Premier Smith says restraint needed in Alberta budget 2024, vows to build Heritage Fund

Alberta Premier Danielle Smith promised not to cut spending this year in a pre-budget speech on Wednesday but said the province still needs to show more restraint than previously expected.

In a pre-budget, eight-minute paid prime time televised speech, Smith said lower resource revenues and the volatile price of oil and gas have prompted the government to think of a long-term strategic financial plan to have a “stable, balanced budget.”

In short, Smith said the province must, in the long-term, get off the rollercoaster ride that is relying on oil and gas prices.

Those challenges are caused by the province’s “unsustainable” dependence on a non-renewable resource, according to Smith, and Alberta can no longer rely on billions of dollars in resource revenues to balance the budget.

The speech comes before the United Conservative government unveiled its budget for 2024, which is scheduled for Feb. 28. The province previously forecast a surplus of $5.5 billion in 2023-24 during its mid-year fiscal update.

“Thankfully, we had a good year and we’ll collect enough resource revenues to cover that $16 billion, with a few billion leftover to pay towards our provincial debt and savings for the future,” Smith said during Wednesday’s address.

“That said, we simply cannot continue to rely on $16 billion or more in resource revenues to balance our budget year in and out.”

“That is a recipe for massive debt and cuts to health and education when the price of oil takes a dip for a year or two or more.”

Smith also said the United Conservative government will not increase sales taxes but will instead renew investments into Alberta’s Heritage Savings Trust Fund, which was established in 1976 to collect a portion of the province’s non-renewable revenues for “future generations.”

According to the Alberta government, the initial investment of $2.2 billion has grown to $21.2 billion as of March 31, 2023.

Smith said previous governments did not re-invest in the fund for various reasons, losing between $12 billion to $25 billion per year in revenue.

Smith said the United Conservative government plans to reinvest $3 billion of surplus and investment income back into the Heritage Fund, increasing its value to $25 billion and putting the province “back on track.”

The goal is to have between $250 billion to $400 billion in the fund by 2050, she said, and the government will publicly release a long-term financial plan by the end of the year along with plans on how to achieve a carbon-neutral economy by that same year.

“There is no doubt in my mind we are capable of achieving these goals, but we need to start today and stick with it fervently year after year.

“I ask for your support as our government commits itself to placing our province on this path to prosperity that will last long after our last barrel of oil has been produced.”

Smith added she instructed Finance Minister Nate Horner to limit government spending to below the legislated rate cap of inflation plus population growth, no matter if oil and gas prices are high or low.

“Instead of spending all that non-renewable surplus cash on the wants of today, we will be fiscally disciplined — invest in the Heritage Fund annually, strategically pay down maturing debt. And slowly but surely, wean our province’s budget off the volatile roller coaster of resource revenues,” she said.

“In my view, our province has one last shot at getting this right. We still have several decades during this global energy transition, where nations will desperately need our oil and gas resources for their people, and we will provide it to them.”

But Smith said she thinks the province will see an “unprecedented and prolonged energy resource boom” despite a predicted global economic slowdown.

“I believe our province is on the cusp of an unprecedented and prolonged energy resource boom, one that will include both hundreds of billions in investment and tens of thousands of new jobs, not only in oil and gas production, but also in designing and building the most advanced emission reduction technologies on Earth,” she said.

“It is going to be an exciting time for our province and for Canada, especially once we finally get a federal government that acts like a strategic partner rather than a delusional adversary.”

— More to come…

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