Analysis of the 2023 Alberta Budget
Alberta budget is more generationally unfair than BC or Ontario, posing risks for upcoming election
Despite the recent change in party leadership, Alberta’s United Conservative Party continues to deliver one of the most generationally unfair budgets in Canada.
The 2023 provincial budget legislates one of the biggest gaps in spending between citizens age 65-plus and those under age 45. This gap is larger than in BC and Ontario, the two other most populous, English-speaking provinces. The generational tensions in Alberta’s budget risk pitting grandparents against grandchildren, rather than making the province work for all generations.
Albertans go to the poll on May 29, 2023. The platforms that all parties will put on offer to attract votes will use the 2023 provincial budget as a starting point – risking the spread of the generational tensions already baked-in to this document. To promote wellbeing for all generations, Alberta’s political leaders need to specifically draw attention to generational unfairness, and promise to reduce it.
Below are six key elements of Alberta’s budget that party platforms need to fix, as well as our priorities to help the parties course correct. Come back in May to check out our take on party platforms in our Voters Guide.
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Alberta isn’t investing more in preventing illness than treating it
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Alberta is resisting operating deficits outside of recessions
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Alberta isn’t investing to conserve the health of our climate
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Alberta has a housing affordability advantage by chance, rather than design
Alberta isn’t investing fairly for young and old alike
The bulk of Alberta spending will go towards medical care ($28.2 billion as of 2025), grade school ($10.7 billion), postsecondary and job training ($5.9 billion), along with other services for families, seniors, persons with disabilities, and communities ($8.4 billion).
Of this money, approximately $16,700 is budgeted for each of the 777,000 Albertans age 65-plus. By contrast, only $9,900 is budgeted for each of the 2.9 million Albertans under 45.
The result is a $6,800 spending gap between an Alberta retiree, and a younger Albertan. The table below confirms that this gap is larger than in Ontario ($6,600), and in BC ($4,800).
Alberta’s big spending gap signals that easing the squeeze for time and money that younger citizens now face compared to a generation ago is not an urgent spending priority. The typical 25-34 year-old earns little more for full-time work than did the same age person in 1976, despite devoting years more to postsecondary, and facing higher housing prices after inflation.
Medical care spending drives the generational imbalance
Canadian Institute for Health Information (CIHI) data show that Alberta’s medical system spends less than $3,000/year for those under age 25. That figure rises to around $4,000/year by age 45; $9,000 by age 65; and $30,000 by age 85. These figures are consistently higher than corresponding medical care investments by BC and Ontario.
Fully 42% of Alberta’s medical budget (or $11.8 billion) is spent on the 16% of the population over age 65. By contrast, the 60% of Albertans under age 45 receive just 36% of medical spending ($10.0 billion). This makes spending on medical care for Alberta retirees larger than the entire budget for Kindergarten to Grade 12 education; and twice as large as the entire budget for postsecondary.
When broken down per capita, Table 1 shows that Alberta spends over $1,300 more per person age 65+ for medical care than BC and Ontario. Conversely, Alberta spends less per resident under age 45 for grade school than does Ontario, and less than BC for postsecondary.
Alberta isn’t investing more in preventing illness than treating it
Medical care spending continues to win the largest budget increases. Table 2 shows that the provincial government plans to increase annual spending on medical, education and social services by $6.5 billion over the next three years. Of this total, $3.8 billion (58%) will go to medical care. On its own, this annual increase for medical care equals two-thirds of the province’s entire investment in postsecondary.
As Albertans struggle with long wait times and not enough access to doctors, it makes sense to inject some new funds into the medical system. But what the Alberta Budget overlooks is that medical care accounts for only one-quarter of our health. Medical care was never supposed to go it alone to foster good health – it’s meant to be part of a wider system supporting people with the things they need to be healthy and well, like decent earnings, homes, child care, and a sustainable planet.
We’re grateful that we can call on fire departments to put out the flames when we need them, but preventing fires is much less deadly, damaging and costly. So it is with health care. Waiting to invest until people are ill is like showing up with hoses once the fire is already raging. We need to prevent the first sparks from getting out of hand. This means clinics and hospitals should be the last stop, not the first stop, in our health system. The first stops for good health are found in our neighbourhoods, jobs, child cares and schools – something the pandemic made painfully clear.
So long as we fail to slow the flow of sickness into our hospitals and clinics, we’ll continue to burn out doctors and nurses. Alas, Alberta’s 2023 Budget strayed from the wisdom that “an ounce of prevention is worth a pound of cure.” That’s why it won’t be enough to help Albertans Get Well.
Some Albertans may think that higher provincial spending on medical care is a point of pride, especially now, when so many Canadians are concerned about gaps in our medical system. But the data show this spending isn’t worth bragging about, because it does not buy the province better outcomes. According to CIHI, Alberta ranks below BC, Ontario and the national average for infant mortality, heart disease mortality, cervical cancer mortality, rectal cancer mortality, avoidable admissions for COPD (lung disease), avoidable admissions for diabetes, and even lower life expectancy.
No matter what your budget priorities are, it makes little sense for Alberta to spend more per capita on medical care yet not achieve routinely better health outcomes. Especially when you consider that Alberta also has a younger population. The median age in Alberta is 38. It’s 40 in Ontario and 42 in BC. A younger population should require less per capita spending on medical care, because we consume most medical services when frailty increases at older ages. Despite this, Alberta spends $5,427 per resident on medical care, compared to $4,997 and $4,864 in BC and Ontario, respectively.
The size of the opportunity to spend more wisely may surprise readers. Alberta would still spend as much on medical care per senior as does BC and Ontario if the Alberta medical budget was $2.5 billion less than it is now. That’s a lot of inefficient spending on medical care when you consider that the province spends only $1.6 billion for $10 per day child care (even when counting the entire federal transfer for child care). Since these provinces report as good or better health outcomes than Alberta, the platforms that political parties put on offer in the upcoming Alberta election should grow spending on child care, education, housing and poverty reduction more urgently than spending on medical care. These are investments where health begins – the conditions in which we are born, grow, live, work and age – rather than waiting to treat illness after Albertans have fallen sick.
Alberta is resisting operating deficits outside of recessions
One strength of the latest Alberta budget is that the government will not run deficits during years it does not anticipate the economy being in recession. Instead, over the next three years, the budget plan is to run $5.8 in operating surpluses, which will be used to pay down previous debt – reducing the provincial debt-load by $1,980 per Albertan under age 45 by the end of 2025/26.
This plan in the Alberta budget stands in contrast to the BC budget, which will add $11 billion in additional operating deficits over the next three years – adding $3,685 per BC resident under age 45 to the provincial debt.
The corresponding plan in Ontario will result in its provincial government accumulating $3.3 billion in operating surpluses over the next three years – reducing the Ontario debt-load by $360 per person under age 45.
Overall debt servicing charges are also lower in Alberta than in BC and Ontario. The charges in Alberta represent a payment of $649 per resident, compared to $756 in BC and $943 in Ontario. Still, debt servicing represents a significant annual expenditure that equals half (53%) of Alberta’s annual investment in postsecondary, by comparison with 45% in BC, and an alarming 117% in Ontario where debt servicing costs considerably more than that province’s entire investment in university and college training.
Alberta isn’t investing to conserve the health of our climate
Climate change puts the health and economic wellbeing of younger and future generations in jeopardy. Yet, the phrase is mentioned just once in all 177 pages of the Alberta budget – and only when referring to the name of a municipal organization. The term “pollution” is entirely absent. Carbon pricing is mentioned just a handful of times, generally to emphasize when the province is doing the minimum required by the federal plan for people and businesses to pay for their pollution. As a point of comparison, the term “oil” is referred to 160 times in Budget 2023.
The World Health Organization identifies climate change as the greatest threat to human health in the 21st century, so it’s worrisome to see the Albert budget go to such lengths to avoid using this phrase.
Pricing pollution is an important health and economic intervention. The logic is simple: people pollute more when pollution isn’t priced – as demonstrated by Nobel prize-winning research. At Generation Squeeze, we think pricing pollution should be pursued as part of a broader #TaxShift. The idea is to tax less what we do want (like better earnings, especially for low and middle earners), while taxing more what we don’t want (like pollution and crazy home prices), in order to pay for better investments in young and old alike.
Alberta has a housing affordability advantage by chance, rather than design
The average price of a home in Alberta is $447,000. It requires 10 years of full-time work for a typical young person to save a 20% down payment. This represents a significant deterioration by comparison with when Baby Boomers started out as young adults in Alberta, when it took only six years of work to save an equivalent down payment.
Still, Alberta housing prices represent a major affordability advantage by comparison with Ontario and BC, where average home prices are $932,000 and $996,000 respectively. Hard work pays off so much less for younger Ontarians and British Columbians because they must labour full-time for 22 years to save a 20% down payment on the average priced home – a dozen more years than in Alberta.
This is a major economic advantage for Alberta that will attract workers and investment. But the 2023 Alberta Budget fails to take steps to nurture and protect this competitive edge.
The Budget proposes none of the housing policy measures now commonplace in BC and Ontario to preventatively fend off factors that can erode affordability. For example, Alberta isn’t taking steps to discourage foreign buyers, empty homes, money laundering or to regulate the use of housing as hotels for vacationers rather than preserving it primarily for those who work and study in the province. While the budget includes a modest $105 million over the next 3 years to address homelessness, there is little emphasis on rapidly accelerating the supply of non-profit housing or purpose-built rental in anticipation of the real risk that the unaffordability contagion in BC and Ontario spreads to Alberta. This risk was already beginning to materialize in spring 2022, before the series of interest rate hikes by the Bank of Canada finally slowed down home prices across the country.
Priorities for Party Platforms in the 2023 Election
The following commitments are required in any platform that aims for a course correction to ensure that Alberta budgets fairly for all generations.
- Commit to invest fairly for young and old alike. As a starting point, this will require a commitment that future provincial budgets will monitor and report the age distribution of current, and proposed, spending on medical care, education and social services; along with the appointment of a minister, deputy minister or other high-ranking official for generational fairness to be accountable for these trends.
- Commit to invest more in preventing illness than in treating illness after people fall sick. As a starting point, this will require a commitment that future budgets will monitor and report the ratio of social spending relative to medical spending.
- Commit to not run operating deficits outside of recession
- Commit to leave the province’s ecosystems in a better place for future generations
- Commit to prioritize housing for homes first, and investments second.
