True reconciliation means acknowledging our right to develop our lands as we see fit
Speculation has swirled for months that Ottawa is planning to introduce a new Indigenous loan guarantee program, and last week’s fiscal update confirmed that more details will be included in the next federal budget. I am not totally against this idea, as it could help Indigenous groups overcome historical barriers to raising capital, particularly through borrowing. However, there has also been speculation that certain industries could be excluded from loan eligibility, in accordance with the government’s environmental, social and governance (ESG) investment framework. This is not OK.
If the government follows through with its plan to roll out a new Indigenous-tailored financial program, it should respect our right to self-determination, which encompasses our autonomy to make investment decisions based on our own, internally defined objectives.
For instance, we are well within our rights to pursue investment opportunities in the energy sector, which offers a path to prosperity for many Indigenous communities. Indigenous-Canadians who work in oil and gas extraction currently make almost three times more than their peers. Quite frankly, it would be irresponsible for us to not seek out new energy investments, given the potential for good-paying energy jobs to lift scores of Indigenous families out of poverty.
A new loan guarantee program would, in theory, provide Indigenous nations with the resources to build our own path forward. But if the loan program were handled by the Canada Infrastructure Bank, as budget 2023 suggested, loans for oil and gas development may be excluded. Applying ESG requirements to the program would have a similar effect.
Such conditions would put remote communities at a disadvantage relative to those located near large urban centres. And communities that are dependent on energy projects for their economic well-being would be left in the lurch.This would be a step away from reconciliation. The federal government should not be able to pick and choose for us which projects we partner on — this is paternalism of the worst sort. Decisions about our lands and the projects built on them should be ours to make — and ours alone.
We have long made decisions about projects in our territories — decisions that balance economic development with stewardship of land and water. The Trudeau government has pledged, repeatedly, to value mutual respect and restorative justice. We need to remind them of that.
Right now, the most important thing the federal government can do is respect the right of all Indigenous communities to self-determination. We have a limited window of opportunity to persuade the Liberal government to include oil and natural gas extraction projects on the list of eligible loan guarantees, and make sure that our inherent right to make decisions about projects on our lands is respected.
This is also an opportunity to forge a much-needed and long-overdue relationship between the Tsimshian, Nisga’a, Haida, Haisla, Heiltsuk, Wet’suwet’en, Gitxsan, Tahltan, Tse’Khene, T’exelcemc and Carrier Sekani people, and build an Indigenous economic corridor stretching from British Columbia to Newfoundland.This loan guarantee program could help lift thousands of Indigenous-Canadians out of poverty, and bring prosperity to our people for generations to come, through inter-generational knowledge and wealth transfer. When our communities prosper, Canada prospers, but we cannot do that without the rest of the country’s help.
This is an opportunity for the federal government to bridge the divide and make Canada the economic powerhouse it ought to be. This loan guarantee program can serve as a much-needed catalyst. We should have the opportunity to invest in any project that has the potential to bring prosperity to our communities, including projects in the oil and gas industry.
Indigenous communities want to be a part of Canada, not apart from Canada. Give us the tools and we’ll finish the job.
Chris Sankey is a senior fellow at the Macdonald-Laurier Institute, a businessman and former elected councillor for the Lax Kw Alaams First Nation.
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According to the recent mid-year update tabled Thursday, the Smith government projects a $4.6 billion surplus in 2024/25, up from the $2.9 billion surplus projected just a few months ago. Despite the good news, Premier Smith must reduce spending to avoid budget deficits.
The fiscal update projects resource revenue of $20.3 billion in 2024/25. Today’s relatively high—but very volatile—resource revenue (including oil and gas royalties) is helping finance today’s spending and maintain a balanced budget. But it will not last forever.
For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).
And while the resource revenue rollercoaster is currently in Alberta’s favor, Finance Minister Nate Horner acknowledges that “risks are on the rise” as oil prices have dropped considerably and forecasters are projecting downward pressure on prices—all of which impacts resource revenue.
In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.
This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.
Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.
Consider this: If this fiscal year the Smith government received an average level of resource revenue (based on levels over the last 10 years), it would receive approximately $13,000 per Albertan. Yet the government plans to spend nearly $15,000 per Albertan this fiscal year (after adjusting for inflation). That’s a huge gap of roughly $2,000—and it means the government is continuing to take big risks with the provincial budget.
Of course, if the government falls back into deficit there are implications for everyday Albertans.
When the government runs a deficit, it accumulates debt, which Albertans must pay to service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $650. That’s largely because, despite running surpluses over the last few years, Albertans are still paying for debt accumulated during the most recent string of deficits from 2008/09 to 2020/21 (excluding 2014/15), which only ended when the government enjoyed an unexpected windfall in resource revenue in 2021/22.
According to Thursday’s mid-year fiscal update, Alberta’s finances continue to be at risk. To avoid deficits, the Smith government should meaningfully reduce spending so that it’s aligned with more reliable, stable levels of revenue.
Alberta maintains a balanced budget while ensuring pressures from population growth are being addressed.
Alberta faces rising risks, including ongoing resource volatility, geopolitical instability and rising pressures at home. With more than 450,000 people moving to Alberta in the last three years, the province has allocated hundreds of millions of dollars to address these pressures and ensure Albertans continue to be supported. Alberta’s government is determined to make every dollar go further with targeted and responsible spending on the priorities of Albertans.
The province is forecasting a $4.6 billion surplus at the end of 2024-25, up from the $2.9 billion first quarter forecast and $355 million from budget, due mainly to higher revenue from personal income taxes and non-renewable resources.
Given the current significant uncertainty in global geopolitics and energy markets, Alberta’s government must continue to make prudent choices to meet its responsibilities, including ongoing bargaining for thousands of public sector workers, fast-tracking school construction, cutting personal income taxes and ensuring Alberta’s surging population has access to high-quality health care, education and other public services.
“These are challenging times, but I believe Alberta is up to the challenge. By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.”
Midway through 2024-25, the province has stepped up to boost support to Albertans this fiscal year through key investments, including:
$716 million to Health for physician compensation incentives and to help Alberta Health Services provide services to a growing and aging population.
$125 million to address enrollment growth pressures in Alberta schools.
$847 million for disaster and emergency assistance, including:
$647 million to fight the Jasper wildfires
$163 million for the Wildfire Disaster Recovery Program
$5 million to support the municipality of Jasper (half to help with tourism recovery)
$12 million to match donations to the Canadian Red Cross
$20 million for emergency evacuation payments to evacuees in communities impacted by wildfires
$240 million more for Seniors, Community and Social Services to support social support programs.
Looking forward, the province has adjusted its forecast for the price of oil to US$74 per barrel of West Texas Intermediate. It expects to earn more for its crude oil, with a narrowing of the light-heavy differential around US$14 per barrel, higher demand for heavier crude grades and a growing export capacity through the Trans Mountain pipeline. Despite these changes, Alberta still risks running a deficit in the coming fiscal year should oil prices continue to drop below $70 per barrel.
After a 4.4 per cent surge in the 2024 census year, Alberta’s population growth is expected to slow to 2.5 per cent in 2025, lower than the first quarter forecast of 3.2 per cent growth because of reduced immigration and non-permanent residents targets by the federal government.
Revenue
Revenue for 2024-25 is forecast at $77.9 billion, an increase of $4.4 billion from Budget 2024, including:
$16.6 billion forecast from personal income taxes, up from $15.6 billion at budget.
$20.3 billion forecast from non-renewable resource revenue, up from $17.3 billion at budget.
Expense
Expense for 2024-25 is forecast at $73.3 billion, an increase of $143 million from Budget 2024.
Surplus cash
After calculations and adjustments, $2.9 billion in surplus cash is forecast.
$1.4 billion or half will pay debt coming due.
The other half, or $1.4 billion, will be put into the Alberta Fund, which can be spent on further debt repayment, deposited into the Alberta Heritage Savings Trust Fund and/or spent on one-time initiatives.
Contingency
Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion is forecast.
Alberta Heritage Savings Trust Fund
The Alberta Heritage Savings Trust Fund grew in the second quarter to a market value of $24.3 billion as of Sept. 30, 2024, up from $23.4 billion at the end of the first quarter.
The fund earned a 3.7 per cent return from July to September with a net investment income of $616 million, up from the 2.1 per cent return during the first quarter.
Debt
Taxpayer-supported debt is forecast at $84 billion as of March 31, 2025, $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements.
Debt servicing costs are forecast at $3.2 billion, down $216 million from budget.
