Alberta posts 'record-breaking' $11.6 billion surplus for 2022/23, paid down $13.3 billion in debt

Last fiscal year, government revenues came in at $76.1 billion — $13.5 billion more than expected — due to non-renewable resource and tax revenues.

  • By Alex Dhaliwal
  • July 06, 2023
  • News Analysis
Alberta posts 'record-breaking' $11.6 billion surplus for 2022/23, paid down $13.3 billion in debt
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According to the year-end fiscal update, Alberta enjoyed a record $11.6-billion surplus for 2022/23 — thanks to high oil and gas prices, record production, and increasing resource royalties.

"It's an indication of the progress we've made in securing Alberta's finances," Finance Minister Nate Horner told reporters.

Last February 24, former finance minister Travis Toews only projected a $511 million surplus — the first projected surplus since 2014/15. Budget 2022 also forecast a West Texas Intermediate (WTI) of US$70 per barrel last fiscal year, though the average price hit $89.69 per barrel. 

In 2022/23, government revenues came in at $76.1 billion — $13.5 billion more than expected — due to non-renewable resource and tax revenues. The province ultimately procured $25.2 billion in non-renewable resource revenue.

Furthermore, the government took in more corporate and personal income taxes than expected: $8.2 billion in corporate income tax, $4.1 billion more than estimated in Budget 2022, and $13.9 billion in personal income tax, $543 million more than estimated.

"We promised to keep our economy moving forward, and Alberta is reaping the benefits," said Horner. The $11.6 billion surplus exceeded third-quarter estimates of $10.4 billion, which he lauded as a "positive."

As a result, the UCP spent $64.5 billion — $2.4 billion more than budgeted — on higher-than-expected healthcare costs and $2.9 billion in affordability measures to ease the impacts of inflation. These measures included $1.1 billion in suspending its gas tax and $304 million on re-indexing personal income taxes to inflation.

Other measures include $644 million into electricity rebates, $441 million for affordability cheques to seniors and families with children, and $51 million to reverse the de-indexing of benefits like Assured Income for the Severely Handicapped (AISH).

"Albertans can rest easy knowing that Alberta's prosperity today means more stability tomorrow as we continue to pay down debt and save for the future," said Horner, who acknowledged the province's strong financial situation allowed it to pay down $13.3 billion in debt.

The province also grew the Alberta Heritage Savings Trust Fund by $2.5 billion to $21.2 billion.

The Canadian Taxpayers Federation (CTF) applauded the Alberta government for staying on track to balance the budget and pay down the debt in response to the year-end fiscal update.

"When Alberta delivers balanced budgets and pays down its debt, that signals that we are a good province to do business with, boosting our credit ratings and attracting people and investment," said Kris Sims, Alberta Director of the CTF. "By paying down the debt, Albertans will pay less in debt interest payments faster, saving taxpayers' money."

According to the Fraser Institute, the total expenditure on interest costs ($6.7 billion) exceeds what the province spent on physicians for 2022/23.

"Interest must be paid on government debt, and the more money governments spend on interest payments, the less money is available for the programs and services that matter to Canadians," said Jake Fuss, associate director of fiscal studies at the Fraser Institute.

In recent years, deficit spending and grow­ing government debt have become a trend for many Canadian provinces. Alberta went from being the only province with more assets than debt in 2007/08 to having the fastest-growing provincial debt burden last decade. 

Now, the province has become an exception to the rule.

"The government's recent surpluses have allowed Alberta to return to being the lowest-debt province in Canada — a sharp contrast to roughly a decade of chronic deficits that previously plagued the province and left a mountain of debt," continued Fuss.

Owing to successive budgetary surpluses, Alberta's provincial net debt (inflation-adjusted) declined from $65.7 billion to $46.0 billion from 2020/21 to 2022/23 — a 30.0% drop. On a per-person basis, Alberta's provincial debt burden now stands at $10,131 — the lowest among the provinces. 

"Alberta is back to enjoying the lowest debt burden of any province, but the provincial government must restrain spending and continue balancing budgets in the years ahead to avoid another surge in debt," said Fuss.

"It's important [we] understand the magnitude of the country's combined government debt because deficits and debt today result in higher taxes in the future."

Since 2007/08, combined federal and provincial net debt (inflation-adjusted) has roughly doubled from $1.1 trillion to a projected $2.1 trillion in 2022/23, imposing actual costs on Canadian taxpayers through interest payments.

A Fraser Institute study found taxpayers owed $68.6 billion in interest payments for federal and provincial debt last year. On a per-person basis, the combined provincial and federal debt for Albertans last fiscal year stood at $42,915. 

Alberta Canada News Analysis
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