The fight against inflation eats into Alberta's anticipated surplus
Helping Albertans cope with the rising cost of living is one of Danielle Smith's priorities that will have an impact on the province's budget.
The imprint of the policies of the new Alberta Premier, Danielle Smith, is being felt on the finances of the province. Alberta should end with a slightly lower surplus compared to what was forecast at the end of August, mainly due to a larger increase in spending.
The surplus should finally hitting $12.3 billion by the end of the fiscal year, about $900 million less than the last economic update.
However, the Premier had set the table on Tuesday by announcing a series of measures to come to help Albertans cope with the increase in prices.
If the detail of the cost of each measure is not yet known, the government has provided $ 2.8 billion over three years to pay these boosts to the population.
The Prime Minister rather evoked on Tuesday a bill of 2.4 billion dollars.
Direct assistance checks for families, seniors and people with disabilities, the food bank envelope and other tax measures are expected to cost $1.3 billion this year and almost as much in 2023-2024.< /p>
This unforeseen envelope is the main reason behind the increase in expenditure now estimated at $64.6 billion for 2022-2023.
The policy of appeasement of relations with unions also led to more generous agreements, which increased health spending by $340 million.
Some of these measures, such as the re-indexing of income tax brackets and the elimination of the provincial gas tax, will also decrease revenues.
The province can, however, count on solid cash inflows. Revenue is expected to reach $76.9 billion as of March 31, 2023.
Volatile oil prices have slightly lowered expected revenues from non-renewable natural resources. Royalties should thus reach $28.1 billion, or $300 million less than anticipated at the end of August.
The province bases its financial forecast on an oil price of US$91.5 for 2022-2023.
This reduction, however, will be offset by an increase in corporate tax money. This estimated revenue of $6.3 billion will be a record for the province.
The government is hopeful that the good financial health of businesses will continue despite concerns of an economic recession world. It forecasts gross domestic product growth of 4.8% this year and 2.7% the following year.
How will this surplus be used in the future? The answer has lost its clarity.
In the first quarter economic update, the government prioritized debt repayment and bailing out the Heritage Fund.
The talked about $1.7 billion deposit in Albertans' woolen sock, however, disappeared from the budget documents by the second quarter economic update, which replaced it with the more vague possibility of savings.< /p>
The government will carefully analyze the various possible uses of the surplus and make decisions based on the priorities of Albertans, it is indicated.
The Previous governments have often been criticized for not having shown foresight during periods of economic boom by saving more.