Alberta using record-breaking resource windfall to pay back $13.4B in debt

·4 min read
Alberta Finance Minister Jason Nixon delivered a first-quarter fiscal update Wednesday which forecasts a $13.2-billion surplus for the current fiscal year. (Nathan Gross/CBC - image credit)
Alberta Finance Minister Jason Nixon delivered a first-quarter fiscal update Wednesday which forecasts a $13.2-billion surplus for the current fiscal year. (Nathan Gross/CBC - image credit)

Alberta's United Conservative Party government is making the highest ever repayment of debt in the province's history — $13.4 billion — thanks to a record-breaking surge in resource revenues.

Finance Minister Jason Nixon says the repayment, as forecasted in Alberta's first-quarter update on Wednesday, shows his government's commitment to fiscal discipline even when the treasury is overflowing with oil and gas money.

That discipline includes not restoring the benefits cut via a suspension of indexation three years ago.

"We remain focused on using the surplus wisely, to benefit Albertans today and tomorrow," Nixon told a news conference.

"Paying down debt and reducing the burden of debt each Albertan carries and building up our provincial savings funds."

WATCH | Nixon says oil and gas revenue windfall will help pay down debt:

Revenue from non-renewable sources like oil and natural gas is forecast to be $28.4 billion by the end of the 2022-23 fiscal year, $14.6 billion more than predicted in the February budget.

The windfall allows the province to repay $13.4 billion in debt due this year without having to resort to refinancing. The move will reduce Alberta's forecasted debt from $93.1 billion to $79.8 billion by March 31, 2023.

Kenney's government isn't using the windfall to restore benefits the province cut to get the province's financial house in order.

The government stopped indexing payments under the Assisted Income for Severely Handicapped (AISH) and seniors' benefits programs to the rate of inflation in its first year of government.

Nixon said there are no plans to resume indexation because Alberta's benefits are the most generous in the country. An eligible person who lives in their own home receives $1,685 from AISH each month.

Nixon didn't explain why the government made that choice. Instead, he pointed to other measures the government has undertaken to ease the impact of inflation without heating up the economy.

"Our goal was not to bring forward affordability items that would make things worse for those individuals and for all Albertans," he said. "So we are focused on rebates, removing taxes."

'The wrong decision'

Kathleen Ganley, the NDP MLA for Calgary-Mountain View, said the government's refusal to reindex AISH, seniors' benefits and the child tax benefit is "just plain cruel."

"We have a situation in this province right now where we have record revenues coming in, where we have billions in surplus, and this government is allowing children and seniors and disabled Albertans to continue to struggle to pay for food," Ganley said.

"And I think it's absolutely the wrong decision and I think it's cruel."

Trish Bowman, CEO of Inclusion Alberta, said she felt "deep, deep disappointment" when learning the government isn't planning to use some of its resource revenues to help people on AISH.

She said high inflation has eroded the value of monthly benefits, which haven't increased since the NDP was last in government. Bowman said the province promised to look at indexation once the Alberta's finances were back on track.

WATCH | Relying on resource revenue is risky, says Alberta economist:

"One of the first groups of people you would look at trying to help are those who are living in sometimes desperate circumstances and already struggling," she said. "So when there's an opportunity to do something about it, my hope is that's the sort of Alberta that we live in."

The government will resume adjusting personal income tax rates to the rate of inflation. The measure is retroactive to Jan.1, 2022. The basic personal tax amount increases to $19,814. The amount will increase again in 2023. The moves mean an additional 80,000 to 95,000 Albertans won't have to pay provincial income tax in 2023.

Wednesday's update confirms the $13.2-billion surplus forecast announced by Kenney on social media Tuesday afternoon.

The Heritage Fund is getting a boost of $2.9 billion thanks to $1.7 billion from the surplus and $1.2 billion in earnings.

Currently all investment income from the fund is put into general revenue. The government intends to amend legislation for the Alberta Heritage Trust Fund so the $1.2 billion amount and future investment income can stay in the Heritage Fund.

Anyone hoping for the Alberta government to follow the lead of Saskatchewan by issuing cash payments to help with the cost of living will be disappointed.

The province says it has provided people relief with the electricity rebate program, removal of the provincial fuel tax and upcoming natural gas rebates set to start in October.