier Smith is looking to bring provincial spending into equilibrium with a savings plan while managing voter priorities like affordability and health care delivery.
Budget highlights
- $17.4 billion in non-renewable resource revenue – 24% of the budget
- $367 million surplus for 2024-25
- $5.2 billion in total accumulated surpluses planned over the next three years
- $2 billion planned to be deposited into the Heritage Fund
- $25 billion in capital infrastructure spending over three years
- $20 million for the Edmonton Stollery Children’s Hospital
- $24 million over three years to grow apprenticeship in skilled trades
- $1.9 billion over three years to plan, design and construct 98 new or modernized schools, including 43 new projects
- $717 million in capital grants to give Albertans and families access to affordable housing
- $3.6 billion to maintain and expand health-care facilities throughout the province
- $1.1 billion for agriculture, natural resources and business development
Analysis
Economic Growth and Financial Policy
Spurred by population growth, a young work force, an affordable housing market, cooling headwinds on inflation, a productive energy sector, and a diversified economy, the Alberta budget pegs GDP growth at 2.9 per cent and 3.3 per cent in 2024 and 2025.
The budget doesn’t cast a fully rosy picture and you can guess the target. The province outlines the uncertainty caused by many of the federal government’s policies around net-zero targets, emissions policies, and other geopolitical risks.
The razor thin surplus will be made possible by another non-renewable resource royalty windfall of $17.4 billion of the budget, making up nearly a quarter of all revenues.
There are some tax increases in the budget. Likely to catch the attention in the headlines is a new $200 tax placed on electric vehicle owners. The province casts the need due to the heavier vehicles putting more pressure on roads and as a way to match the contributions made on fuel taxes annually by non-combustion vehicle drivers. Land titles registration fee has essentially doubled, “for a $450,000 home purchase with a 10 per cent down payment, this translates to a levy of $955, an increase of $553.50 from the existing fees.”
Health Care
Premier Smith bet big on health care governance reforms since taking office, so it’s no surprise to see a 4.4% budget lift in addition to Refocusing Health Care as a major theme of Budget 2024. While wholesale changes to the governance of Alberta Health Services have been a focus area focus for the UCP – this budget includes nearly half-a-billion in spending to modernize Alberta’s primary health care system and $6.6 billion for physician compensation and development. There’s a commitment to build new infrastructure across the system as well. Earlier this week, the government scooped their own budget release when they announced $17-million in new funding for a standalone Stollery Children’s Hospital. The budget today outlined $1.55-billion total spend to continue building the Alberta Recovery Model.
While Minister Horner and Premier Smith have shared the need to tighten the belts, the message is clear that they will continue to put big annual increases towards health care, but government critics will ask if it’s enough in the coming weeks. There will be expectations to at minimum meet inflation and population growth increases and they will be facing tough labour negotiations.
Education
The theme of managing Alberta’s population growth is squarely reflected in Budget 2024’s investments to address enrolment pressures for K-12 students, with surplus revenue enabling almost half-a-billion-dollars in new spending to invest in modernizing schools and expanding specialized programs including through charter schools. Budget 2024 aims to establish 35,000 new and modernized student spaces, with 82 per cent (28,500) of these spaces being built in Calgary and Edmonton metro areas.
Affordability Promises Kept and Broken
When it comes to the issue of affordability, the UCP reaffirmed their election platform policy to introduce a new personal income tax bracket of eight per cent on the first $60,000 of income over the next two years – but not this year. It stretches the timeline on implementation of their key campaign commitments against a clear commitment to fiscal responsibility – a signal that the royalty gusher that marked the past two budget cycles has softened. One of the most notable budget commitments to improving affordability for Albertans is $254 million in new funding towards capital grants to increase access to affordable housing.
Wildfire Management
New funding for wildfire and water management to mitigate the risk of natural disasters are a rare exception to the number of large investments in Budget 2024 that were not previously identified in Throne Speech last fall. The province has committed $151 million in operating expenses over the next three years for enhancements to the Wildfire Management Program and $55 million in capital investment for new firefighting equipment and facilities. While this budget allocation may not be brand new, it certainly presents a response to recent the New Democratic Party’s rhetorical focus on climate emergencies.
Skills and Jobs Training
The key skills training investment in this budget is increase of $102-million over three years to create 3,200 apprenticeship seats at 11 post-secondary institutions across the province. Post-secondary institutions will also benefit from an allocation of $10-million in operational funds to create new mental health spaces. This is a clear response to strong advocacy from student groups and post-secondary institutions – stakeholders who would not be obvious allies of the current government – but whose priorities must be considered by Advanced Education Minister Rajan Sawhney for the UCP to successfully advance their skills for jobs policy blueprint.
What’s Next?
The United Conservative government’s overarching political priority for Budget 2024 was for Premier Smith to deliver on several election promises made throughout her party leadership and subsequent provincial election campaign. This budget was clearly designed against the expectations of UCP supporters with a short runway to a party leadership review in November, while maintaining a long term focus to the policies Smith views as critical to her long term legacy as Premier.
The continuation of the first session of the 31st Alberta Legislature will adjourn proceedings tomorrow so cabinet and caucus can embark on a week-long tour of the province to sell today’s budget to voters and stakeholders. MLAs will vote on an appropriation bill when the legislature returns on March 11.
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