Travis Toews shakes hands with Alberta Premier Danielle Smith after Toews was sworn into cabinet as President of Treasury Board and Minister of Finance in Edmonton on Oct. 24.JASON FRANSON/The Canadian Press
In the world of Alberta politics, this week was all about Danielle Smith’s inflation-relief programs. But it was also about the new Premier making a clean break from the Kenney era, with an eye to winning the May provincial election. A big infusion of surplus cash that was planned for the Heritage Savings Trust Fund was a casualty.
To start from the beginning: The past few days in Alberta politics are ones that most governments in most jurisdictions – in this inflation-prone era – would view as net-positive. Ms. Smith announced a suite of affordability measures, including a plan to give most families with children and most seniors direct payments, suspending the gasoline tax, electricity rebates and boosting monthly payments to Albertans with disabilities.
University of Calgary economist Trevor Tombe wrote that the governing United Conservative Party hasn’t done a bad job in giving help to families with children. With “all the measures implemented since April and the new measures from the Premier, I find that the additional benefits for families with children roughly corresponds to the disproportionately higher costs those families face.”
He also said the income test for the $600 payment program, which excludes those families earning more than $180,000 a year, means approximately 80 per cent of Alberta households with children will benefit.
And when it comes to its own books – and the mid-year fiscal update released by Finance Minister Travis Toews on Thursday – the government has a sizable forecasted surplus of $12.3-billion this fiscal year. It will continue in the plan laid out by the Jason Kenney government to make the province’s largest-ever single-year debt payment. Just 20 months ago, it was forecast Alberta would have in the neighbourhood of $120-billion in debt by now. Instead, the government is poised to make a whopping $13.4-billion payment, bringing the debt down to just under $80-billion.
This is also a government well-positioned to do something about inflation pressures, and a province likely to be sheltered by the worst effects of the recession-in-the-making for 2023. The price of oil will go down (and up), but actual demand remains high. The province’s economy is increasingly diversified, and interprovincial migration and immigration numbers are strong. Even with higher interest rates putting pressure on housing, provincial officials aren’t anticipating a shock to Alberta real estate – as prices here didn’t skyrocket during the pandemic, as was the case in other provinces.
But here’s the downside, if you’re a fan of the Heritage Savings Trust Fund. The fund is not getting all of the near-$3-billion boost promised just three months ago. At that time, the government said it would make the largest-ever single-year investment in the Heritage Fund, retaining the fund’s remaining 2021-22 net investment income of $1.2-billion but also allocating $1.7-billion, for a total investment of $2.9-billion. At the time, then-finance minister Jason Nixon – an ally of former premier Mr. Kenney who now appears to be in the UCP political wilderness – surely portrayed it as a done deal.
Apparently, we’re told now, this plan wasn’t set in stone.
The government is instead touting $5.8-billion it has managed to set aside that can be used for future savings, yes, but also debt repayment or infrastructure projects. And maybe there is a better use of surplus dollars than bolstering the Heritage Fund this year. Mr. Toews noted that nobody wants to see the government renew loans at much higher interest rates.
“We’re holding our options open,” said Mr. Toews. He said on the Heritage Fund, “We’ve deferred that decision to fit into our plan around the fiscal framework going forward.”
But it also a clear change in the direction set out by Mr. Kenney and Mr. Nixon, and gives the Smith government wiggle room in the crucial months ahead before the May election.
And there’s also a question of fairness on the announced affordability measures. As many times Mr. Toews said “every Albertans is going to benefit” as he presented the fiscal update, only some Albertans will get direct inflation relief.
Children under the age of 18, or those 65 and older, who live in households with an income of less than $180,000 will get $100 a month for six months, starting in January. There are no direct payments of this sort for people without children – even if they’re a lower- or middle-income worker. I’m not sure that a lump-sum payment to every Albertan in the vein of Ralphbucks is the best path, either. But the current plan that sees money go to some who struggle, and not others, creates a system open not only criticism, but resentments.
For instance, many seniors have a limited income and could definitely benefit from some kind of help. But the government told me Friday about 90 per cent of the province’s seniors will qualify. This is a decision to distribute money widely to a demographic that holds much of the country’s wealth and has a much lower poverty rate than other groups. Since seniors as a group also turn out to vote – and are more likely to vote conservative – this decision can and should be viewed with skepticism.
There’s also not many details on the inflation-proofing promises announced by the Premier because, as officials acknowledge, the government is still in the process of refining the numbers. And Ms. Smith has promised there’s more. “These are just first steps,” she said during her televised address. Yet-unbudgeted inflation and election promises are still to come.