(CHAT News)

By Eli J. Ridder | @EliRidder

UPDATED

Alberta to boost heritage savings fund to leave behind reliance on energy revenues, premier says

Feb 21, 2024 | 6:33 PM

The Alberta government will cut back on spending and invest billions of its non-renewable resource revenues into a savings fund so the province will no longer have to rely on that revenue stream by 2050, Premier Danielle Smith said Wednesday.

Smith wants to use the interest made off the growing Heritage Savings Trust Fund to supplement the provincial budget as the resource revenues made from industries like oil and gas decline as an alternative to increasing taxes, she said.

“We will be fiscally disciplined, invest in the Heritage Fund annually, strategically pay down maturing debt and slowly, but surely, wean our province off the volatile rollercoaster of resource revenues,” she said in a televised prime time address.

Smith made it clear she wanted to avoid hiking taxes or creating a sales tax to make up for lost revenue as the country chases its carbon neutrality goals.

“We only need look at some of our fellow provinces and many U.S. states, to know that increasing these kinds of taxes to balance a budget is a recipe for economic decline,” she said.

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“That will not be the approach of our government.”

Smith said her United Conservative government will release a financial plan before the end of 2024 that will details its plan to grow the Heritage Fund to between $250 billion and $400 billion.

This year, the government is targeting an investment of $3 billion in surplus and investment interest into the Heritage Fund, bringing its total value to $25 billion.

Next week, Smith’s government will release its next budget amid a year of economic uncertainty, anticipated droughts and passionate debate over a proposed departure from the Canada Pension Plan and youth gender policy.

Smith said she has instructed Finance Minister Nate Horner to limit government spending to below the legislated rate cap of inflation plus population growth.

The Opposition NDP has long accused the province of failing to fund for growth in health care and education and has said not matching funds to growth is equal to a budget cut.

Census data provided by the province last November reported Alberta added 184,000 people for 4.1 per cent growth in the 2023 census year. Growth of 2.9 per cent is expected in the 2024 census year.

The NDP said Smith’s speech was all about broken promises.

“The premier had an opportunity tonight to keep the promises made to Alberta families during the last election, fix the chaos her government has created in health care and make life more affordable for Albertans, but she didn’t,” said NDP deputy leader Christina Gray in a statement.

Gray said Albertans instead are missing out on at least $272 million in affordability measures the premier promised in the last election, as well as action on lowering utility prices, high rents or even to offer relief on soaring insurance rates.

“This is unacceptable. It’s clear that Danielle Smith and the UCP are only willing to maintain the current state of chaos we see across our hospitals, schools and in family budgets.”

For decades, Alberta has tied budget spending to the mercurial ups and downs of oil and gas prices, leading to years of eye-popping multibillion-dollar surpluses set against equally alarming deficits.

Alberta’s most recent forecast for this budget year, which ends in March, forecasts a $5.5-billion surplus against almost $69 billion in spending. It is tied to West Texas Intermediate — the North American benchmark price for oil — averaging US$79 a barrel.

The Alberta government will reveal its next budget on Feb. 29.

— with files from the Canadian Press.