Albertans continue to pay for government debt—despite budget surpluses

” due to the amount of debt accumulated, and higher interest rates, Albertans will actually see government debt interest costs increase and reach $687 per Albertan by 2025/26 “

Thanks in large part to a windfall in resource revenue, the Alberta government has been running budget surpluses since 2021/22. Yet at the same time, as budget season approaches, Albertans are paying more and more for the cost of government debt.

Prior to the recent string of surpluses, during a period of relatively low resource revenue, Alberta incurred nearly uninterrupted deficits from 2008/09 to 2020/21. A deficit is simply when the government spends more than it collects in revenue in a given year—and it leads to debt accumulation.

Indeed, Alberta went from a net financial asset position of $35.0 billion in 2007/08 to a net debt position of $59.5 billion in 2020/21. In other words, the province’s finances deteriorated by nearly $95 billion.

Of course, the burden of government debt ultimately falls on Alberta families, today and in the future, because governments must pay interest on their debt—and that interest ultimately is raised from Albertans through taxes. As the government accumulated more and more debt, debt interest costs increased from $61 per Albertan in 2007/08 to a projected $672 per Albertan in 2023/24. Servicing the debt also diverts resources away from services such as health care and education.

Unfortunately, debt interest costs don’t just disappear when you run surpluses, even with the Alberta government using a share of these surpluses to pay down debt. Instead, due to the amount of debt accumulated, and higher interest rates, Albertans will actually see government debt interest costs increase and reach $687 per Albertan by 2025/26.

This is why it’s so important for governments to practice fiscal prudence, in good times and bad. Rather than increasing spending during the good times (i.e. periods of relatively high resource revenue) as successive Alberta governments have done in the past, then running deficits when relatively high resource revenue inevitably declines, the Smith government should restrain spending.

How? For starters, the government can limit the amount of resource revenue included in the budget using a rainy-day account based on the previous Alberta Sustainability Fund (ASF), which was established in 2003 to “stabilize” a specific amount of resource revenue for the budget, thus limiting the amount of money available for annual spending. The idea was simple; save some resource revenue during good times to ensure a stable amount of resource revenue for the budget during bad times.

Unfortunately, the previous ASF was based in statutory law, which meant its rules were easily changed and the government discarded the fund entirely in 2013. The Smith government should instead establish the specific amount of resource revenue for the budget as a “constitutional rule,” which would make it more difficult to change in the future.

Government debt comes with big costs for Albertans—and those costs don’t simply disappear when the province runs a surplus. For true fiscal stability, the government needs a fundamentally new approach. The upcoming budget is a good place to start.

Author:

Tegan Hill

Associate Director, Alberta Policy, Fraser Institute

Related Topics:#AlbertaBudget #AlbertaGovernmentDebt #AlbertaNetDebt #FraserInstitute #TeganHill

Up Next

“Indian Industry” cronyism

Don't Miss

Trudeau gov’t ‘green’ heat pump scheme a dismal failure, records show

Todayville

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

Chrystia Freeland’s WEF page deleted after she announces bid to replace Trudeau

National / 2 hours ago

Poilievre calls likely Trudeau replacement Mark Carney the World Economic Forum’s ‘golden boy’

Daily Caller / 3 hours ago

Pastor Lectures Trump and Vance On Trans People, Illegal Immigrants

Alberta

Alberta Premier Danielle Smith Media Roundtable from Washington

Published on January 21, 2025

Todayville

From the YouTube channel of Alberta Premier Danielle Smith

Members of the media join Premier Danielle Smith for a round table on January 21, 2025.

Alberta

Is There Any Canadian Province More Proud of their Premier Today…

Published on January 21, 2025

Todayville

Prior to Trumps inauguration event and announcement was made that Trump would not be imposing the 25% tariffs…

Which means, Canada seriously dodged a bullet here.

And while the Liberals will most likely frame this as, their success in showing, Bad Orange Man, that they’re tough and ready to burn down what is left of our economy, throwing Alberta under the bus, first…through a nuclear option…

Premier Smith rode this challenge out like the true champion we knew that she would be.

It’s hard to say if this was a legality matter in the grander scheme…or if the 25% tariffs would have truly been as big of an impact on the US…

One thing is clear, however…

Smith was ready to go to the tables with the Trump administration and opt for diplomacy over threats…which should be what we expect from our leaders.

And should these 25% tariffs have gone through…I’m more than sure a Plan B would have been brought out in civil conversations, over screeching rhetoric.

“She’s treasonous”, they screeched.

“She’s supporting her friends in Oil and Gas”, they relent.

“She should put Canada first”, they echo…

And let’s just address these…

Is Walmart beholden to Campbells soup? Fruit of the Loom? Kraft?

Or does Walmart sell products that helps keep their doors open?

Walmart is not beholden to any product…just like Premier Smith isn’t. We have 26% of our GDP – the largest portion – owed to Alberta O&G, something that we have a limited trade partner with, due to the Liberal – Anti-Alberta/Anti-O&G/Anti-Pipeline attitude that wants to spend us further in debt with unreliable and expensive “Renewables”.

What does Alberta get from renewables?

A higher cost for energy, in an affordability crisis, created by the same people who continue to push them…sounds like a terrible deal, for Albertans, and something a true leader would Not Favor.

When Walmart sits down to hash out a deal with Heinz, are they committing treason because they haven’t shown their allegiance to their own, ‘Great Value’ brand Ketchup?

No…other provinces have their own industries and resources, which they are free to continue developing independent of the federal government, as is suitable and supportive of their own economies…Alberta isn’t competing with them, nor Canada as a whole.

Alberta through industry and resource, actually supports Canada through a grand imbalance on “Equalization Payments”…

As do we through paying 50% more into the Canada Pension Plan, than we actually get out of the Canada Pension Plan…to the tune of a $334 Billion Dollars.

And as for this “Team Canada”, horseshit…

The title Premier of Alberta, should hold some clues as to who Premier Smith should be advocating for…as she is the Premier of Alberta and Not the Prime Minister, nor leader in the Liberal Party that has created this fiasco, to begin with.

Rail, as they may…other provinces can’t cast a vote in her support, either way…

None of the other provinces, through Members of Parliament, nor through Premiers, came to support Alberta and our economy through a number of Federal Bills that railed on our provincial resources…

Worse yet…these hypocrites cash cheques from our province, while telling us how to diversify our economy…to which I’d state one thing unequivocally…

If we wanted to be a Have Not Province…like you are…we’ll come and ask you for your advice.

Until then…

I’ll hold my Alberta Flag Higher than my Canadian…

And be proud today, of having the only Premier in the country of Canada, worthy of any praise today!