Western Canada: Alberta expects to post $5.5-billion surplus this fiscal year

Hi everyone, Mark Iype in Edmonton today.

Alberta Finance Minister Nate Horner gave his fiscal update this week. And there is money in the coffer.

The province expects to post a surplus of $5.5-billion this fiscal year, which is more than double what had been predicted in the February budget.

And that is despite the province having to spend more than $1.2-billion to fight this year’s triumvirate of natural disasters – wildfires, floods and drought.

Horner presented the midyear economic update on Thursday, and said the projected surplus is $3.2-billion higher than the initial estimate, showing the province is well positioned for growth, despite economic headwinds that have buffeted much of the country for the past year.

“Our fiscal outlook remains strong and we fully expect to retain our position as the economic engine of Canada,” he said.

“We know some things remain beyond our control and we’re aware of the many challenges the current global economy presents – rising costs, higher interest rates and general economic uncertainty are weighing on businesses and consumers,” Horner told reporters at a news conference. “We’re not immune to these challenges, but we’re in a strong position to weather them.”

The $1.2-billion allocated for disaster relief in the fiscal year, which ends in March, took a major bite out of the province’s 2023 contingency fund of $1.5-billion. Only $123-million remains, according to the government’s numbers.

Horner said there have been discussions about wildfire spending becoming its own budget line, considering the severity and frequency of wildfires in Alberta.

The good news about the books came a day after provincial and federal leaders, including Premier Danielle Smith and Deputy Prime Minister Chrystia Freeland, stood side by side to announce an $11.5-billion deal with Dow Chemicals to expand its Edmonton-area chemicals plant next year.

The company says the facility will be the world’s first ethylene cracker that produces net-zero greenhouse emissions. (An ethylene cracker is an industrial facility that converts fossil fuels into usable products.)

“Today is a great day for the whole world,” Freeland said.

The federal government is contributing up to $400-million to the project through tax credits for carbon capture and clean hydrogen investments. The province’s contribution could reach as high as $1.8-billion through provincial tax-credit programs, Smith said.

While some have wondered how the federal government could support plastic manufacturing, which seems counter to the Liberal platform, Johan Foster, a University of British Columbia chemical and biological engineering professor, said greening production of plastics is a positive step and doesn’t see it as hypocritical.

“It is not so black and white,” he said. “There’s a lot of uses that we haven’t found a better solution for.”

This is the weekly Western Canada newsletter written by B.C. Editor Wendy Cox and Alberta Bureau Chief Mark Iype. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here.