The Most Expensive Campaign Promise Ever – Explainer

This article was submitted by Peter McCaffrey, President 0f the Alberta Institute

Over the coming weeks, I’ll be analyzing some of the big policy announcements that the major parties in the Alberta election make.

So, today, we’re going to kick things off with a look at an issue that made headlines yesterday – electricity policy.

I know, I can almost see your eyes glaze over through your webcam, but bear with me – this is important!

Last March, Justin Trudeau announced the release of the federal government’s “2030 Emissions Reduction Plan: Canada’s Next Steps for Clean Air and a Strong Economy”.

Who could be opposed to Clean Air and a Strong Economy, right?

The devil, as always, was in the details and, in this case, the details are called the “Clean Electricity Regulations”.

The federal government has been talking for some time about “transitioning” Canada’s entire electricity sector to being “net-zero” (ie: no net carbon emissions) by 2050.

The “Clean Electricity Regulations”, though, are the federal government’s plan to speed up this transition and require the provinces to have net-zero electricity grids by 2035 instead.

Now, for some provinces, that won’t actually be too challenging, as they already generate the vast majority of their electricity from Hydro.

But for Alberta (and Saskatchewan), it will be practically impossible – and insanely expensive.

That hasn’t stopped Rachel Notley and the NDP from promising to follow the federal government’s lead and do it, though.

So, let’s take a deep dive into exactly why this policy could be so harmful to Alberta.

First, in Alberta, about 85% of electricity on the commercial market comes from non-renewable resources.

That means that, in order to achieve net-zero here, we’d have to rebuild almost literally the entirety of our electricity market in the next 12 years.

If that sounds expensive to you – you’d be right!

In July 2020, when the federal government first started floating this idea, the Alberta Electric System Operator (AESO) wrote a report that calculated that transitioning Alberta to a net-zero electricity grid by 2035 would cost $52 billion in additional capital investments and generation operating costs.

Yes, you read that right – $52 billion.

And, to be clear, that $52 billion isn’t the entire price of transitioning to net-zero – that would be much more – the $52 billion is just the extra price of doing it faster, by 2035 instead of 2050!

Next, fast forward to yesterday, and a new report was been released that assesses those direct capital and infrastructure costs calculated by AESO, and works out what the additional indirect economic harm to Alberta would be of being forced to make this rapid transition.

This new report was written by a group called Navius, who are traditionally seen as a left-leaning environmental economic research group, and even they say that the indirect impacts to Alberta’s economy will be enormous – $35 billion – and that’s before they even account for inflation.

So, now, thanks to these two reports, we know exactly what the federal government’s 2035 net-zero electricity grid plan will cost Alberta.

$52 billion in direct costs to upgrade and build infrastructure, plus at least $35 billion in indirect economic costs, for a total of at least $87 billion.

And, as I mentioned before, Rachel Notley and the NDP are fully on board.

They aren’t advertising their support, of course.

Just like with the carbon tax in 2015, they aren’t campaigning on this policy, and they haven’t mentioned it on their website or included it in their campaign material.

But, at a private NDP event last year and in a few occasional tweets, Rachel Notley has confirmed that the NDP is committed to this idea.

And, just like in 2015 with the carbon tax, they’re hoping Albertans won’t notice until after the election.

Let’s be clear, though – a policy of implementing a net-zero electricity grid by 2035 makes the carbon tax look like a bargain by comparison.

The carbon tax costs Albertans about $2 billion.

Don’t get me wrong, that’s a huge amount of money.

But $87 billion (or more) over just 12 years is more than $7 billion a year.

I really worry that people don’t understand just how much money we’re talking about here.

It’s an absolutely insane amount.

Let’s try to put it into scale…

$87 billion is more than the entire Alberta government budget ($63 billion).

$87 billion is 48 times the cost of the Red Deer Hospital.

$87 billion is 290 times as much as the province’s “controversial” Calgary arena investment.

$87 billion would pay for the salaries of every single nurse in Alberta for 70 years.

One more… just for fun…

$87 billion would buy a Tesla Model 3 for literally every household in the province.

Yes, seriously – you get a Tesla, you get a Tesla, everyone gets a Tesla!

This is honestly such an insane amount of money that I’m genuinely not even sure that the NDP realizes exactly what they’ve committed to here.

“Never has a politician committed to a policy that would cost this much to implement. This is not only unrealistic, but it is dangerous to the long-term health and viability of our economy,” said UCP Candidate Brian Jean.

It is the single biggest election promise in Alberta history, and it’s not even close.

Thankfully, here at the Alberta Institute, our team is working hard to assess and analyze campaign promises to make sure that you have the facts at your fingertips, and that you’re fully aware of just how much our politician’s promises are going to cost you.

I’d love to be able to bring you more of this type of analysis, so if you support our work, please help us continue to provide you with the level of in-depth policy research by making a donation to support our work:

The Alberta Institute is an independent, libertarian, public policy think tank that aims to advance personal freedom and choice in Alberta.

Founded in 2018, we work to develop and promote solutions to a wide range of municipal, provincial, and federal public policy issues in a strictly non-partisan way.

Our solutions are informed by our belief in a free and open society built on individual rights, private property, peace, voluntaryism, free markets, free minds, free trade, free movement, self-ownership, and reason.

We promote these beliefs through a wide variety of activities and actions, including research, data analysis, publications, newsletters, advocacy, events, conferences, and more.

Independence:

The Alberta Institute’s work is funded by thousands of small-dollar donors from across Alberta who believe in – and wish to support – our mission.

We don’t accept any government funding – and we never will – because we think Albertans should be free to choose, for themselves, which organizations to support.

The donations we receive from our supporters allow us to hire dedicated research staff and volunteer coordinators, publish and promote our findings, host events to help get the message out and connect with the community, offer internships and other opportunities to young Albertans, and much more.

We also depend on our grassroots volunteers, spread across nearly every community in the Province, to help with our mission of advancing personal freedom and choice across Alberta.

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Alberta

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

Published on April 9, 2025

Todayville Content Team

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

Alberta

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

Published on April 9, 2025

Todayville

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.