Alberta’s new finance minister will need all the help he can get

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Nate Horner has begun his time as Alberta Finance Minister on solid footing by leaning on the results from 2022-23, which he describes as “one of the most positive fiscal years in our province’s history.” It includes moving past years of deficits with a record $11.6-billion surplus, and the province’s highest ever non-renewable resource and corporate income tax revenues.

In presenting the sunny fiscal year-end results for Alberta on Thursday, both Mr. Horner and finance officials mostly sidestepped questions regarding the elephant in the room – the current fiscal year. With volatility and chaos being themes this year in global energy markets, 2023-24 is so far shaping up to be less rosy.

Many energy industry watchers believe the world is headed for higher oil prices in the second half of this year, but that trend has yet to take shape.

Contributing to the softer market are inflation and interest rate concerns, uncertainty about China’s appetite for oil, and what seems to be a price insulated from many geopolitical events, such as civil unrest in Russia. As Rystad Energy said this month, “despite expectations of a looming oil market deficit, prices have remained surprisingly low.”

The price for West Texas Intermediate oil was just under US$70 a barrel on Thursday, in stark contrast to the near $80 a barrel forecast the government has for the 2023-24 fiscal year – a forecast Mr. Horner acknowledged Thursday might have to come down by the first quarter update at the end of August.

“We’re not as worried as you may think,” he added on the lower price point for oil, speaking about the importance of the price differential and the currency exchange on provincial non-renewable resource revenues.

There are other questions Albertans will still have to wait for answers on. These issues include what effect coming climate policies will have on Alberta’s main industry, and whether the province’s reputation as a low-tax jurisdiction continues to attract more business than it gives up in revenues.

As immigrants and interprovincial migrants move to the province in record numbers, another question is whether Alberta’s status as an affordable housing oasis continues to hold – and if the province is able to provide education and medical services to all.

“If you’re going to be a low-tax province, you have to be a pro-growth province,” Mr. Horner said.

It also remains to be seen what the Smith government will do with the newly created Alberta Fund, which allows the government to use surplus cash for debt repayment, additional deposits to the long-term savings Heritage Fund, or “one-time initiatives” that do not lead to permanent increases in government spending, including capital projects.

Mr. Horner expressed openness to completing a revenue review – a close examination of whether the province could do better with steadier sources of cash, such as consumption or provincial taxes – long promised by his predecessor, Travis Toews.

But that clashes with the difficult task on Mr. Horner’s shoulders of crafting a workable Bill 1 for the fall sitting of the legislature, which will amend the Taxpayer Protection Act to legislate that residents must vote on whether to raise personal and business taxes. That was a key promise of the United Conservative Party in the May election, but could hamstring the province if it faces future financial crunches.

Mr. Horner insists the measure will be brought in not to restrain some future government, but “to handcuff ourselves.”

But this Thursday was remarkable for another reason, as it was the first major public appearance for Mr. Horner – formerly the agriculture minister – in the main job in Finance. His family is steeped in Western Canadian politics: He’s the great-grandson of Senator Ralph Horner of Saskatchewan, and the grandson of Jack Horner, “Cactus Jack,” the famously outspoken Alberta Tory MP who did the unthinkable in 1977 by joining the Liberals in exchange for a spot in Pierre Trudeau’s cabinet.

Still an MP at the time, former prime minister John Diefenbaker quipped on the floor crossing: “The sheriff has joined the rustlers.”

Jack Horner’s brothers Norval and Hugh were also Tory MPs, with Hugh later moving into provincial politics, taking prominent cabinet spots in Peter Lougheed’s government. Hugh’s son, Doug Horner, was a long-time Progressive Conservative MLA who served as finance minister in the Redford era before leaving politics in 2015.

“Yeah, cousin Doug is on speed dial,” Nate Horner said on Thursday, adding that so are former Alberta finance ministers Shirley McClellan and Mr. Toews.

The new Finance Minister will need all the help he can get as he builds budget plans in the country’s most fiscally volatile province. But Mr. Horner told reporters on Thursday that he believes politics, despite his father’s warnings on the job, is a noble calling. “You want to try to do your best for your fellow Albertans. That’s the way I was brought up.”