The money just rolls in—$892 per second. We are wallowing in it. Alberta’s non-renewable resource revenue for the 2022/23 fiscal year is the highest in history, by far—40 percent higher than the previous high in 2005/05. Twenty-eight billion dollars.
The windfall results from high oil prices, record production and higher royalty rates as tar sands projects mature. New premier Danielle Smith must be wearing a rabbit’s foot. When the NDP gained power in 2015, prices were in the doldrums and remained that way throughout their term, one of the lowest periods of royalty revenue in Alberta’s history. It did nothing for their chances of re-election. Premier Kenney didn’t fare much better in his first two years. But Smith has hit the jackpot, proving once again that luck beats brains.
So what to do with all this treasure? Not, as Smith has suggested, give the oil industry $100-million in royalty breaks to clean up abandoned oil wells, something they are legally and morally obligated to do anyway. The government tabled its budget yesterday and overall it looked much more sensible than Smith’s ruminations. And generous—one might almost think we have an election coming up in three months.
Most importantly it’s generous toward the health care system. Spending on health will be increased by about a billion dollars, aimed at more paramedics and ambulances, reducing wait times for surgeries, more home-care workers and expanded primary care. All much needed although not enough according to the province’s doctors and nurses.
Substantially increased spending for education is also promised. After years of cuts, post-secondary funding will rebound. In keeping with conservative priorities, one of the biggest increases is in justice and public safety for more prosecutors and judges, sheriffs and addiction centres for the incarcerated.
There were some goodies for Calgary although perhaps fewer than one might expect considering the city is expected to be the key battleground in the election. Mayor Gondek commented, “If I was trying to win votes, I’d be pumping a whole lot of money into the place I was trying to win votes from. This is not that.”
After the $68.2-billion budget, the province is still left with a surplus of $2.4-billion. Half is to go into debt reduction and the other half in a new “Alberta fund” which can be used only to repay debt, deposit into the Heritage Savings Trust Fund, or for “one-time initiatives.” The latter is problematic.
Too much can’t be vested in the Heritage Fund. Back in the 70s when Peter Lougheed established it, 30 percent of resource revenues went into it. That is now down to less than seven percent. That’s just not enough. If humanity does actually transition to sustainability (hey, it could happen), the province will need a big cushion to ease the pain. Albertan’s have never really accepted that bust follows boom, but they do and the next bust could set records of another kind.
While this royalty bonanza is the biggest yet in total, it isn’t the biggest per capita. Alberta’s population has grown along with oil and gas revenues. Still, even per capita it’s the biggest boom since the late ‘70s/early ’80s. In that boom, non-renewable revenues made up more than three-quarters of government revenues compared to just over a quarter today. So we have reduced our dependence on our favourite industry, and that at least is progress.