Insights & Analysis

January 18, 2023

Pre-Budget Submission for the Provincial Government 2023 Budget

The Business Council of Alberta (BCA) is pleased to provide ideas and recommendations to the Government of Alberta in advance of its 2023 budget.

We are a non-partisan, for-purpose organization composed of the province’s largest enterprise chief executives and leading entrepreneurs. Our members represent the majority of Alberta’s private sector investment, job creation, exports, and research and development. We are dedicated to building a better and more prosperous Alberta within a strong Canada.

Since Budget 2022 was tabled, Alberta’s economic and fiscal situation has continued to improve. The province is once again leading the way in economic growth; unemployment is down nearly 2 percentage points to a 7-year low; and people are increasingly choosing to move to Alberta. By many accounts, the province has surpassed expectations and is in a stronger position than it was before the pandemic.

However, many hardships remain. From wages not keeping pace with the rising cost of living to wait lists for medical care to the threat of job loss in the face of a global recession. Not surprisingly, all of these are top issues on the minds of Albertans.

Ahead of the provincial government's Budget 2023, @BizCouncilAB outlines ideas and recommendations to ensure a good life for all in Alberta, expand the economy, and enable long-term sustainability. #ABBudget2023 Click to Share

These issues rest against a backdrop of uncertainty. Central bank policy, war in Ukraine, global weather conditions, trade barriers, and climate policy could all have profound impacts on Alberta businesses and Albertans, and the province’s fiscal state.

Despite these hardships and uncertainty, the Businesses Council of Alberta believes that Alberta’s best days are yet to come, if we plan for them purposefully. Budget 2023 is an opportunity to both address current issues and make the strategic decisions that will open the pathways to build a better future.  

BCA’s Define the Decade initiative outlines a roadmap to secure our future. Created through extensive engagement with Albertans and Alberta businesses, this plan was designed to improve the lives of Albertans in 2023—and for generations to come.

The three goals of Define the Decade serve as the three priority areas for our Budget 2023 recommendations:

  1. A good life for all—a high standard of living and quality of life for all Albertans
  2. Economic expansion—a vibrant and growing economy, positioned for enduring prosperity
  3. Long-term sustainability—strategic long-termism in our public finances and beyond

A good life for all

Without question, the biggest hardship Albertans face today is the rising cost of living, and Budget 2023 should take steps to ensure that Albertans do not fall behind.

Albertans are feeling the squeeze on their budgets from both sides: meagre wage growth on the one hand, and a higher debt load on the other. In the face of rising prices and interest rates, this puts many Albertans in worse shape than their peers in other provinces.

To this end, the province recently announced the Affordability Action Plan, a $2.4 billion package containing several measures intended to help Albertans meet their basic needs. These include the temporary suspension of the provincial fuel tax, rebates on electricity bills, and cash payments to seniors, families, and AISH beneficiaries.

BCA believes that policy relief, particularly for the most vulnerable, can help to mitigate medium- and long-term economic damage. That said, for financial support to be effective and to not undermine the objective, we recommend it be responsive, targeted, and temporary. In particular, cash payments should be expanded to include low-income Albertans without children.

More importantly, we recommend the government not lose sight of the long term. Strategic planning is necessary to support a high quality of life for Albertans for generations to come.

To this end, the biggest threat to future affordability is the rising cost of owning or renting a home in Alberta. Affordable housing creates resilient and inclusive communities. Yet, for many, options are becoming scarce and drifting out of reach.

While Alberta has long been seen as affordable relative to other, larger provinces, an inflow of people and investors could change that if growth in the housing stock fails to keep pace.

As such, we urge the provincial government to take steps in Budget 2023 to ensure that housing remains affordable so that all who want to come here can call Alberta home.

Another issue central to a good life for Albertans is access to high-quality health care and education.

It is no secret that Alberta’s health care system, like others across Canada, is under strain; improving it remains a top priority as we move into 2023. However, pouring more money into the existing system will not improve outcomes. To be sure, the province must address important issues like shortages of doctors and nurses. But beyond that, health care spending should focus on delivering better value for money.

As such, where new money is required, we recommend funding grow in line with inflation and population growth or be redeployed from other areas of the budget that represent an inefficiency or declining need. Additional resources should be devoted to improving the system for the long term.

As well, the government must focus on providing exceptional post-secondary education opportunities in the province. Post-secondary education is increasingly necessary for a higher quality of life, and skilled talent is critically important to Alberta’s economy.

By 2035, Alberta is expected to see a 40% jump in the number of 18-21 year-olds in the province, which will put significant pressure on its post-secondary institutions (PSIs). Therefore, it is imperative that government make the necessary investments now to ensure that PSIs have the capacity to welcome students as demand increases.

Recommendations to support a good life for all:
  • Ensure timely, predictable, and, where possible, automated cash payments via the Affordability Action Plan to those who need relief most, including low-income Albertans without children. Most important is making it easy for those with the least resources to receive funding. This should include working with social services agencies to support eligible Albertans with applications, as well as adding a more real-time assessment of an individual’s financial situation so that those whose situation has changed since their 2021 tax return may also receive relief.
  • Ensure all support is provided in multiple smaller instalments, as opposed to lump-sum payments; as research shows the former to be less stimulative on prices.
  • Specify a clear end date for each component of the Affordability Action Plan in Budget 2023. No new measures should be added unless significant inflation persists. Should extraordinary need remain beyond June, future support should be more targeted to reach only the most vulnerable.
  • As recommended in the Final Report of the Alberta Affordable Housing Review Panel, develop a provincial strategic plan for housing with short- and long-term objectives aimed at addressing Alberta’s affordable housing needs and achieving housing stability for all Albertans.
  • Commit to developing an Alberta physical and mental wellness strategy that emphasizes the prevention of chronic conditions, reducing the burden on the health care system.
  • Create the conditions and incentives necessary for innovation and solution adoption within Alberta’s health care system in order to solve the most pressing challenges facing our health sector.
  • Create and adequately fund a provincial postsecondary education enrolment growth strategy, including increased funding for work-integrated learning and micro-credentialing.

Economic expansion

Budget 2023 should ultimately focus on creating the conditions to support a growing economy with the goal of setting Alberta on a path to enduring prosperity.

Beyond current economic uncertainty, structural changes are already beginning to challenge the Alberta economy. These changes include an aging workforce, growing demand for lower-carbon products and energies, and fierce global competition for people and capital.

However, while many forces may be out of our control, there is much that we do control and decisions can be made in Budget 2023 to ignite growth.

The first thing is to address ongoing labour shortages in the province. Businesses in Alberta are struggling to find the workers they need, limiting our economic potential. One way to fill those vacant jobs quickly is to attract workers from other provinces. Fortunately, net in-migration has been rising and the provincial government’s “Alberta is Calling” campaign has been successful at drawing national attention to the benefits of living in Alberta. This campaign should be maintained or even expanded.

Labour shortages aside, we recommend that the government support economic expansion by building on Alberta’s strengths. More specifically, we believe the province should marshal its resources, people, and ingenuity to the three, global-scale challenges outlined in Define the Decade—challenges that Alberta is uniquely positioned to solve: sustainable food; low-carbon energy, materials, and minerals; and medical and wellness advancements.   

BCA, with input from Albertans and businesses, extensively outlined a plan for how we can do this. Done well, pursuit of these three “prosperity missions” will both enable the province to play a leadership role in making the world a better place and also generate homegrown competitiveness and prosperity.

But it will require us to operate in a new way, collaborating across nearly every industry and calling upon business, government, and people to work together. As such, we urge the government to use Budget 2023 as an opportunity to get this ball rolling.

Within Budget 2022, $750 million was set aside as a contingency fund for economic recovery. To mitigate longer-term threats to economic stagnation, we recommend allocating a similar amount to unlock pathways for the province’s future prosperity.

As a first step, we recommend that the government explore options to create an Alberta Mission Agency. An Alberta Mission Agency would essentially be the next version of the highly successful Alberta Oil Sands Technology and Research Authority (AOSTRA). Similar to AOSTRA, it would involve government, the private sector and post-secondary institutions combining their efforts to undertake early-stage research and innovation that businesses will then commercialize and adopt, creating jobs and prosperity for Albertans.

As well, there is a need to support better collaboration across the province. Outside Alberta, people are not only working cooperatively within jurisdictions but across state and provincial lines. By taking a broader regional approach, they are able to build competitive advantage and economic opportunity.

To this end, we recommend that, in tandem with the Alberta Mission Agency, the province begin to scope and devote resources to developing an Heartland Economic Region, a collaborative network to marshal resources province-wide.

This Heartland Economic Region would bring communities and Indigenous communities together to compete with similar mega-regional economic development initiatives across North America and attract international capital investment and people to the province.

Finally, the province should fund key needle movers to jumpstart progress. The global race to solve these challenges is already underway, and Alberta must position itself to win. This will require time, resources, and sufficient funding to get Alberta started.

Recommendations to support economic expansion:
  • Continue investment in successful labour attraction efforts like the “Alberta is Calling” campaign and explore expansion into targeted international markets.
  • Explore options to create an Alberta Mission Agency (AMA), including the possibility of expanding the existing mandate of an entity such as Alberta Innovates. To make an impact, an initial investment in the AMA should be similar in magnitude to AOSTRA in inflation-adjusted terms. This agency should operate at arm’s length from government and be highly connected to the business and research sectors.
  • Scope and launch a Heartland Economic Region with $20 million in annual funding, with the amount to be re-assessed after the first 2-3 years. The Heartland Region should start within Alberta and focus on linking the province’s economic centres and Indigenous communities, from Fort McMurray and Grande Prairie in the north to Edmonton, Red Deer, and Calgary centrally to Lethbridge and Medicine Hat in the south. It could coordinate missions, bids, investment and funding proposals, infrastructure, and more.
  • Fund two key needle movers, as outlined in BCA’s Define the Decade plan: Develop a provincial contribution towards carbon capture utilization and storage (CCUS) to complement the federal government’s CCUS Investment Tax Credit (ITC), ensuring Alberta can be a competitive jurisdiction in which to invest; and create an agri-food incentive program modelled on the current Alberta Petrochemicals Incentive Program.

Long-term sustainability

Budget 2023 must focus on the long-term sustainability of government services.

Access to high-quality government services delivered in efficient, innovative, cost-effective, and sustainable ways is a key pillar of prosperity but has been previously challenged by the government’s unpredictable and unsustainable fiscal state and model.

As a fundamental first step, to deliver government services that meet the needs of Albertans, the province must rest on sound fiscal footing in the long term.

With this objective in mind, BCA published a policy paper looking at the best ways to use Alberta’s immediate surpluses—the expected $12.3 billion in 2022/23 and $5.6 billion in 2023/24.

In the past, the province has missed opportunities to be more strategic and long-term in its use of surpluses. This time, we urge the provincial government to be future-focused, using anticipated surpluses to set the province up for a stronger long-term fiscal state by constraining overall spending growth and devoting the majority of surplus income to debt reduction.

We also urge the government to be strategic, using future revenue growth to promote competitiveness, economic opportunity, and investment in the province. The resulting economic gains will generate the resources needed to fund future health and educational needs through higher tax revenues. In these ways, the provincial government can share today’s revenue windfall with future generations of Albertans.

Recommendations to support long-term sustainability:
  • Given that Alberta’s current strong fiscal position is the result of volatile resource revenues, the provincial government should not use its current revenue windfall to fund increases in ongoing operational spending. Rather, the government should limit total program spending growth over the next two years to the smart spending band—no more than the rate of population growth plus inflation.
  • In addition to re-investing fund earnings, the provincial government should invest $1 billion in the Heritage Fund.
  • Following that $1 billion investment in the Heritage Fund, the provincial government should allocate 80% of the remaining surplus to debt repayment and 20% to an arms’ length fund to be reserved for future strategic investments in areas of emerging opportunity where the province is well-positioned to succeed.
  • Similar to how the MacKinnon Panel on Alberta’s Finances examined provincial spending, the Budget should commit to convening a comparable panel of experts, and actively engaging Albertans, for the purposes of exploring a new revenue model for Alberta that will create more stability and certainty, and set a clear path to fiscal sustainability.

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In the spirit of truth, reconciliation, and respect, we honour and acknowledge the lands upon which we live and work as guests, including the traditional territories of the First Nations in Treaties 6, 7, and 8 and the citizens of the Metis Nation of Alberta. We thank the First Peoples of this land, which we now call Alberta, for their generations of stewardship of the land, and we seek to walk together in the spirit of truth and reconciliation to build a shared future for all in Alberta.

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