‘One last shot’: Alberta premier talks lower oil and gas revenue, Heritage contributions in Budget 2024 preview

Premier Danielle Smith spoke to Albertans via a televised address Wednesday night, giving a sneak peak at her government’s focus ahead of the tabling of the 2024 budget next week.

In pre-taped comments, the premier touched on the economic forecast — acknowledging the predictions of economists that say lower revenue from natural resources is on the menu for 2024 — as well as planned contributions to the Alberta Heritage Fund, overall government spending, personal income tax, social programs, and more.

Declining revenues from resources such as oil and gas have pushed the governing United Conservative Party to exercise restraint, Smith said. But, the premier said this doesn’t mean spending cuts are on the way.

“We will ensure this is done thoughtfully and with priority given to the programs and services Albertans most rely on such as health, education, and social supports,” she said.

Personal income tax cuts promised by the UCP will also be pushed back a year, and “phased in responsibly,” according to the premier.

Smith described the budgets of recent years as a “rollercoster” and proposed a solution to that volatility — increased contributions to the Alberta Heritage Fund.

“It is time for our province to implement a long-term strategic financial plan that gets us to a stable balanced budget each and every years with predictable and stable revenues to fund our core social problems,” she said.

Last year, the UCP passed a law required all money earned through the Heritage Fund be reinvested in the fund rather than spent.

So, in 2024, the governnment is planning to invest and reinvest approximately $3 billion of surplus and investment interest back into the Heritage Fund, which the province says would increase its value to almost $25 billion.

Smith says directions have also been given to finance minister Nate Horner to limit government spending to below the legislated rate cap, which is inflation plus population growth. indefinitely.

Consistent fiscal discipline in years of both high and low oil prices is the solution to success, she added.

Not only will the government keep an eye on spending and contribute to Heritage, the premier also says it will “strategically” pay down maturing debt, and “slowly but surely wean our province’s budget off the volatile roller coaster of resource revenues.”

The Heritage Fund was created in 1976 to collect a portion of the province’s non-renewable resource revenue and invest it, so that the interest earned in the fund would eventually grow to the point the province could limit reliance on resource revenues when they ultimately declined, according to the province.

“In my view, our province has one last shot at getting this right,” Smith said.

Alberta will continue to be a global leader in oil and gas, and provide that resource to those who need it “with the most advanced environmental technology on earth.”

Smith also took an opportunity to throw shade at the federal government, particularly when it comes to oil and gas, saying “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.”

Alberta’s government has consistently sparred with the feds over the timeline for a net-zero energy grid — as Environment Minister Steven Guilbeault has long expressed his determination to hit the goal by 2035, while Smith and the UCP say that is unrealistic, and instead, are pushing for 2050.

“Meeting these two goals simultaneously with Alberta technology, determination, and ingenuity will leave an invaluable legacy for future generations of Albertans and Canadians,” the premier said.

NDP Deputy Leader Christina Gray said in a statement following the address that the UCP’s budget will miss the mark.

“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,” Gray said.

The Opposition claims Albertans are missing out on at least $272 million in affordability measures that were promised by Smith during the election, including lowering utility prices, high rent, and high insurance.

“The UCP has failed to fund and support our public education, and is moving forward with the dismantling of your already struggling health care system,” Gray continued. “This is unacceptable.”

Smith and company are leading toward “underfunded healthcare, overcrowded emergency rooms, and hundreds of thousands of Albertans living without a family doctor” according to the NDP.

It also claims the budget ignores public education, including overcrowded classrooms and exhausted teachers.

On the other hand, Christine Myatt, a senior consultant for New West Public Affairs, applauded the way Smith managed expectation with this announcement.

“We’ve heard over the last fiscal year about big surpluses — billions of dollars in surplus and what they are telling us, they’re not going to take that money — that surplus money — and spend frivolously,” she said.

Myatt is also applauding the move to invest $3 billion into the Heritage Fund, something she says is sorely needed, given the past decades of Alberta’s reliance on it to fund government services.

“The fund has not grown since Lougheed was in power,” she said. “So as Premier Smith pointed out, had we kept that revenue in the fund and continued to invest, we would be much better off than we are today.”

Budget 2024 will be presented by Minister Horner on Thursday, Feb. 29, the second day of the legislature’s spring sitting.