By Trevor Busch
Alberta’s Budget 2023 isn’t showing any fiscal blue clouds based on a wealth of petro-dollars pouring into government coffers over 2022, but financial analysts are warning some rainy days may not be far off as key indicators continue to point to a recession in the near future.
While the prospect of an economic recession is slowly moving from speculation into the realm of hard numbers, Taber-Warner MLA Grant Hunter is firmly focused on the positive aspects of the UCP’s budget which includes posting an expected $2.4 billion surplus.
“It’s always nice when we have royalties,” said Hunter. “But I don’t think that’s the whole picture. I think the full picture is the fact that for the last three years, we’ve been very careful with our budgeting. We’ve got our per capita spending and government spending in line with the other top four provinces in Canada. Before that we were an outlier. And I think that that has now allowed us to be able to be in this enviable position we’re in right now.”
Spending is up almost across the board, with big boosts being seen in health, education and justice. The province is on track to rake in $70.7 billion in revenue, with expenses set at roughly $67 billion, with $1.5 billion being set for unforeseen spending emergencies. Bitumen royalties are expected to bring in a total of $12.6 billion.
Hunter highlighted the province’s lower corporate tax rate as another revenue source that has been paying off for Alberta.
“Because we’ve decreased our corporate tax rate from 12 per cent down to 8 per cent, tells us that when you free up businesses through regulatory reduction – which is what we’ve done, that reducing rate – you do make it so that we’re competitive with other jurisdictions in the United States that are competing for that those investments. We do quite well, that’s what we’re seeing right now, is an increase in our corporate tax revenue even though we’ve decreased our tax rate from 12 per cent to 8 per cent. This is a story that I think is very important to tell, because I know there’s lots of arguments out there that we need to increase corporate tax rates. I can say that based on the last four years, that’s not true.”
Almost $2 billion is headed to the Heritage Savings Trust Fund bringing that total to $20 billion, and Hunter also commented on the critical need for the province’s recent affordability package.
“Number one is obviously we have affordability measures and we’re trying to help Albertans. We didn’t create the inflation. That’s a worldwide macro-phenomena that’s going on. But we can certainly help and we’re in an enviable position to be able to help. We have the largest affordability package going out to Alberta, per capita than any other province. The other thing is that we’re doing it without going into debt.”
“Most of those other provinces have to go into debt to provide those affordability measures and helps. And so that’s exciting that we were able to steal a $2.4 billion surplus. And just to be clear, in the last two years when everybody else was struggling, we’ve been able to pay down debt by over $14 billion, and not just pay down debt, but also add money to the Alberta Heritage Trust Fund. So again, all of these things are a result of us being able to get back the Alberta Advantage. The Alberta Advantage is really lower marginal tax rate than other jurisdictions, lower regulatory burden than other jurisdictions. And that’s really what helps businesses come in.”
Value-added agricultural enterprises and development in southern Alberta has been key to promoting enhanced prosperity in Taber-Warner, and Hunter is confident there is much more to come just over the horizon.
“In the south here, we’ve got agri-food processing that is skyrocketing right now. Stay tuned, there’s gonna be some really exciting announcements very soon on that front, but the agri-food is really what I’ve been focusing on in the south here. But we’ve got petrochemical. We’ve got hydrogen, we’ve got lots of other increases in other sectors as well throughout the province. And it’s happening because of that Alberta Advantage, because people come here, businesses come here, and they say we can actually make it work here in Alberta, whereas other jurisdictions, they can’t.”
A tax rebate to promote growth in this area that had been previously implemented by the province has been a welcome change, according to Hunter.
“The 12 per cent tax rebate for agri-food processing,” said Hunter. “This was a big, big game changer in the south here. My phone is ringing off the hook by multinational agri-food processing companies. The ones that are here already are talking about expanding. And so again, I don’t want to preempt some of the negotiations that we’re doing right now with some of the companies but we’re going to see growth. In our area, massive growth in the next 10 to 20 years. It’s just going to be fantastic.”
Hunter disputes suggestions that the good news on display in Budget 2023 is solely sourced from non-renewable resource revenue.
“I know that there’s some out there that are saying this is all because of resource revenue increase. And I just think that is just telling only a portion of it. There is an increase in that for sure. And I’m not discounting that. But we’re also seeing a massive increase in government revenues, which allows us to be able to build 58 new or modernized schools, that is all helpful to being able to help us do this, like providing health care – the health care that we’re providing right now is basically about a $2 billion increase in health care spending. They’re going to be increasing health spending in terms of primary care networks, and surgery, backlogs, EMS, wait times. So all of these things, it’s all coming back to roost now, where we’re being able to actually see the benefits of the hard work we’ve done over the last few years.”