Fraser Institute News Release: Smith government can use its own 2022 spending plan to help stabilize provincial finances

CALGARY, AB, Feb. 6, 2025 /CNW/ - The Alberta government has indicated a desire to stabilize provincial finances and better insulate them from the volatility of resource revenues, and reverting to the government's original 2022 spending plan can help, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

"If the Alberta government is serious about mitigating the province's resource revenue rollercoaster, it can reach back its 2022 spending plan (mid-year), which would help balance budgets even if resource revenues decline," said Tegan Hill, director of Alberta Policy at the Fraser Institute and co-author of Smith Government Can Stabilize Alberta's Finances with Original Spending Plan.

The study finds that the spending increases introduced between the original 2022 mid-year update and the 2023 budget are a major reason why the province's current budget risks deficits this year and next from potentially lower resource revenues.

"While the Smith government introduced genuine and transparent spending rules in 2023, they were imposed on an elevated level of spending from the original 2022 plan," commented Hill.

Despite the fact the province is forecasting a budget surplus this year, fuelled largely by relatively high resource revenues, the government is at risk of incurring a budget deficit if resource revenues decline.

In fact, using 20-year average (nominal) resource revenues and not the relatively high revenues currently, the province would be on track to run deficits of $5.8 billion, $6.3 billion and $5.0 billion over the next three years.

But, if the province reverts to its mid-year 2022 spending plan, even with the 20-year average resource revenues, the province would be on track to run a $345 million budget surplus by 2026/27.

"The Alberta government had a spending plan as recently as 2022 that would help stabilize provincial finance, and they should revive that plan to ensure balanced budgets and continued debt relief," Hill said.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

SOURCE The Fraser Institute

MEDIA CONTACT: Tegan Hill, Director, Alberta Policy, Fraser Institute; To arrange media interviews or for more information, please contact: Drue MacPherson, Media Relations Coordinator, 604-688-0221 ext. 721, [email protected]