EDMONTON — Alberta’s budget has come out of the red, forecasting a bright economic future and promising major spending on hospitals, health care and programs to fill gaps in its burgeoning workforce.
Finance Minister Travis Toews said the 2022 budget projects a surplus of $500 million, with small surpluses expected in subsequent years.
Seven years have passed since the province’s last balanced budget and the surplus represents a dramatic turnaround from recent budgets that were awash in staggering multi-billion dollar deficits.
Toews says Alberta’s economy will fully recover from the contraction that began in 2014 and the province will lead the country in economic growth.
Soaring oil and gas revenues are the main driver, but years of belt-tightening and a diversified economy also played a big part, he said on Thursday.
“Without the flattening of this operating expense curve, we wouldn’t be presenting a balanced budget today.”
The projected surplus is another huge pendulum swing for a province that for decades has been riding the skyrocketing highs and subterranean lows of oil and gas prices.
Case in point: A year ago, Toews projected a deficit of $18.2 billion for the fiscal year ending March 31. It is now expected to be a small fraction of that amount: $3.2 billion.
The United Conservative government expects to take in $13.8 billion from non-renewable energy this year, which would make it the second highest catch on record. Tar sands royalties alone would be $10 billion.
West Texas Intermediate, the benchmark price for North American oil, was trading above US$92 a barrel on Thursday. The province forecasts a more modest average of $70 per barrel over the coming year, falling into the mid-$60 range in subsequent years.
“We use, I would say, credible but conservative energy projections,” Toews said.
When asked if Alberta is staying on the energy price roller coaster, he said, “What I can say with confidence is that today we have a much more sustainable fiscal reality. than four years ago.
The budget calls for $62.6 billion in total government revenue offset by $59.4 billion in base spending. That’s before additional COVID-19-related spending and money to offload canceled rail contracts to transport crude signed by the previous NDP government.
The debt borne by taxpayers is expected to amount to $94.7 billion. Debt service charges are expected to rise slightly to $2.7 billion.
Despite the improved results, the Province expects debt to grow over the next two years to fund commitments to create jobs, grow the economy and build health care capacity.
The budget adds $600 million to the health operating budget, a commitment that will grow to $1.8 billion in 2024-25.
The money will be used to finance new intensive care beds, places in hospitals, the expansion of laboratories and hospitals and to help recruit more doctors and nurses, in particular to fill vacancies in the regions. rural and remote.
Waves of COVID-19 patients strained hospitals and emergency departments and pushed the system to the brink of collapse during the fourth wave late last year.
Premier Jason Kenney said the pandemic has underscored the flaws in a system in which Alberta pays comparatively more for health care but gets less in terms of per capita bed space and other services. The extra money is intended to correct this disparity.
The province also plans to address labor market gaps.
The government aims to invest $72 million over the next three years to expand charter schools and college programs to increase opportunities in science, high tech, engineering, math, and science. jobs.
There is to be $171 million over three years to create 7,000 new post-secondary spaces in high-demand fields, including computer and data science, finance, agricultural sciences, health and aviation.
The opposition NDP said the budget failed to meet the immediate needs of families burdened by the UCP’s long-standing policy changes that resulted in sky-high electricity and utility bills, bonuses higher insurance and higher tuition, tuition, and even camping fees.
“The premier may be celebrating, but Alberta families are not,” Notley said Thursday.
“There are families and small business owners who are hurting and this budget is nowhere near enough to help them.”
The budget also promises rebates on natural gas bills to consumers. A utility refund will be triggered from Oct. 1 if gasoline prices rise above $6.50 per gigajoule.
Notley called it a phantom plan given that the government’s own forecast does not predict the price will ever reach that threshold and the government has not set aside any money to pay for it.
Economist Trevor Tombe said the move from a steep deficit to a surplus is the biggest in the province’s history. Tombe said he was surprised by the government’s conservative forecast for oil averaging $70 a barrel.
“That’s well below what the markets really think oil prices will be,” said Tombe, of the University of Calgary.
“So if it ends in the mid-1980s, where the futures markets are right now, we could be looking at a surplus in the range of about six, six and a half billion dollars instead of the $500 million relatively modest.
This report from The Canadian Press was first published on February 24, 2022.
Dean Bennett, The Canadian Press