Alberta Budget 2021 Highlights

From Alberta.ca/budget-highlights

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

Published on November 21, 2024

Todayville

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

Alberta

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

Published on November 21, 2024

Government of Alberta

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