EDMONTON—Let the good times roll in Alberta.
That is, at least, the message emerging from a snapshot of the provincial economy offered Thursday in Alberta’s second quarterly report of the fiscal year.
The province is looking at a $12.3-billion surplus for the current fiscal year. While down slightly from the first-quarter projection of a $13.2-billion surplus, this includes a slew of new spending initiatives announced by Premier Danielle Smith this week.
“Our principled approach to paying down the provincial debt and building our savings increases fiscal capacity and positions our province to better weather a potential future global recession,” said Finance Minister Travis Toews told a Thursday news conference.
“Challenges are ahead, but we’re leaving no one behind.”
Smith’s initiatives in the name of inflation relief — including sending $600 over six months to eligible Albertans; tax relief; and utility rebates — are expected to cost $2.8 billion over three years. That number was previously said to be $2.4 billion, but that didn’t include some of the initiatives extending into a third year, officials clarified Thursday.
Meanwhile, Alberta is looking recession-proof, according to the provincial government’s financial stewards. Add to that, its housing market is not expected to see a major correction like that anticipated in Toronto or Vancouver, as the province is expecting good migration and low inventory. Houses are more affordable in Alberta and the province generally has a lower cost of living compared to places such as British Columbia or Ontario.
Total revenue for Alberta is expected to be $76.9 billion for this fiscal year, up $14.3 billion from where last year’s budget had it pegged. The province is expecting to dish out a total of $64.6 billion in expenses.
Nonrenewal resource revenue for the province is projected to be a whopping $28.1 billion — $12 billion more than in 2021-22.
However, total revenue will likely drop by $7.3 billion next year as energy prices go down, according to the province’s predictions.
West Texas Intermediate oil — its benchmark price is used by Alberta to estimate finances — is expected to be USD91.50 per barrel this fiscal year, although the pricing of oil is volatile due to things such as geopolitics and war. For the next two years, it is expected to drop to $78.50 and $73.50 per barrel, respectively.
Also in the next two fiscal years, Alberta’s surplus is expected to drop to $5.6 billion in 2023-24 and $5.3 billion in 2024-25.
Still, the province is expected to withstand any global recession that may be on the horizon, according to treasury board and finance officials.
Employment has been picking up and the province’s population is growing. Alberta is expected to see a 2.2 per cent increase in its population next year. Meanwhile, its GDP is increasing 4.8 per cent in 2022, with an average growth of 2.8 per cent in the following years, up to 2025.
Alberta is expecting lots of new investment as well, especially when it comes to industries outside the energy sector, such as construction and renewables. Investment in non-energy industries is expected to grow by nine per cent in 2023.
Non-renewable investment, meanwhile, is expected to grow by $2.9 billion in 2022.
Alberta is expecting to see high corporate profits and large household income growth, making the province’s nominal GDP (a high-level measure of income) grow 24 per cent.
Alberta is expecting to make a large debt payment this year, to the tune of $13.4 billion.
Toews was asked by reporters about a line in the first-quarter update from August that stated the province planned to invest $1.7 billion into the Heritage Savings Trust Fund. It appeared to have been removed in Thursday’s report.
The minister didn’t clarify but repeatedly said in response to questions about the fund that $5.8 billion of provincial money had been set aside for future considerations.
Toews was also asked about people seemingly left out of the province’s inflation-relief plans.
Earlier this week, the province rolled out plans to reindex support programs and send direct payments of $600 over the next six months per child in families with a household income of less than $180,000. Seniors would also qualify for that payment, along with people on the province’s assured income for disabled residents and developmental disabilities programs. The province is also suspending the fuel tax, giving utility rebates and offering further tax relief when people file their taxes.
But a single person with no children who uses transit and makes $30,000 per year is sitting outside the scope of most of the initiatives, for example.
“I’m sure we could all find a specific example,” said Toews in response to questions from reporters. “The reality is the vast, vast majority of all Albertans are gonna benefit from these affordability measures.”
The Alberta NDP’s finance critic, Shannon Phillips, said this windfall comes down to the war in Ukraine causing oil prices to soar and not to any decisions the UCP government has made in the past three years.
Phillips said that the province was not committing enough money to the health-care system, which she said is in crisis, and seemingly pulling money from the Heritage Savings Trust Fund.
“My friends, this is how you p— away a boom,” she said.
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