Alberta Premier Danielle Smith looks to the gallery as the 2024 budget is delivered in Edmonton, Thursday, Feb. 29, 2024. Smith says Albertans need to get on board with the direction her government is taking on fiscal restraint and saving for the future.THE CANADIAN PRESS/Jason Franson.
CALGARY – Alberta Premier Danielle Smith says spending needs to remain in check as her government looks to sock away savings into its rainy-day fund.
She says the government’s long-term revenues increase at about three per cent a year. Meanwhile, her government aims to have at least $250 billion in its Heritage Savings Trust Fund – up from the $25 billion it’s forecasting this year – by 2050.
“We can’t spend every single dollar today on today’s needs and wants. We have to start putting money aside so that we’re preparing for what the world might look like in 20 or 30 years,” Smith said told reporters at a schools announcement in Calgary on Friday.
“I’m just asking everyone, including members of our public service, to accept we’re all in this together, that we want to make sure we have an environment where I can start reducing personal income taxes.”
In the 2024-25 budget introduced Thursday, spending was forecast at $73.2 billion, a 3.9 per cent increase from last year. The government expects a surplus of $367 million.
Resource revenues are expected to make up nearly a quarter of provincial revenues through 2026. Each dollar-drop in the benchmark price of oil costs Alberta more than $600 million.
The government has forecast the price of West Texas Intermediate crude to average US$74 per barrel.
“I am very concerned about what’s happening with oil and gas prices internationally,” Smith said.
The government is to put $2 billion into its heritage fund out of cash left over from this year but anticipates no payments for the next three years.
Smith said she hopes the fund will grow to a point it can provide a replacement for resource revenues.
“My finance minister’s nervous, because we don’t know what oil and gas prices are going to look like over the coming years. He and I are highly motivated to find that new revenue source, that investment in the Heritage Savings Trust Fund.”
The government is also reserving $2 billion for contingencies such as drought and wildfire, but that is about a third less than what was spent last year.
The contingency fund is fine the way it is, Smith said.
“We know there are going to be extraordinary years. Then we’ve had full years we haven’t had to engage emergency response when it comes to fires,” Smith said.
“We won’t always have a $2.9-billion disaster like we did last year. A certain amount of base funding for the typical season is prudent but also making sure we have a substantial consistency — so we’re never caught out is a wise way of going about it.”
Wildfires burned a record 22,000 square kilometres in the province during last year’s season.
Heather Sweet, the Opposition NDP critic for agriculture, forestry and rural economic development, said the United Conservative Party government isn’t putting enough money toward wildfire readiness.
“The UCP is planning for the upcoming wildfire season on a hope and a prayer, while drastically underfunding preparation for wildfires this year,” she said in a release.
“Hope is not a strategy.”
This report by The Canadian Press was first published March 1, 2024.
