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Alberta Finance Minister Joe Ceci and Alberta Premier Rachel Notley hug after delivering the budget in Edmonton on March 22, 2018.JASON FRANSON

Alberta Finance Minister Joe Ceci has tabled his fourth budget since the New Democrats took power. The budget projects several more years of deficit spending and admits its plan to get back to balance depends on two pipelines that have yet to be built.

It will also rely on additional income from the province’s carbon tax, which will increase to meet federal requirements, and put it in general revenues.

Read more: Alberta projects $8.8-billion deficit; looks to pipelines, carbon tax to balance books

Gary Mason: Someone needs to start an adult conversation in Alberta about debt – but who?

Here’s what you need to know about Alberta’s latest budget and what it means for the province as it prepares for an election next year.

Deficits and debt

The government plans to slowly reduce the deficit, which is projected to be $8.8-billion in the coming year, finally returning to balance by 2023-24.

By then, Alberta will owe $96-billion — a 78 per cent increase over the projected debt for the coming year, and a far cry from when Alberta declared itself debt free more than a decade ago.

Opposition parties immediately seized on the debt figures.

“In their absolute best-case scenario, Albertans will have endured years of deficit and be looking at an accumulated debt of $100-billion by the time they balance,” Alberta Party MLA Rick Fraser said.

Deficits will slowly become smaller over the next five years, the government said. By 2023-24, the budget will arrive at a projected surplus of $700-million.

Economy

The Alberta government expects its economy to grow over the next several years at a rate of 2 to 3 per cent, even as the province’s heavy oil continues to be sold at a significant discount. The unemployment rate is also expected to improve, shrinking from 8.1 per cent in 2016 to 6.8 per cent in the coming year and 5.3 per cent in 2021.

At the same time, the government says its net debt-to-GDP ratio will remain among the lowest in the country, at 7 per cent in the coming year, compared with 15 per cent in B.C., 38 per cent in Ontario and 45 per cent in Quebec.

Oil prices and the differential

The plan to return to balanced budgets depends in part on increased revenues from the oil sector − which, in turn, depends on added pipeline capacity.

Even though global oil prices have lifted in recent months, Alberta’s resource revenue remains weak in 2018-19 fiscal year, $700-billion lower than the forecast for 2017-18. The budget forecast is based on the price of West Texas Intermediate averaging US$59 per barrel in 2018-19, $60 in 2019-20 and $63 in 2020-21. But the government said the positive impact on revenue from the oil-price increase is more than offset by the negative impact of a higher exchange rate and wider light-heavy oil price differential.

The differential is the discount paid on each barrel due to the additional processing required to turn bitumen into usable products, and the higher transportation costs to distant refineries.

The differential is estimated to have averaged US$14.50 in 2017-18, but is forecast to average US$22.35 in 2018-19. The province says new pipeline capacity will address the disparity. The Enbridge Line 3 replacement pipeline is anticipated to start operations by 2019, while the TransCanada Keystone XL and Kinder Morgan Trans Mountain projects are expected by 2021.

Those projects face stiff opposition, particularly in B.C., where the provincial government, environmentalists and First Nations have all vowed to block Trans Mountain. Alberta is expecting a decision soon in a Federal Court of Appeal case that Premier Rachel Notley says will be the final word on the fate of the pipeline.

Carbon tax

The government plans to increase the province’s carbon tax, in line with federal requirements, to $50 a tonne by 2022. Currently, it devotes carbon tax revenues to environmental programs or rebates. But the money it gets from the hikes — which the province is describing as federal increases — will be added to general revenues.

By 2023-24, that additional slice of the carbon tax is projected to bring in an estimated $1-billion.

Cannabis

Alberta says it will take in $26-million in cannabis taxes in 2018-19, increasing to $99-million by 2020-21. That will be a combination of the previously announced federal excise tax, most of which will be funneled back to the provinces, and a new tax the Alberta government is adding.

Ottawa has already announced an excise tax of about $1 per gram or 10 per cent, whichever is higher. The federal government plans to keep 25 per cent and give the remaining 75 per cent to the provinces.

Alberta plans to add another tax worth 10 per cent of the retail price that will be collected at the licensed-producer level. The Finance Minister said the additional provincial tax is designed to keep the price of marijuana consistent with those of other provinces.

“We don’t want to have disparities across the country in terms of pricing for cannabis,” Mr. Ceci said. “And so we will essentially match whatever happens in other provinces around taxation.”

The province will also collect licensing fees and plans to earn revenue from online sales, which will be overseen exclusively by the Alberta Gaming and Liquor Commission. Initially, the government expects to lose money — $43-million in the first year — due to setup costs, but projects a profit of $37-million by 2020-21.

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