Rob Breakenridge: Less focus on Ottawa and more on the books, please

This government needs to focus as much on its own massive spending as it does picking fights over 'sovereignty.'

By: Rob Breakenridge

As the 2025 calendar flipped to July, all appeared sunny on Alberta’s fiscal front.

The long-awaited tax cut, promised by the UCP during the 2023 election, was finally showing up on Albertans’ paycheques. And July also began with news that the final numbers on the 2024-25 fiscal year revealed a surplus of $8.3 billion. Some of that windfall will be used to top up the Heritage Savings Trust Fund and to pay down debt, but there would still be leftover cash to be spent by the government.

So, hey, when summer began, things looked great on the homefront. But all anyone seemed to want to talk about at the highest levels of the UCP goverment was … Ottawa.

The convenience of the hyperfocus on the federal government, including numerous demands of Prime Minister Mark Carney, the Alberta Next town hall meetings, the talk of referendums, and everything else, is the implication that Ottawa is the source of all of Alberta’s problems. The scrutiny then falls on decisions by the federal government, and not Alberta’s government.

Frankly, there should be enough scrutiny to go around. All is not as rosy in Alberta as it may seem on the surface. Good numbers to kick off the summer notwithstanding, our fiscal house is very much not in order.

An important piece of context to Alberta’s recently registered surplus is the fact that the province’s haul of non-renewable resource revenue clocked in at a whopping $22 billion (just shy of the record level of $25 billion registered in 2022-23). Subtracting the surplus from that reveals a considerable $14 billion budgetary reliance on energy revenues, representing a far greater reliance than any budget tabled over the last decade. For perspective, the largest total annual amount of resource revenue recorded during the Notley NDP years was $5.4 billion.

One could be forgiven for asking why the surplus wasn’t bigger. But the more important question is actually why we are already tracking in the wrong direction. Just a few months into the 2025-26 fiscal year, the expected deficit is quickly ballooning. Originally pegged at $5.2 billion, Thursday's fiscal update revealed a revised projected shortfall of $6.5 billion, even with expected energy revenues at just under $16 billion. That’s driven by a record level of spending ($79 billion) fuelled by a record level of reliance on what’s often referred to as the royalty roller coaster.

This, from a government that has preached fiscal conservatism and the need to get off of that roller coaster and bank those windfalls for future generations. To this day, the UCP clings to the narrative that it’s been their fiscal conservatism that rescued Alberta from the spendthrift ways of the NDP.

The numbers tell a different story. For one thing, this current fiscal year’s $79 billion in spending represents a 41 per cent increase in overall spending from the last NDP budget. Whereas the NDP took four years to increase spending by $10 billion (from $48 billion to $58 billion), the UCP has doubled that pace. We went from $64 billion to $74 billion from 2023 to 2025 and we’re now set to go from $70 billion in 2024 to $79 billion in 2026. An even slightly slower (or conservative, you might say) pace would have left us in a much stronger fiscal position today.

Again, bear in mind that Alberta is expecting a $5.2 billion deficit this year, despite $17 billion in resource revenue. The closest comparable NDP deficit — $6.4-billion — was recorded in a year where Alberta brought in just $2.7 billion in resource revenue. It’s not difficult to calculate how bleak the balance sheet would be looking this year if those resource revenues were under $3 billion.

Perhaps they won’t drop that low again for the foreseeable future, but it’s reasonable to infer that they might not remain at these lofty heights. Indeed, just in the last few weeks, Smith has been warning Albertans that the recent downward movement in oil prices would strain the provincial treasury. Experts are forecasting even more drops to come. If we can’t balance the budget when the economy is growing (according to the Conference Board of Canada, Alberta and Saskatchewan will lead the country in growth next year) and coffers are overflowing with resource revenues, how does that position us to weather future downturns or crises?

Alberta is still in the enviable position of having the lowest debt-to-GDP ratio of any of the provinces, but that, too, is moving in the wrong direction. Even with the recent surplus, both Alberta’s overall debt and the debt-to-GDP ratio are rising. Furthermore, there’s no indication that this trend is going to be reversed anytime soon. The government is forecasting at least two more deficits after this year’s, and Alberta’s population growth isn’t letting up, either.

On top of that, it’s increasingly likely that the premier’s focus on Ottawa — and the quest for more "sovereignty” — is going to spawn some costly new initiatives.

For example, the idea of Alberta creating its own revenue agency to take over provincial tax collection duties from the Canada Revenue Agency is something that Premier Smith has spoken in favour of, and she’s made sure to put it on the agenda of the Alberta Next panel.

However, creating such an agency could mean as much as $1.5 billion in start-up costs and as much as $750 million in annual expenditures. In return, Albertans get an additional tax form to complete and an even-more bloated provincial bureaucracy. It’s a pointless exercise at the best of times, but it would be more irresponsible to compound record spending levels with something so frivolous and extravagant.

None of this can be blamed on Ottawa. Alberta isn’t obligated to sign on to federal initiatives like childcare, dental care, or pharmacare. And despite the premier’s stated desire to reform federal transfers, it’s hard to make a case that Alberta would or should receive more, and other provinces receiving less doesn’t help Alberta (and, no, we don’t “pay” into the equalization program).

While this premier has chosen to replicate her predecessor’s Fair Deal panel, she hasn’t done so with regard to the previous blue ribbon panel on government spending. Nor did we ever get a corresponding blue ribbon panel on government revenue.

For now, we have a provincial government totally preoccupied with Ottawa and completely uninterested in any sort of inward reflection on its own choices. Like previous Alberta governments, it’s the have-our-cake-and-eat-it-too approach: low taxes, high spending, and fingers crossed that energy windfalls can clean up the mess.

This is not sustainable, regardless of how many distractions and scapegoats they conjure up. Blame Ottawa will only get them so far.

Rob Breakenridge is a Calgary-based podcaster and writer and, host of The Line: Alberta Podcast. He can be found at robbreakenridge.ca and and reached at rob.breakenridge@gmail.com.

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