Last month, I was pleased to present Alberta’s 2021-22 year-end fiscal results, which show the province brought in just over $68 billion in revenue and spent just over $64 billion to support public services. That means the province ended the fiscal year with a surplus of $3.9 billion.
We’ve closed the book on the last fiscal year, but I’ve still seen a lot of talk in the media and online about what Alberta should do with continued increased revenues. Let me ask you: what advice would you give someone drowning in debt, with no long-term savings, who suddenly saw increased earnings?
I’m sure every reasonable Albertan would say the same thing: pay down your debt and save for the future. You never know how long a windfall will last — build a strong financial foundation today to remain prosperous tomorrow.
Alberta’s government is doing exactly that. We are focused on paying down debt and reinvesting in the Alberta Heritage Savings Trust Fund, the province’s long-term savings account.
You may not feel the immediate effects of debt repayment, but our actions now will benefit Albertans in the future. As of the end of 2021-22, each Albertan carries $20,690 in taxpayer-supported debt. The more we can reduce our debt, the lighter this burden will be on our children and grandchildren.
We not only owe debt, we owe debt servicing costs on our debt, almost all of which are interest payments. These costs in 2021-22 were $2.6 billion. For context, if debt servicing were its own ministry, it would be the fifth largest in government, behind only health, education, advanced education and community and social services. Imagine what we could do if we weren’t burdened with these costs.
Another benefit of a lighter debt burden? An improved credit rating. When credit rating agencies release ratings, they tell us that an important factor in the province’s improved ratings and outlook is a focus on reducing Alberta’s debt burden. We anticipate rating agencies will keep a close eye on our financials with an eye to upgrading our rating as the province’s fiscal situation remains stable.
So, reducing debt is one side of the coin. The other side is growing our long-term savings. That’s why I’m pleased to report the Heritage Savings Trust Fund is at its highest value ever and will continue to grow to support future generations.
As Alberta’s primary long-term savings fund, the Heritage Fund came into existence by collecting a portion of Alberta’s non-renewable resource revenue to invest for the benefit of current and future generations of Albertans.
I don’t need to tell you why it’s important to put money away when resource revenue is high. We’ve all seen the famous bumper sticker — put politely, what goes up will come down. We need to be prepared.
Maintaining and growing this valued fund is vital to our economic security — investment earnings cushion the province from future unstable economic conditions and market ups and downs.
Of course, many Albertans and Alberta businesses are continuing to feel the effects of inflation and rising costs of goods and services. We’ve already provided about $2 billion in relief for Albertans through a range of affordability measures, and we are looking at ways to provide more support to those who need it most.
We need to be careful here. Additional government support measures could inadvertently add to inflationary pressures — by stimulating spending and in turn exacerbating ongoing supply-demand imbalances. Any new measures must help individuals with the higher costs they are facing, but not increase spending and stimulate demand.
Alberta’s strong end to the 2021-22 fiscal year moves the province forward toward continued economic growth with a lower debt burden and increased savings, and allows us to explore ways to support Albertans now and in the future.
Sound fiscal management helped get us here. By avoiding past mistakes that led to today’s debt burden, we now have the opportunity to strengthen our economic future.
Our children and grandchildren deserve it.
Jason Nixon, President of Treasury Board and Minister of Finance