Thanks to Energy: Strong year-end results position Alberta for future

Thanks to a growing economy, strong energy prices late in the fiscal year and a commitment to fiscal discipline, Alberta ended the 2021-22 fiscal year with a surplus of $3.9 billion, the first surplus in seven years. The province paid down the provincial debt by $1.3 billion, so Albertans can look forward to a future without ballooning debt servicing costs.

The Alberta Heritage Savings Trust Fund grew to its highest net value in its history – $18.7 billion – earning $1.95 billion in investments to bring the total value of the fund’s investments to $20 billion. With these results, the fund is an even stronger savings account to support future generations and cushion the province from the ups and downs of the market and future volatility in the economy.

“The year-end fiscal report is fantastic news for Albertans and our province – and an opportunity to save resource revenue for future generations and avoid past mistakes that led to today’s debt burden. Sound fiscal management will continue to direct our decision-making for investing and spending to make life better for Albertans and future Albertans.”

The government recorded $68.3 billion in revenue in 2021-22, an increase of $24.6 billion compared with the estimated $43.7 billion at Budget 2021, when the world’s economy was still gripped by the COVID-19 pandemic. Leading up to Budget 2021, West Texas Intermediate crude was trading between US$40 and US$50 per barrel so the province based the budget on an average WTI price of US$46 per barrel. Instead, the average price in 2021-22 was US$77 per barrel, or $31 higher than expected, as economies reopened and demand for energy surged. On the same day the government released its third-quarter fiscal update and forecast a $3.4-billion deficit, Russia invaded Ukraine, sparking wider global unrest that further drove up demand and prices for oil even as supply chains were pinched.

In 2021-22, Alberta drew in, among other sources of revenue:

• $23.5 billion in income and other taxes, or $4.4 billion more than budget. This includes:
  • $13.3 billion in personal income taxes, or $1.7 million more than budget, as employment and household income increased.
  • $4.7 billion in corporate income tax, or $2.8 billion more than budget, as corporate profits also rebounded strongly.
• $16.2 billion in non-renewable resource revenue, or $13.3 billion more than budget.
  • The increase was mainly due to the significant and rapid surge in oil and natural gas, especially in the last two months of the fiscal year.

More than half the recorded surplus, or $2 billion, is due to the partial reversal of the contract provision for the Sturgeon Refinery, primarily as a result of the change in the ownership structure implemented this year.

Expenses were also higher than estimated at budget, with the province spending $64.4 billion in 2021-22, or $2.5 billion more than forecast. This includes $3.8 billion for COVID-19 and recovery plan expenses, as well as $3.1 billion in disaster and emergency assistance.

• More money was earmarked for the health system so it could ramp up access to scheduled surgeries delayed during COVID-19. Funding also supported lab testing and contact tracing, vaccine distribution, mental health, and staffing at continuing care and acute care facilities to help prevent the spread of the virus.
• The province injected an additional $2.9 billion into its disaster assistance budget to support farmers coping with the severe drought in the summer of 2021.
• $500 million supported recovery plan initiatives, including $122 million for the Small and Medium Enterprise Relaunch Grant program, which offered financial assistance to Alberta organizations that lost 30 per cent of their income when they were ordered to close or curtail operations due to the pandemic.

Alberta also spent $6.6 billion in 2021-22 on capital projects to create good-paying jobs and support Alberta’s Recovery Plan. The planning for five new health projects got underway, including a new maternity and community health clinic in La Crete. The new Grande Prairie Regional Hospital was completed and was one of several hospitals across the province to get new or expanded operating rooms with space for more surgeries. With this money, the province completed construction on about 50 bridge projects and more than 80 road rehabilitation projects. Another 912 new housing units were started or completed and 15 school projects were completed, with construction on another 52 school projects underway.

Alberta’s government is maintaining its responsible approach to spending and investing to cushion the province from future oil price volatility and help Albertans over the long term. The province has reduced the cost burden by extending its provincial fuel tax relief program to Oct. 1, providing Albertans with $150 in electricity rebates starting in July, funding affordable child care for parents and providing grants to low-income students in high-demand programs.

Alberta’s year-end results prove that providing responsible, stable funding is working as the province leads the nation in economic growth and recovery.

• The Job Creation Tax Cut has reduced corporate tax rates to eight per cent but driven up corporate tax revenue by making Alberta the most competitive business environment in North America. New and emerging sectors are investing here, growing their businesses and creating jobs for hard-working Albertans.
• Alberta is becoming a technology and innovation hub and making itself into a centre of excellence for hydrogen production and innovation.
• Dozens of major investments have been made in the first few months of 2022 in tech, agrifood, hydrogen, carbon capture projects and other sectors outside of oil and gas.
• Venture capital investment in Alberta continues to break records, with three straight years of growth between 2019 and 2021, and a record start in 2022.

The province remains committed to a set of fiscal anchors that have already worked to get Alberta’s finances back on track, and promises to continue to meet a balanced budget. The province has kept the net debt-to-GDP ratio well below 30 per cent, landing at 16.2 per cent at year end, and is successfully aligning its overall spending levels with other comparable provinces. This means Albertans are still getting top-quality public services at less cost as the province explores innovative and more efficient ways to provide and improve access to those services.

Full versions of the Government of Alberta’s annual report and performance results are available online.