CALGARY, AB – The big surprise in Alberta’s budget today was the $645-million investment in a new agency, Energy Efficiency Alberta. This was not one of the usual tiny boutique programs that governments use to tell their budget story but rather a big part of a multibillion-dollar environmental spend.
This investment matters because, as increasing power rates in Alberta caused by climate change policy start to shrink families’ disposable income, the economy could shrink further. Energy efficiency measures are a valuable way to prevent this and good for the environment, as well.
The government will use roughly two-thirds of the $9.6 billion levied over five years to develop large-scale renewable energy projects, green infrastructure and to support energy efficiency and micro-generation.
The other major leg of the economic strategy is infrastructure spending of $34.8 billion over four years. Unfortunately, like most governments’ current infrastructure spending, much more work is required to ensure that projects create long-term economic growth rather than just short-term stimulus. While many of the projects will address real needs in the province, the approach is not particularly connected to a clear economic development strategy. And without significant economic growth, Alberta’s deficits will create a devastating burden for the next generation.
In a similar vein, the relatively small allocation – $250 million – for jobs and diversification was something of a surprise. The highlight here is a drop in the small business tax from 3% to 2%. Over time, the government will need to move beyond small business support to address the much more important challenge of how to help Alberta businesses scale up — grow from being small to bigger firms, supporting high quality jobs.
Another key element of assessing the long-term strategic value of the budget is how well it supports the education sector. In advanced education, the operating grant is going up 2% but tuition remains frozen.
The post-secondary system will continue to be challenged to become a stronger contributor to economic growth and diversification as students pay an increasingly smaller portion of the costs of their education.
One final observation is that Alberta’s focus on the health care front seems to be very much on reducing costs. Ultimately, the biggest challenge in health care in Alberta is not cost but quality. Improving service quality for patients should be first priority. Poor or inappropriate service and health care quality is a major cost driver.