Province Législature Session Type de discours Date du discours Locuteur Fonction du locuteur Parti politique Alberta 25e 2e Discours du budget 19 mars 2002 Mme Patricia “Pat” Nelson Ministre des Finances PC Mrs. Nelson: Mr. Speaker, Alberta is a place like no other. We are an incorrigible lot, fiercely proud. Compassionate beyond words. We deliberately face into the wind every chance we get. That description comes from a recent history of our province. But it rings through my mind as I stand here to introduce Budget 2002. Throughout our history of ups and downs, booms and busts, Albertans have shown an uncanny ability to stare down the worst possible adversity. When the storms of challenge and change gust through our province, we do not turn our backs or search for corners to hide behind. We face directly into the wind. We tackle our problems head on. We make the right decisions. And we move on, deliberately, decisively, with our eyes firmly fixed on building a better future for our province. As I stand here today, March 19, it’s a year ago today that my colleagues and I were sworn into Cabinet. Little did I know what this year would bring: the worst drought in Alberta’s recorded history, forest fires raging through the summer, a dropping Canadian dollar and collapsing stock market, mounting expectations and increasing costs, dramatic drops in the price of oil and gas, and Canada joining the war on terrorism. For the first time in many, many years we watched as a group of fine Alberta men and women went off to war thousands of miles from home. The world is a very different place than a year ago today. And yet, we’ve made it through. We’ve faced each one of these storms, made the right decisions, and kept Alberta strong. Mr. Speaker, these are challenging times, not only in Alberta but around the world. It’s a time of uncertainty. A time when great optimism for the future is bounded by the shock of September 11, the reality of lower oil and gas prices, and uncertain markets in the US, in Canada and around the world. Alberta is not immune. As much as we pride ourselves on setting our own course, we are, once again, facing forces that simply are beyond our control. While Alberta’s economy continues to be strong, dramatic drops in the price of oil and gas translate directly into a huge hit on provincial revenues. The harsh reality is that resource revenues fell by 44% last year and are expected to fall again this year. Faced with these challenges, this is the promise we will make to Albertans. We will keep our vow to balance the budget. Alberta’s budget will be balanced this year and every year. We will not compromise the future of our province by spending money we cannot afford. We will not take the easy way out. Albertans will continue to pay the lowest overall taxes in the country. We will not stray from our legislated commitment to pay down Alberta’s debt. A debt-free Alberta is a dream that continues to be within our grasp, as long as we stay the course and keep our eyes on that achievable prize. With Budget 2002, Mr. Speaker, we will do what Albertans expect from a Ralph Klein government. We will face the challenges head on and we will make the right decisions. Our goals are clear – to keep the budget balanced in spite of substantial losses in revenue, to sustain our commitment to health and education, and to build a future that undoubtedly will be bright, for our children and for our province. For Albertans watching and listening today, they will see a mix of three strategies in Budget 2002. For the first time in seven years, our government will take deliberate action to raise revenues. This is a measure we do not take lightly. But we simply can no longer shield Albertans from the combined impact of higher costs and lower revenues. Personal income taxes will not go up and there will be no sales tax in Alberta. At the same time, people will pay more for health care insurance premiums, a pack of cigarettes, a case of beer, and a bottle of wine. If you speed, you’ll pay more in fines. In total, these and other revenue measures will raise $722 million. That money will go directly to maintain our priorities – a health system we can count on and a good education for our children. Even with these steps, total provincial revenues for 2002-03 will still drop by 5.6% or $1.2 billion compared with last year. Secondly, we will deliberately trim our spending plans to meet the size of our pocketbook. Lower than expected revenues have brought us all back down to earth. We will continue to spend substantially more money on health, education, and programs for children and Albertans who need our support. But those increases will not be as high as some would like or expect. We simply can afford no more. Following through on steps already taken last fall, we will continue to defer, delay or substantially change some of the funding commitments announced last year or in previous years. That means a number of major capital projects will be delayed until we can afford them. Planned reductions in corporate income taxes will be phased in at a slower rate. A number of programs will be reduced, revamped, or eliminated entirely. In total, spending in 2002-03 will drop by 8.1% or $1.7 billion compared to last year. The third essential strategy is to never turn our backs on a proven formula for fiscal success. Alberta’s tried and true formula includes balanced budgets, prudent forecasts, responsible spending, and deliberately paying down the debt. The formula works, Mr. Speaker. It has become the hallmark of our government and the envy of every other province in the country. That’s the big picture Mr. Speaker. Now for some details. Mr. Speaker, 2001-02 was a difficult and dramatic year. After basking in the glow of the biggest resource revenues on record just a year ago, the harsh reality began to hit. Albertans understand how volatile the province’s revenues can be. They know that when energy prices go up, they can just as easily come crashing down. Last summer, we began to warn Albertans that the winds of change were coming. Oil and gas prices were declining. Then came September 11, an event so devastating that it sent shock waves around the world. Without knowing the full impact, we took action, anticipating the worst. We kept our spending in check and prevented any chance of falling headlong into a deficit. One of the challenges we face with Budget 2002 is balancing two very important, but contrasting facts: on the one hand, a strong Alberta economy and on the other, dropping provincial revenues. There is no doubt that Alberta’s economy is strong. Our economy grew by 4.5% last year, leading the rest of Canada once again. Nearly 44,000 new jobs were created in the province. Talk to people in towns, cities and communities across the province and they’re optimistic about the future. Things are good. People are working. More businesses and individuals are investing in Alberta. All signs point to continuing strong growth in the province’s economy. We expect another 35,000 new jobs this year, and Alberta’s economy is expected to grow by 2.5%. That’s outstanding growth in the face of turbulent times. On the other hand, Mr. Speaker, the province’s revenues show a starkly different picture. We’re now facing a situation where the strong, positive outlook for Alberta’s economy does not translate directly into rapidly growing revenues for the province. This time last year, we anticipated that revenues would start to decline, but the shock was how fast and how deeply they fell. Weaker energy prices, lower investment income, and lower corporate income tax revenue resulted in a loss of $1.6 billion. To address that dramatic drop, our government is taking deliberate steps to raise revenues. We cannot and we will not force all of the adjustments on the spending side. Health care insurance premiums will increase on April 1. Individuals will pay another $10 a month. For families, the increase will be $20 a month. Mr. Speaker, if we want the best – if we want a high quality, accessible health system – and we do – then we all need to share in the costs. The last time health care premiums were raised was in 1995 and at that time, they made up about 16% of spending on health. Since then, premiums have been frozen but health spending has increased by over 87%. With this year’s budget, premiums will now cover less than 13% of the costs of the health system. At the same time, we know premiums hit some families harder than others. Mr. Speaker, we will not pass on the burden of increasing costs to Albertans who can least afford it. With changes in this year’s budget, over 440,000 individuals and families will benefit from the enhanced premium subsidy program. Our first priority is to help low income families with children. With this year’s budget, 16,000 more Alberta families will pay no health care premiums whatsoever, bringing the total number of families who pay no premiums to almost 61,000. Over 28,000 families who paid the full premium last year will now only have to pay a part of the monthly premiums. Steps will also be taken to shelter low income seniors from the impact of rising health care premiums. 180,000 seniors who currently receive subsidies will not be affected by the increases in premiums and another 8,000 seniors will only have to pay a portion of the increases. Almost 165,000 Alberta seniors will pay no premiums at all. Cigarette taxes will go up by $2.25 a pack effective midnight tonight, and other tobacco taxes are going up as well. This is a dramatic increase. It goes beyond any desire on our part simply to generate more revenue. If we can stop one young person from starting to smoke ... if we can stop young people from becoming addicted to tobacco, we can save lives in the future. We’ll create healthier Albertans and we’ll help reduce costs in the health care system for years to come. Effective April 1 liquor mark-ups are going up, too, and the increases will bring our prices closer to those in our neighbouring provinces. It means Albertans will pay up to 45 cents more for a bottle of wine, 60 cents more for a bottle of liquor, and about 40 cents more for a case of beer. This will add $50 million to provincial coffers. Taken together, these and other decisions in Budget 2002 will add $722 million to provincial revenues. While some will undoubtedly question these increases, Mr. Speaker, the objective is beyond dispute: to protect priority programs and balance the budget. At the same time, let me make one message very clear. We cannot continue the spending track we have been on, a track that showed overall spending increasing at a rate of almost 8% a year over the past five years. While this year’s spending levels will be down considerably from last year, that’s primarily because one-time spending commitments will end and debt servicing costs are down, thanks to our deliberate steps to pay down Alberta’s debt. Spending on health and education, on programs for children and those who need our support, will continue to increase, but at a pace we can afford. For 2002-03, our first priority is to put Alberta’s health system on a sustainable track for the future. As promised by Premier Klein, we will implement the recommendations of the Premier’s Advisory Council on Health. Comprehensive health reforms will begin this year. Overall spending on health and wellness will increase by 7.3% or $468 million, by far the largest increase in spending in this year’s budget. Regional health authorities will receive an overall increase of 6.7%. In the coming years, health budgets cannot continue to grow faster than long-term increases in provincial revenues. Targets for future increases will be limited to 4%, an amount we can afford on a long-term basis. Mr. Speaker, it’s time to face reality head on. All other areas have taken a backseat so we can continue to pay the growing price tag for health care. Things have to change. Let me turn from health to one of the most important things we can do for Alberta’s future, and that’s to ensure we have the very best educated young people. The young people in our schools, universities, colleges and technical institutes will shape the future of our province. We owe it to them to make sure they can compete with the very best in the world. In this year’s budget, support for basic and post-secondary education will increase by 4.7%. We will spend just under $3 billion providing basic education to children in schools. Another billion dollars will go to universities, colleges and technical institutes to help ensure that our young people get the education and skills they need to succeed and contribute to Alberta’s growing economy. Funding for scholarships and student assistance will also increase in this year’s budget. Over the next three years, spending on basic and post-secondary education will increase by 12.5%. Mr. Speaker, in order to channel funding into health and education, difficult choices had to be made. As a result, corporate tax reductions will proceed, but at a slower rate and over a longer time period. On April 1, tax rates will fall by half a point to 4.5% for small businesses and 13% for other businesses. The tax threshold for small businesses will increase to $350,000. The result is that Alberta businesses will save an additional $81 million in taxes. We will also continue with plans to delay a number of capital projects announced last year. Over $700 million in infrastructure spending was deferred in 2001-02 alone. This year, a further $631 million in infrastructure projects will be put on the back burner until we can afford them. Later this month, we’ll look at the financial picture as the current year’s budget wraps up. If dollars are available, we may be able to advance additional one-time funding to support some infrastructure and transportation projects – but only if we can afford it. In the next three years, our spending on infrastructure will drop to about one billion dollars a year. Mr. Speaker, let’s put this in perspective. In the last three years, Alberta’s spending on infrastructure – on roads, schools, hospitals and other important projects – grew to more than triple the average of other provinces. Since 1999, our government has provided an additional $3.5 billion in one-time accelerated infrastructure funding. That money supported highway construction projects and important capital projects for municipalities, school boards, health authorities and post-secondary institutions. With the money already in their hands, construction can proceed over the next few years. In the next three years, we will spend $1.7 billion maintaining and upgrading Alberta’s roads and highways. This includes $211 million in grants to municipalities. Funding for community lottery boards will end on March 31 and savings will be re-directed to help support health and education. In future years, the savings will go to existing foundations that support the arts and recreation, to the Wild Rose foundation, and to other community initiatives. These are difficult decisions, Mr. Speaker. We know the impact they will have on communities and municipalities. In the longer term, we are optimistic that municipalities and the government can work together to put important capital and transportation projects back on track. But this year, continued high levels of funding are simply not possible. Mr. Speaker, in the face of difficult decisions in this year’s budget, Albertans will understand how important it is to stay on track, to keep our eyes firmly fixed on a responsible fiscal course. As I mentioned at the outset, we do not know what tomorrow will bring. The office of the Provincial Finance Minister does not come equipped with a magic crystal ball. Those who dare to guess the price of natural gas for next three years, peg it anywhere from $2.65 an mcf to $4.60. Each 10 cent fluctuation means $163 million more or less for the provincial coffers. Oil price forecasts range from a low of $18 a barrel to a high of $26.50. And for each dollar difference, we could gain or lose $108 million. Mr. Speaker, some would say: just wait and see: things will pick up. We can’t. We won’t take that risk. We can’t base a budget on this week’s price of oil. And we will not put the future of essential programs and services at risk while we sit with fingers crossed, wishing and hoping that optimistic forecasts will come true. This year’s budget is based on the price of gas remaining at about $3 and oil hovering around $20 a barrel. As required by legislation, we have set aside an economic cushion of $724 million for this year. Our tried-and-true fiscal formula is the right course to take. It may be cautious. It may turn out that there is more good news to come. But Mr. Speaker, if we stick to this formula, we will be the first debt-free province in the country. We will continue to have the lowest taxes in Canada. And we will build a great future for this wonderful province of ours. In the coming months, we’ll also have the advice of a new Financial Management Commission to guide us in decisions about how to shape the future fiscal course for our province. I’m proud to announce that David Tuer has agreed to Chair the Commission. We look forward to the work of his Commission and the sound advice I know they will provide. Mr. Speaker, one of the toughest questions a Finance Minister gets asked every year is: what does this budget mean for an average Albertan? It’s a tough question because it sounds so simple. It’s so important, and yet, it is so difficult to answer in simple terms. To me, the answer this year lies in these important points. It means some tough decisions were made to raise revenues, scale back spending and delay projects until we can afford them. But in return, this is what we’ll get: a sustainable health system with new ideas and new approaches, a good education for our kids, continuing programs for children and people who need help. Most of all, I hope Albertans understand that, in the face of challenging times, their government made the right decisions. I quoted Winston Churchill in my Budget Address last year, and his wise counsel deserves repeating this year. Churchill said, “There is only one duty, one safe course, and that is to try to be right.” Trying to be right is the key. There is no certainty, given the times we’re in. We cannot guarantee we will be right, but we have faced the uncertainty head on and preserved what Albertans value the most. Mr. Speaker, as I said at the outset, Alberta is a place like no other. We do not duck or hide. We solve our problems today rather than pass them on to future generations of Albertans. Once again, with Budget 2002, we are facing into the winds of change, facing our challenges head on. Whatever storms and uncertainty the coming months might bring, I have no doubt that this time next year Albertans will bask in the glow of an even brighter, more solid, and prosperous future for our children and grandchildren. Albertans have put that responsibility in our hands, and we will not let them down. Thank you, Mr. Speaker.