On 16 March 2017, the Alberta NDP government tabled its?budget for the 2017-18 fiscal year. Whereas?last year’s budget announced major new initiatives?(such as the?Alberta Child Benefit, a?carbon tax?and the?nearly doubling of annual provincial spending on housing), this year’s budget was more status quo.
Here are 10 things to know:
- Alberta continues to be the lowest-taxed province in Canada (and no major tax changes were announced in this budget).?According to the Notley government, Alberta will maintain an $8.7 billion “tax advantage” over British Columbia (which is next lowest-taxing province). That means that, if Alberta had the same tax rates as British Columbia, Alberta’s provincial tax revenue would be $8.7 billion greater. Using that same methodology, Alberta has a $9 billion “tax advantage” over Saskatchewan and a $13.4 billion “tax advantage” over Ontario. In fact, these “tax advantage” calculations appear to be ‘back of the envelope.’ It’s challenging to predict with accuracy how much new revenue would actually be generated by a tax increase (e.g., a new provincial sales tax could result in fewer purchases of consumer goods). For recent calculations made by Trevor Tombe,?see this link.
- Alberta’s economy is starting to pick up steam. The Notley government says it’s expecting 2.6% economic growth in 2017 and 2.2% for 2018. The?Conference Board of Canada predicts?Alberta’s economic growth will outpace growth of any other province in 2017. And as of February 2017, Alberta’s?employment rate was the?highest of any Canadian province.
- Alberta’s running deficits, but they may start to get smaller.?The provincial deficit for 2016-17 is forecast to be $10.8 billion. For 2017-18, the Notley government expects it to be $10.3 billion. And for 2018-19, the government’s deficit target is $9.7 billion.
- Alberta’s provincial debt (as a % of GDP) remains the lowest of any province by a long shot…but it’s growing.?Alberta’s net debt-to-GDP ratio for the 2016-17 fiscal year is projected to be 3.1%. For 2017-18, it’s projected to be 7.1%. And for 2018-19 it’s projected at 9.5%. By contrast, BC’s projected net debt-to-GDP is in the 15-16% range for this same period, Saskatchewan’s in the 14-15% range, and Ontario’s is almost 40%. (You can see these?figures for yourself here.)
- Health spending will increase by 5% this year.?A total of $400 million over four years was announced for the construction of a?new hospital in Edmonton. Funding ($131 million) was also announced for a 200-bed long-term care facility in Calgary “for people with complex care needs.” This is the first time in at least a decade that a new publicly-operated long-term care facility is being built in Alberta. The budget also announced that 145 new long-term care beds would be added to?Norwood, a publicly-operated long-term care facility in Edmonton.
- The budget contains important announcements pertaining to K-12 education.?Specifically, the Notley government announced funding for?10 new schools and funding to replace or update 16 other schools. This includes $500 million in new capital funding over four years; the Notley government also announced an additional $488 million for “future school projects” beginning in 2018-19. Finally, school fees were reduced by 25%, representing $54 million in savings to Alberta parents over the next year.
- For the third consecutive year, the Notley government announced a tuition freeze for Alberta’s post-secondary students.?However, international students are not covered by the tuition freeze; in fact, some international students will see a substantial tuition increase (see?this recent CBC story for more on this). This year’s budget also provides post-secondary institutions with a 2% increase in their base operating grants, as well as some additional funding for scholarships, awards and grants.
- Many people on social assistance in Alberta will continue to see the erosion of the value of their benefits.?There will be no increases in benefit levels for social assistance recipients—for example, a ‘single employable’ adult on social assistance continues to receive approximately $8,000 annually to live on (see?Figure 9a in this report).?For persons with serious disabilities receiving Alberta Income for the Severely Handicapped (AISH) benefits, things are a bit different. AISH benefit levels, relative to comparable programs in other provinces, are high (see Table 3?in this report). However, as?Alberta’s auditor general recently pointed out, it’s hard to qualify for AISH benefits.
- The budget contains some good news for the homelessness sector.?Provincial funding for?Homeless Support Outreach Services?will increase by almost $3 million (moving from $87.4 million to $90.3 million). This funding will go toward?Housing First?support, meaning it will help pay for staffing for new housing units for which capital funding was already in place. What’s more,?$7 million was announced?for a Calgary-based program that provides supportive housing for persons exiting substance use treatment.
- The budget announced $100 million in new provincial money for improved drinking water in First Nations communities.?The provincial government also indicated that there will also be federal money for drinking water for First Nations. According to a?recent CBC News story: “The province said the $100 million will pay for infrastructure to deliver clean water to the boundaries of First Nations, with the federal government investing to upgrade systems on the reserves.”
In Sum.??If last year’s budget contained the Notley government’s vision, this year’s ‘stand pat’ budget is more cautious. It announces no major spending initiatives, no major spending cuts, and no major tax reforms.
Nick Falvo is the Director of Research and Data at Calgary Homeless Foundation. This post?first appeared on the Calgary Homeless Foundation blog.
The author wishes to thank Janice Chan, Daniel Dutton, Herb Emery, Louise Gallagher, Nathan Jackson, Lindsay Lenny, Josh McKeown, Mel McMillan, Rick Mueller, Joanna Oda, Robin Shaban, Joel Sinclair, Hitomi Suzuta, Jonathan Teghtmeyer and Trevor Zimmerman for assistance with this blog post. Any errors lie with the author.
?The reason many social assistance recipients will see a?decrease?in the real value of their benefits is that benefits are not indexed to inflation (ergo:? if inflation is 1.5% in the year ahead, the?purchasing power?of social assistance benefits will decrease by 1.5%).