Western Standard - REBROADCAST： Premier Smith's Address to the Province

00:00:00.000 .

00:00:30.000 .

00:01:00.000 My fellow Albertans, with this year's budget approaching and economists predicting softer

00:01:11.160 oil and natural gas prices this upcoming year, I want to take a moment to share with you

00:01:16.200 how our government intends to manage the provincial budget and finances in the years ahead.

00:01:22.880 Although I'm pleased to report that spending cuts will not be needed to balance this year's

00:01:27.040 lower resource revenues will certainly require us to show more restraint than previously predicted.

00:01:33.060 We will ensure this is done thoughtfully and with priority given to the programs and services

00:01:37.220 Albertans most rely on, such as health, education, and social supports. In addition, promised personal

00:01:43.900 income tax cuts will have to wait a year and be phased in responsibly. As we all know, Alberta is

00:01:49.480 blessed with abundant natural resource wealth. However, the volatile price of oil and gas often

00:01:54.920 has us riding a budget roller coaster from year to year and trying to predict world oil and gas

00:02:00.600 prices is much like trying to predict the weather during an alberta spring i and i suspect most of

00:02:06.360 you are growing tired of this budget volatility bouncing between years of plenty and then having

00:02:11.880 to choose between incurring massive debt or cutting key social programs is not the recurring

00:02:16.840 story albertans want to see time and again it is time for our province to implement a long-term

00:02:22.920 strategic financial plan that gets us to a stable balanced budget each and every year

00:02:28.520 with predictable and stable revenues to fund our core social programs

00:02:33.960 and that long-term plan is what i wish to talk with you about tonight alberta has one of the 0.99

00:02:39.080 largest deposits of oil and natural gas on the planet through alberton's ingenuity hard work

00:02:44.920 and entrepreneurship coupled with the foresight of thoughtful provincial leaders including ernest

00:02:49.560 Manning, Peter Lougheed, and Ralph Klein. Our province has built itself up from humble prairie

00:02:55.240 beginnings into an energy superpower with one of the most successful and growingly diverse

00:03:00.360 economies in the world. In fact, that economic vitality has driven growth and opportunity

00:03:06.360 right across the entire country. We have used the fruits of our vast resources to build a province

00:03:12.120 of almost 5 million people with world-class cities, parks, transportation networks, schools,

00:03:18.440 health facilities and other social infrastructure and we have established a strategic tax advantage

00:03:24.280 that we are using to further attract investment and diversify our economy we're doing a lot right

00:03:29.880 and we have much to be proud of but as a province we've also made mistakes and we need to correct

00:03:35.800 course now while we still have time bluntly stated our province has become unsustainably dependent

00:03:42.920 on non-renewable resource revenues as an example in budget 2023 our province required about 16

00:03:50.200 billion dollars of resource royalties just to balance our roughly 70 billion dollar provincial

00:03:55.400 budget thankfully we had a good year and will collect enough resource revenues to cover that

00:04:01.000 16 billion dollars with a few billion left over to pay towards our provincial debt and savings

00:04:06.040 for the future that said we simply cannot continue to rely on 16 billion dollars or more

00:04:13.000 in resource revenues to balance our budget year in and out that is a recipe for massive debt and

00:04:19.640 cuts to health and education when the price of oil takes a dip for a year or two or more

00:04:24.840 it is not sustainable some say the answer is higher income taxes or a sales tax i reject this

00:04:31.800 We only need to look at some of our fellow provinces and many U.S. states

00:04:35.520 to know that increasing these kinds of taxes to balance a budget is a recipe for economic decline.

00:04:41.520 That will not be the approach of our government.

00:04:44.060 Let me propose an alternative solution.

00:04:46.520 Peter Lougheed had the foresight to create what is today commonly called the Alberta Heritage Fund.

00:04:51.180 The initial purpose of this fund was to invest a portion of Alberta's non-renewable resource revenues each year

00:04:57.760 so the investment income earned on the fund would eventually grow large enough to eliminate our

00:05:02.920 province's reliance on resource revenues when they ultimately declined. Turns out that vision

00:05:08.100 was well ahead of its time. In fact, several countries, such as Norway and many other oil

00:05:13.240 and gas-producing nations around the world, adopted that same strategy, and now boasts

00:05:18.400 sovereign wealth funds large enough to entirely eliminate their nation's reliance on resource

00:05:22.840 revenues. In fact, these nations now earn enough each year in their funds to make massive

00:05:28.240 investments in world-class infrastructure and other public benefits that were not previously

00:05:33.100 possible. In Alberta, if we had just reinvested the income earned in our heritage fund from the

00:05:39.300 Lougheed government's initial deposits of about $12 billion in the late 70s and early 80s,

00:05:44.780 even without investing another extra dollar, our heritage fund would be worth over $250 billion

00:05:50.860 dollars today, earning between 12 and 25 billion dollars per year in revenue. This means we would

00:05:58.600 have been earning enough interest today to make us entirely unreliant on resource revenues. But

00:06:04.580 for a variety of reasons, from both within and without Alberta, we did not do this as a province.

00:06:10.180 Of course, now is not the time for us to bemoan what might have been. In my view, the time has

00:06:14.620 come to act decisively and end any further procrastination. Last year, our government

00:06:19.960 passed a law mandating that all income earned in the Alberta Heritage Fund must be invested in the

00:06:26.120 fund rather than spent. During the current budget year, we hope to invest and reinvest approximately

00:06:31.420 $3 billion of surplus and investment income back into the Heritage Fund, increasing its value to

00:06:37.520 almost $25 billion. That's up from $17 billion just a couple of years ago. This puts us back on

00:06:44.340 the right track. In addition, I have instructed our finance minister to limit government spending

00:06:49.260 to below the legislated rate cap of inflation plus population growth, not just during lean years with

00:06:55.500 lower oil prices as we expect next year, but also in years when high oil and natural gas prices

00:07:01.660 result in billions of surplus provincial dollars. Instead of spending all that non-renewable surplus

00:07:07.500 cash on the wants of today, we will be fiscally disciplined, invest in the Heritage Fund annually,

00:07:13.180 strategically pay down maturing debt and slowly but surely wean our provinces budget off the

00:07:19.380 volatile roller coaster of resource revenues. In my view our province has one last shot at

00:07:25.320 getting this right. We still have several decades during this global energy transition where

00:07:30.160 nations will desperately need our oil and gas resources for their people and we will provide

00:07:35.120 it to them with the most advanced environmental technology on earth. So despite this coming

00:07:40.000 years predicted global economic slowdown i believe our province is on the cusp of an unprecedented

00:07:45.760 and prolonged energy resource boom one that will include both hundreds of billions in investment

00:07:51.680 and tens of thousands of new jobs not only in oil and gas production but also in designing

00:07:57.360 and building the most advanced emission reduction technologies on earth it is going to be an exciting

00:08:02.320 time for our province and for canada especially once we finally get a federal government that

00:08:07.120 acts like a strategic partner rather than a delusional adversary. Prior to the end of this

00:08:12.960 year, our government will publicly release a long-term financial plan charting a path to a

00:08:17.640 heritage fund of between $250 and $400 billion by the year 2050. 2050 is also our target for

00:08:25.840 achieving a carbon-neutral economy. Meeting these two goals simultaneously with Alberta technology,

00:08:31.600 determination, and ingenuity will leave an invaluable legacy for future generations of

00:08:36.760 Albertans and Canadians.

00:08:38.740 There is no doubt in my mind,

00:08:40.220 we are capable of achieving these goals,

00:08:42.580 but we need to start today and stick with it fervently,

00:08:45.720 year after year.

00:08:48.040 I ask for your support as our government commits itself

00:08:50.940 to placing our province on this path to prosperity

00:08:53.820 that will last long after our last barrel of oil

00:08:56.580 has been produced.

00:08:57.800 We, our children and their children,

00:09:00.260 deserve nothing less.

00:09:01.900 Thank you, good night,

00:09:03.240 and may Alberta remain forever strong and free.

00:09:06.760 You

Western Standard - February 23, 2024

REBROADCAST： Premier Smith's Address to the Province

Episode Stats

Summary

Transcript