Alberta’s United Conservative Party government is making the largest debt payment in the province’s history, $13.4 billion, thanks to a record increase in resource revenue.
Finance Minister Jason Nixon says the refund, as forecast in Alberta’s first-quarter update Wednesday, shows his government’s commitment to fiscal discipline, even as the coffers are full of oil and gas money.
This discipline includes not restoring benefits cut through a suspension of indexation three years ago.
“We remain focused on using the surplus wisely, to benefit Albertans today and tomorrow,” Nixon said at a news conference.
“Pay down the debt and reduce the debt burden that every Albertan carries and build our provincial savings funds.”
Alberta finance minister says surplus will pay down debt and lower cost of living
In his first-quarter fiscal update, Finance Minister Jason Nixon said the government’s projected $13.2 billion surplus will reduce debt, reduce energy costs and lower income taxes for Albertans.
Revenue from non-renewable sources such as oil and natural gas is expected to be $28.4 billion by the end of the 2022-23 fiscal year, $14.6 billion more than projected in the February budget.
The windfall allows the province to pay off $13.4 billion in debt maturing this year without having to resort to refinancing. The measure will reduce Alberta’s projected debt from $93.1 billion to $79.8 billion by March 31, 2023.
The Kenney government is not using the windfall to restore benefits the province cut to get the province’s financial house in order.
The government stopped indexing payments under the Assisted Income for People with Severe Disability (AISH) and benefit programs for the elderly to the rate of inflation in its first year in government.
Nixon said there are no plans to resume indexing because Alberta’s benefits are the most generous in the country. An eligible person living at home receives $1,685 from AISH each month.
Nixon did not explain why the government made this choice. Instead, he pointed to other measures the government has taken to ease the impact of inflation without heating up the economy.
“Our goal was not to introduce affordable items that would make things worse for these people and for all Albertans,” he said. “So we’re focused on rebates, eliminating taxes.”
‘The wrong decision’
Kathleen Ganley, NDP MLA for Calgary-Mountain View, said the government’s refusal to re-index AISH, seniors’ benefits and the child tax benefit is “simply cruel.”
“We have a situation in this province right now where we have record revenues, where we have billions in surplus, and this government is allowing children and seniors and Albertans with disabilities to continue to struggle to pay for food,” he said Ganley.
“And I think it’s absolutely the wrong decision and I think it’s cruel.”
The government will resume adjusting personal income tax rates to the rate of inflation. The measure is retroactive to January 1, 2022. The basic amount of personal tax increases to $19,814. The amount will increase again in 2023. The moves mean an additional 80,000 to 95,000 Albertans will not have to pay provincial income tax in 2023.
Wednesday’s update confirms the $13.2 billion surplus forecast announced by Kenney on social media Tuesday afternoon.
The Wealth Fund is getting a $2.9 billion boost thanks to $1.7 billion in surplus and $1.2 billion in earnings.
Currently, all of the fund’s investment income is converted to general income. The government intends to amend the legislation for the Alberta Heritage Trust Fund so that the $1.2 billion and future investment income remains in the Heritage Trust.
Anyone wishing the Alberta government would follow Saskatchewan’s lead by issuing cash payments to help with the cost of living will be disappointed.
The province says it has provided relief to people with the electricity rebate program, the elimination of the provincial fuel tax and the upcoming natural gas rebates starting in October.