Cost of affordability measures pegged at $2.8B in Alberta fiscal update

Alberta's second-quarter fiscal update puts the costs of the province's new affordability measures at $2.8 billion over three years. 

The update, released Thursday by Finance Minister Travis Toews, reveals the government will spend $1.3 billion on the affordability package in this fiscal year, $1.2 billion in 2023-24 and $300 million in 2024-25.

Premier Danielle Smith announced the measures in a televised address Tuesday night. 

They include cash payments for seniors, families with children and people who receive AISH, PDD and income support; a suspension of the provincial gas tax, and help with electricity bills over the winter.

Officials with the premier's office on Tuesday put the cost of the package at $2.4 billion.

The money is coming mostly from the budget surplus for 2022-23, which is now forecast at $12.3 billion, $900 million less than the $13.2 billion forecast at the end of the first quarter. The government said the drop is due to softening oil prices and demand.

West Texas Intermediate oil is now forecast to average $91.50 US per barrel in 2022-23.

The surplus estimate for 2023-24 is $5.6 billion. In 2024-25, the surplus estimate is $5.3 billion.

The monthly $100 payments to seniors, families with children and others outlined in the affordability measures are set to start in January and continue three months into the next fiscal year.

The costs that carry over into the 2024-25 fiscal year account for the effects of reindexing social benefits and tax brackets to the cost of inflation. They were deindexed in 2019 as a cost-savings measure.

The mid-year update shows the province is forgoing nearly $1 billion in revenues in this fiscal year through the suspension of the 13 cent per litre provincial fuel tax which started April 1. Collection of part of the tax — 4.5 cents per litre — resumed on Oct. 1.

In her address on Tuesday, Smith said the government will suspend the provincial fuel tax entirely for at least six months as part of the affordability measures.

On Wednesday, a spokesperson for the premier said the affordability program will roll out beginning in January, after the government passes enabling legislation in December.

In presenting the first-quarter update at the end of August, then-finance minister Jason Nixon said the province was saving $1.7 billion of the surplus in the Heritage Fund. However, that figure doesn't appear in Thursday's update.