Alberta
Alberta government must reform spending to avoid deficits

From the Fraser Institute
By Tegan Hill
According to Premier Danielle Smith, the Alberta government is creating a new committee—composed of the premier, Finance Minister Nate Horner, Technology and Innovation Minister Nate Glubish, three treasury board members, and three private members—to review government spending in the province. Smith says the committee will find savings so her government can deliver on the promised personal income tax cut. But in fact, the need for a thorough program review is much broader than that.
A bit of background.
During the election campaign, Smith promised to create a new 8 per cent tax bracket for personal income below $60,000, which is expected to cost provincial coffers $1.4 billion annually. While the Smith government’s 2024 budget delayed this tax cut, the premier recently said a “substantial” cut is coming soon.
According to Smith, the committee will review “every single program in every single department to see if there are ways that we can remove wasteful spending, move spending from low-priority areas to high-priority areas, find ways that we can use technology to be able to deliver services better, and accelerate that personal income tax cut.”
Again, the idea of a program-by-program review is a good one. But the goal must span beyond finding savings for a single personal income tax cut. Alberta has a big spending problem and it must be meaningfully addressed.
Simply put, Alberta governments have a bad habit of increasing spending during the good times of high resource revenue and budget surpluses, like the province is currently experiencing, but fail to rein in spending when resource revenues fall. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.
To be clear, the Smith government introduced a rule to limit increases in operating spending (e.g. spending on annual items such as government employee compensation) to the rate of population growth and inflation. But while this a step in the right direction, the government’s earlier spending increases since 2022 mean it continues to rely on relatively high—but very volatile—resource revenue to balance its budget.
Indeed, according to this year’s provincial budget, program spending this year will reach $14,334 per Albertan, which is $1,603 more per person (inflation-adjusted) than the government originally planned to spend in the 2022 mid-year budget update, Smith’s first fiscal plan as premier.
In total, the Alberta government will spend a projected $6,037 more per Albertan (inflation-adjusted) over four years from 2023/24 to 2026/27 than it planned in the 2022 mid-year budget update.
In other words, the government’s current plan to restrain spending by the rate of inflation and population growth is starting from a higher base level of spending. As a result, Alberta remains at risk of incurring a budget deficit when relatively high resource revenue declines.
For perspective, if resource revenue fell to its average over the last 10 years—rather than being at historic highs—the government’s $367 million projected surplus for this year would immediately fall to a deficit of $7.4 billion, even before the billion-dollar tax cut that Smith says is coming soon.
The Alberta government should use its program review to more closely align ongoing spending with stable ongoing levels of government revenue rather than onetime windfalls. Otherwise, Alberta will continue on its boom-and-bust rollercoaster that inevitably leads back to deficits and more debt.
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Alberta
Low oil prices could have big consequences for Alberta’s finances

From the Fraser Institute
By Tegan Hill
Amid the tariff war, the price of West Texas Intermediate oil—a common benchmark—recently dropped below US$60 per barrel. Given every $1 drop in oil prices is an estimated $750 million hit to provincial revenues, if oil prices remain low for long, there could be big implications for Alberta’s budget.
The Smith government already projects a $5.2 billion budget deficit in 2025/26 with continued deficits over the following two years. This year’s deficit is based on oil prices averaging US$68.00 per barrel. While the budget does include a $4 billion “contingency” for unforeseen events, given the economic and fiscal impact of Trump’s tariffs, it could quickly be eaten up.
Budget deficits come with costs for Albertans, who will already pay a projected $600 each in provincial government debt interest in 2025/26. That’s money that could have gone towards health care and education, or even tax relief.
Unfortunately, this is all part of the resource revenue rollercoaster that’s are all too familiar to Albertans.
Resource revenue (including oil and gas royalties) is inherently volatile. In the last 10 years alone, it has been as high as $25.2 billion in 2022/23 and as low as $2.8 billion in 2015/16. The provincial government typically enjoys budget surpluses—and increases government spending—when oil prices and resource revenue is relatively high, but is thrown into deficits when resource revenues inevitably fall.
Fortunately, the Smith government can mitigate this volatility.
The key is limiting the level of resource revenue included in the budget to a set stable amount. Any resource revenue above that stable amount is automatically saved in a rainy-day fund to be withdrawn to maintain that stable amount in the budget during years of relatively low resource revenue. The logic is simple: save during the good times so you can weather the storm during bad times.
Indeed, if the Smith government had created a rainy-day account in 2023, for example, it could have already built up a sizeable fund to help stabilize the budget when resource revenue declines. While the Smith government has deposited some money in the Heritage Fund in recent years, it has not created a dedicated rainy-day account or introduced a similar mechanism to help stabilize provincial finances.
Limiting the amount of resource revenue in the budget, particularly during times of relatively high resource revenue, also tempers demand for higher spending, which is only fiscally sustainable with permanently high resource revenues. In other words, if the government creates a rainy-day account, spending would become more closely align with stable ongoing levels of revenue.
And it’s not too late. To end the boom-bust cycle and finally help stabilize provincial finances, the Smith government should create a rainy-day account.
Alberta
Governments in Alberta should spur homebuilding amid population explosion

From the Fraser Institute
By Tegan Hill and Austin Thompson
In 2024, construction started on 47,827 housing units—the most since 48,336 units in 2007 when population growth was less than half of what it was in 2024.
Alberta has long been viewed as an oasis in Canada’s overheated housing market—a refuge for Canadians priced out of high-cost centres such as Vancouver and Toronto. But the oasis is starting to dry up. House prices and rents in the province have spiked by about one-third since the start of the pandemic. According to a recent Maru poll, more than 70 per cent of Calgarians and Edmontonians doubt they will ever be able to afford a home in their city. Which raises the question: how much longer can this go on?
Alberta’s housing affordability problem reflects a simple reality—not enough homes have been built to accommodate the province’s growing population. The result? More Albertans competing for the same homes and rental units, pushing prices higher.
Population growth has always been volatile in Alberta, but the recent surge, fuelled by record levels of immigration, is unprecedented. Alberta has set new population growth records every year since 2022, culminating in the largest-ever increase of 186,704 new residents in 2024—nearly 70 per cent more than the largest pre-pandemic increase in 2013.
Homebuilding has increased, but not enough to keep pace with the rise in population. In 2024, construction started on 47,827 housing units—the most since 48,336 units in 2007 when population growth was less than half of what it was in 2024.
Moreover, from 1972 to 2019, Alberta added 2.1 new residents (on average) for every housing unit started compared to 3.9 new residents for every housing unit started in 2024. Put differently, today nearly twice as many new residents are potentially competing for each new home compared to historical norms.
While Alberta attracts more Canadians from other provinces than any other province, federal immigration and residency policies drive Alberta’s population growth. So while the provincial government has little control over its population growth, provincial and municipal governments can affect the pace of homebuilding.
For example, recent provincial amendments to the city charters in Calgary and Edmonton have helped standardize building codes, which should minimize cost and complexity for builders who operate across different jurisdictions. Municipal zoning reforms in Calgary, Edmonton and Red Deer have made it easier to build higher-density housing, and Lethbridge and Medicine Hat may soon follow suit. These changes should make it easier and faster to build homes, helping Alberta maintain some of the least restrictive building rules and quickest approval timelines in Canada.
There is, however, room for improvement. Policymakers at both the provincial and municipal level should streamline rules for building, reduce regulatory uncertainty and development costs, and shorten timelines for permit approvals. Calgary, for instance, imposes fees on developers to fund a wide array of public infrastructure—including roads, sewers, libraries, even buses—while Edmonton currently only imposes fees to fund the construction of new firehalls.
It’s difficult to say how long Alberta’s housing affordability woes will endure, but the situation is unlikely to improve unless homebuilding increases, spurred by government policies that facilitate more development.
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