Last week, Minister of Finance and President of Treasury Board, Nate Horner, released a video connecting his values as a rancher with his current role as the official holder of Alberta’s purse strings. His vision, which is shared by the Premier, is to save now, put money into the Heritage Savings Trust Fund, pay down debt, and support government programs.
It’s hard to argue with the necessity for prudent, responsible spending and saving. Alberta’s population has grown faster than any point in recent history, as over 190,000 more people called Alberta home in 2023. And although Alberta has lower taxes and housing costs compared to other provinces, many families are struggling to make ends meet. The 2024-25 budget attempts to balance affordability and higher costs on Albertans with significant revenue headwinds facing provincial finances.
One of the messages from previous UCP budgets was the danger of large public debt. The Budget Speech yesterday addressed the rising cost of debt as it must be refinanced at higher interest rates. Paying the interest on debt reduces the nest egg the government wants to leave for the next generation of Albertans.
The objectives in the 2024-25 Budget align with the government’s “fiscal anchors” that include:
- Mandated annual balanced budgets.
- Limiting year-over-year increases in operating expense to population growth and inflation.
- Limiting in-year expense increases to a budgeted and voted contingency.
- Paying down the debt.
- Making additional deposits into the Alberta Heritage Savings Trust Fund.
The province is retaining more than $1 billion in investment earnings from 2023-24 in the Alberta Heritage Savings Trust Fund. Alberta’s government will also deposit another $2 billion from the Alberta Fund, a set-aside fund of 50% of past surplus cash, increasing the value of the Heritage Savings Trust Fund to a forecast $25 billion.
Prior to the end of this year, government committed in the budget to release its long-term plan charting a path to a Heritage Fund worth between $250 billion and $400 billion dollars by the year 2050. If made a reality, Alberta would join the ranks of jurisdictions such as Alaska, Norway, and many other resource-based jurisdictions around the world that boast sovereign wealth funds large enough to replace their reliance on resource revenues.
Overall, total revenue for the 2024-25 fiscal year is estimated to be $73.5 billion, which is $2.1 billion lower than the third-quarter forecast for 2023-24. Total expense in 2024-25 is $73.2 billion, a 3.9 per cent increase from the forecast for 2023-24. Total expense is expected to be $74.6 billion in 2025-26 and $76.2 billion in 2026-27. An additional $2 billion is added to the capital plan, which is $25 billion, to build the schools, hospitals, and roads. Also, a contingency of $2 billion will help the province respond to disasters and emergencies and other in-year expense pressures, a $500-million increase from 2023-24.
To summarize the three main takeaways from the budget are: Growing the Heritage Fund, increasing education and Health spending, and resist the calls to grow the government debt.
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For more information and insights about what these developments mean for Alberta’s political landscape, please contact:
Richard Feehan – Senior Strategy Advisor
feehan@prairieskystrategy.ca
780.940.8956
Rick Fraser – Senior Strategy Advisor
rick@prairieskystrategy.ca
403.701.7584
Colleen Potter – Senior Strategy Advisor
colleen@prairieskystrategy.ca
587.500.2336
Mat Steppan – Senior Strategy Advisor
mat@prairieskystrategy.ca
780.236.1543
Jeff Sterzuk – President
jeff@prairieskystrategy.ca
403.612.1724
Ben Thibault – Senior Strategy Advisor
ben@prairieskystrategy.ca
587.897.6261
Richard Truscott – Vice-President
richard@prairieskystrategy.ca
403.998.0494
To learn more about Prairie Sky Strategy, please visit our website.
