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Alberta

Premier Smith meets with Prime Minister Trudeau

Published

1 year ago

4 minute read

Premier Danielle Smith met with Prime Minister Justin Trudeau on July 7 to discuss economic priorities.

Although the meeting was constructive, there are still several concerning issues that need to be resolved if Alberta and the federal government are to reach an agreement on an emissions-reduction plan that will simultaneously secure a reliable and affordable electricity grid, protect Alberta workers and drive economic growth in our energy sector for decades.

The positive news is the federal government has agreed to immediately form a bilateral working group with the Alberta government to work on an aligned framework to incentivize investment in carbon capture, utilization and storage as well as other emissions-reducing technologies.

This group would also work to develop a regulatory framework for the construction and use of small modular reactor technology in our province and to secure credit for carbon reduction through increased LNG exports to international markets. Article 6 in the Paris Accord allows for jurisdictions to receive credit for reducing emissions in other countries.

These are welcome developments.

However, the federal government has yet to formally recognize Alberta’s exclusive jurisdiction to set its own emissions-reduction targets and milestones on the path to a carbon-neutral energy sector and electricity grid by 2050.

They continue to set targets for a 42 per cent reduction in energy sector emissions by 2030 and a net-zero electricity grid by 2035. Both of these targets are unachievable, will drive billions of investment out of Alberta, massively increase electricity costs and result in the loss of tens of thousands of Alberta jobs.

We also understand the federal government is set to release its draft so-called ‘clean electricity’ regulations (CER) for feedback in the coming weeks, and which do not initially include a carve-out for provinces like Alberta, which needs more time to transition to a carbon-neutral power grid due to our reliance on natural gas-fired electricity generation.

It will be critical after this initial feedback period is complete that Ottawa grant Alberta’s requested CER carve-out until the working group has reached an agreement on decarbonizing our power grid that Albertans can afford and support.

Albertans have borne the significant cost of replacing all coal-fired electricity generation with natural gas seven years ahead of schedule, for which ratepayers have already paid billions in compensation and will continue to make these compensation payments through 2030.

Alberta has sovereign and exclusive constitutional jurisdiction to regulate our energy and electricity industries. This is non-negotiable.

We have asked the federal government to come to the table in good faith and to assess the realities of our power grid and the true magnitude of being the fifth-largest producer of oil and gas in the world.

If Ottawa does not recognize and support Alberta’s exclusive right to regulate these sectors of our economy, our province will have no choice but to use alternative policy options to protect our rights independent of federal interference.

Our sincere hope is that the newly formed federal and provincial working group will be able to facilitate an agreement that will align Ottawa’s efforts with the Alberta government’s Emissions Reduction and Energy Development Plan.

Failing to reach an agreement on these matters would be an unprecedented missed opportunity that would cost our country tens of billions in economic investment and countless jobs from coast to coast. We look forward to starting the working group as soon as possible.

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This is a news release from the Government of Alberta.

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Alberta

Alberta’s fiscal update projects budget surplus, but fiscal fortunes could quickly turn

Published on November 21, 2024

By

From the Fraser Institute

By Tegan Hill

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.

Author:

Tegan Hill
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Alberta

Premier Smith says Auto Insurance reforms may still result in a publicly owned system

Published on November 21, 2024

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Better, faster, more affordable auto insurance

Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.

After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.

Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.

“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”

Danielle Smith, Premier

“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”

Nate Horner, President of Treasury Board and Minister of Finance

Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.

Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.

Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.

In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.

Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.

By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.

“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”

Nathan Neudorf, Minister of Affordability and Utilities

Quick facts

  • Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
  • A 2023 report by MNP shows
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