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Alberta

Alberta Budget 2021 Highlights

Published

4 years ago

5 minute read

Maintaining responsible spending

A careful approach to spending

Budget 2021’s responsible approach to spending will mean more investment in priority areas like health care, education and job creation.

Sound fiscal anchors

Budget 2021 is built on 3 fiscal anchors:

  • Keep net debt below 30% of GDP to help protect future generations from rising debt servicing costs.
  • Deliver services more cost effectively by bringing spending in line with other comparator provinces.
  • Re-establish a plan to balance the budget post-pandemic when a more stable level of predictability returns to the budgeting process.
    Getting back on track

    Operating expense

    • In 2021–22, operating expense is $1 billion higher than 2020–21 forecast and begins to normalize, remaining relatively flat over the next 2 years.

    Deficit

    • $18.2 billion deficit is targeted for 2021–22, $2 billion less than the 2020–21 forecast.
    • $11 billion and $8 billion deficits are targeted for 2022–23 and 2023–24 respectively.

    Declining deficit can be attributed to decreasing expense as:

    • the costs of the pandemic subside
    • the government works to streamline and modernize service delivery
    • revenue increases as the economy recovers
      Budget 2021 funding highlights

      Budget 2021 provides funding of:

      • $23 billion for health services
      • $8.2 billion operating expense for kindergarten to grade 12 (K to 12) education services
      • $6.3 to $6.4 billion operating expense for social services ministries
      • $136 million over 3 years for the Alberta Jobs Now program
      • $166 million over 3 years for the Innovation Employment Grant
      • $500 million in 2021–22 for additional investments in economic recovery

Investing in health care

Budget 2021 invests record funding in health care

Alberta’s government is increasing Health’s budget by over $900 million (or 4%) to $23 billion, and that’s excluding the impact of COVID-19.

  • $5.4 billion for physician compensation and development (including academic medicine)
  • $3.5 billion for community care, continuing care and home care programs, including $20 million over 4 years for palliative and end of life care
  • $1.9 billion for drugs and supplemental health benefits.
  • $34 million for children’s health supports to expand mental health and rehabilitation services for children and youth
  • $140 million over 4 years for mental health and addiction services
    Continuing the fight against COVID-19

    Budget 2021 invests in continued supports to protect Albertans as we enter the second year of the pandemic.

    • $1.25 billion COVID-19 Contingency to address health-care costs for responding to the pandemic, including surgical wait times and backlogs
    • This is in addition to $2.1 billion spend in 2020-21
      Getting health care back on track

      Budget 2021 invests $16 billion for Alberta Health Services operations. Includes:

      • Alberta Surgical Initiative
      • Continuing Care Capacity Plan
      • CT and MRI Access Initiative
        Investing in health care capital

        Budget 2021 commits $3.4 billion over 3 years for health related capital projects and programs, providing:

        • $2.2 billion for health facilities, with $143 million for 5 new projects
        • $766 million for Alberta Health Services self-financed capital, for parkades, equipment and other capital requirements
        • $343 million for capital maintenance and renewal of existing facilities
        • $90 million for health department IT projects

Preparing for recovery

Paving the way for jobs and investment

Alberta’s Recovery Plan is a bold strategy to create jobs that get people back to work, build infrastructure and diversify our economy. This includes the acceleration of the Job Creation Tax Cut, which creates employment opportunities by making Alberta one of the most attractive jurisdictions in North America for new business investment. Budget 2021 will spend an additional $3.1 billion in 2021–22 to continue supporting recovery plan strategies.

Building infrastructure to create 90,000 new jobs

Budget 2021 invests $1.7 billion more in capital funding in 2021–22 than what was planned in Budget 2020.

The 3-year Capital Plan now totals $20.7 billion and will support more than 50,000 direct and 40,000 indirect jobs through to 2024.

Diversifying the economy

In 2021–24, $1.5 billion invested in Alberta’s Recovery Plan.

Budget 2021 invests in established and emerging sectors that hold the greatest potential for growth and job creation, and are fundamental to our economic recovery including: energy; agriculture and forestry; tourism; finance and fintech; aviation, aerospace and logistics; and technology and innovation.

 

Economic recovery spending highlights

    • Innovation Employment Grant supports small and medium-sized businesses that invest in research and development
    • Developing framework to protect intellectual property in Alberta
    • Investment and Growth Strategy supports emerging sectors while building on our existing strengths
    • Invest Alberta provides supports and services to drive up investment and showcase Alberta as the best place in the world to do business

 

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Alberta

Alberta takes big step towards shorter wait times and higher quality health care

Published on April 9, 2025

By

From the Fraser Institute

By Nadeem Esmail

On Monday, the Smith government announced that beginning next year it will change the way it funds surgeries in Alberta. This is a big step towards unlocking the ability of Alberta’s health-care system to provide more, better and faster services for the same or possibly fewer dollars.

To understand the significance of this change, you must understand the consequences of the current (and outdated) approach.

Currently, the Alberta government pays a lump sum of money to hospitals each year. Consequently, hospitals perceive patients as a drain on their budgets. From the hospital’s perspective, there’s little financial incentive to serve more patients, operate more efficiently and provide superior quality services.

Consider what would happen if your local grocery store received a giant bag of money each year to feed people. The number of items would quickly decline to whatever was most convenient for the store to provide. (Have a favourite cereal? Too bad.) Store hours would become less convenient for customers, alongside a general decline in overall service. This type of grocery store, like an Alberta hospital, is actually financially better off (that is, it saves money) if you go elsewhere.

The Smith government plans to flip this entire system on its head, to the benefit of patients and taxpayers. Instead of handing out bags of money each year to providers, the new system—known as “activity-based funding”—will pay health-care providers for each patient they treat, based on the patient’s particular condition and important factors that may add complexity or cost to their care.

This turns patients from a drain on budgets into a source of additional revenue. The result, as has been demonstrated in other universal health-care systems worldwide, is more services delivered using existing health-care infrastructure, lower wait times, improved quality of care, improved access to medical technologies, and less waste.

In other words, Albertans will receive far better value from their health-care system, which is currently among the most expensive in the world. And relief can’t come soon enough—for example, last year in Alberta the median wait time for orthopedic surgeries including hip and knee replacements was 66.8 weeks.

The naysayers argue this approach will undermine the province’s universal system and hurt patients. But by allowing a spectrum of providers to compete for the delivery of quality care, Alberta will follow the lead of other more successful universal health-care systems in countries such as Australia, Germany, the Netherlands and Switzerland and create greater accountability for hospitals and other health-care providers. Taxpayers will get a much better picture of what they’re paying for and how much they pay.

Again, Alberta is not exploring an untested policy. Almost every other developed country with universal health care uses some form of “activity-based funding” for hospital and surgical care. And remember, we already spend more on health care than our counterparts in nearly all of these countries yet endure longer wait times and poorer access to services generally, in part because of how we pay for surgical care.

While the devil is always in the details, and while it’s still possible for the Alberta government to get this wrong, Monday’s announcement is a big step in the right direction. A funding model that puts patients first will get Albertans more of the high-quality health care they already pay for in a timelier fashion. And provide to other provinces an example of bold health-care reform.

Nadeem Esmail

Senior Fellow, Fraser Institute
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Alberta

Alberta’s embrace of activity-based funding is great news for patients

Published on April 9, 2025

By

From the Montreal Economic Institute

Alberta’s move to fund acute care services through activity-based funding follows best practices internationally, points out an MEI researcher following an announcement made by Premier Danielle Smith earlier today.

“For too long, the way hospitals were funded in Alberta incentivized treating fewer patients, contributing to our long wait times,” explains Krystle Wittevrongel, director of research at the MEI. “International experience has shown that, with the proper funding models in place, health systems become more efficient to the benefit of patients.”

Currently, Alberta’s hospitals are financed under a system called “global budgeting.” This involves allocating a pre-set amount of funding to pay for a specific number of services based on previous years’ budgets.

Under the government’s newly proposed funding system, hospitals receive a fixed payment for each treatment delivered.

An Economic Note published by the MEI last year showed that Quebec’s gradual adoption of activity-based funding led to higher productivity and lower costs in the province’s health system.

Notably, the province observed that the per-procedure cost of MRIs fell by four per cent as the number of procedures performed increased by 22 per cent.

In the radiology and oncology sector, it observed productivity increases of 26 per cent while procedure costs decreased by seven per cent.

“Being able to perform more surgeries, at lower costs, and within shorter timelines is exactly what Alberta’s patients need, and Premier Smith understands that,” continued Mrs. Wittevrongel. “Today’s announcement is a good first step, and we look forward to seeing a successful roll-out once appropriate funding levels per procedure are set.”

The governments expects to roll-out this new funding model for select procedures starting in 2026.

* * *

The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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