Have Alberta's finances gone off the rails?

0:00Welcome to Hub Headlines. Today's program features the best commentary and analysis published in the Hub for March 3rd. Up first is Trevor Tum, writing on whether or not Alberta's finances have gone off the rails. Alberta is, by a wide margin, Canada's richest province. Yet last week's provincial budget project's a $9.4 billion deficit for the coming year. That is not a trivial shortfall. Relative to the province is roughly $490 billion economy. It amounts to 1.9% of GDP. Roughly the same share as Ottawa's projected $65 billion deficit over that same period. Dead is set to rise alongside it. Alberta anticipates its net debt will grow from less than 8% of GDP to nearly 13%. That remains far lower than in any other province to be clear and well below federal levels.

1:01But the speed of the increase is notable. It is roughly half the rise the federal government experience during COVID-19 and its aftermath. So what's behind Alberta's fiscal troubles? It turns out that policy choices, not external factors, are largely to blame. The government points primarily to falling oil prices and rapid population growth. Deflecting blame in difficult circumstances is common in politics, and there's usually a kernel of truth behind such efforts. Indeed, oil prices have declined through much of 2025 amid global uncertainty and weaker economic growth. The province expects prices to barely exceed $60 per barrel in the coming fiscal year, down from $74 in 2024 to 2025. And when every $1 change in the price of oil shifts revenues by nearly three quarters of a billion dollars annually, price declines pose a serious challenge. And yet, while oil prices matter, they are not the whole story.

2:02The government plans to increase operating expenses to more than $70 billion this year, up not only from previous years, but also from the government's original plans for this year. Some, especially those outside Alberta, may find that surprising for a province typically viewed as fiscally conservative. But former Premier Jason Kenny was unusual among recent Premier's and recent decades in actually seeking to restrain the size of government and reduce per person spending. By contrast, the current government aims to keep spending growth in line with population plus inflation, an approach similar to most past Premier's across all parties, from Ed Stelmac to Rachel Nottley. But a closer look at the numbers reveals that spending has actually grown well beyond population and inflation recently, effectively reversing the reductions under Kenny. Indeed, budget 2026 projects are returned to real per capita total spending levels that slightly exceed the highest year under former NDP Premier Nottley.

3:02So what's going on? Consider what the government itself planned just one year ago. In budget 2025, the government projected operating spending of $64.8 billion for 2026 to 2027. Now, for that same fiscal year, it anticipates spending $70.4 billion, an increase of more than $5.5 billion. Did inflation surge unexpectedly? Did population growth dramatically exceed forecasts? No. Last year, the government projected population growth of 2.5% in 2025, followed by 1.4% in 2026. And today, in its latest budget, it assumes the same 2025 population growth and an even lower 1.1% in 2026. Inflation has also come in below earlier expectations, averaging about 2% last year and 2.1% this year, down from the 2.6 and 2.4%, respectively, that it previously thought.

4:06None of the additional $5.5 billion can therefore be attributed to unexpected population or inflation pressures. Moreover, spending growth in excess of population plus inflation is a pattern over many years, despite a recent law enacted to try to prevent that very thing. Alberta's main fiscal anchor, introduced in 2023, set a ceiling on operating spending that rises with population and inflation. By its own calculation, this year's spending remains about $100 million below that ceiling. So no problem, right? The trouble is when the ceiling was first set, it incorporated roughly $1.9 billion in temporary COVID-related spending, effectively baking an unusually high starting point into the formula. The ceiling is also adjusted each year using the previous year's population and inflation, rather than current figures. That also baked in higher adjustments since inflation peaked in 2022 and declined thereafter.

5:08While the mathematical details behind why this matters may seem technical, the combined effect is substantial as I illustrate below. Absent those features the ceiling this year I estimate would be roughly $5.5 billion lower and the deficit consequently less than half is large. And none of this even adjusts for the fact that several billion in provincial spending are excluded from the ceiling entirely. While rapid spending growth may only violate the spirit of the Alberta budget law, there are more explicit violations at play too. First, running a deficit required freezing spending at the previous year's level. That would have implied a much smaller shortfall, and second, the province was limited to no more than three consecutive deficits. Yet last week's budget projects read ink throughout the forecast horizon, exceeding that limit. So, as the federal government did in its budget from last November, Alberta has now abandoned its main fiscal anchor that was originally meant to ensure spending growth is sustainable in the long run.

6:10While these choices absolutely increase the scale of Alberta's deficit in 2026, there's a deeper reason why today's deficit is largely of the province's own making. The province's very reliance on volatile oil prices is itself a policy choice. Premier Prentice was the last one to seriously attempt to reduce the province's reliance on resource revenues. Today, oil price swings have a larger impact on the bottom line than they did a decade ago. Delaying efforts to save more resource revenue, introduce alternative revenue sources or exercise additional spending restraint has left Alberta more exposed to the volatility of its royalty roller coaster than ever. In fact, due largely to recent spending increases, Alberta's reliance on resource revenues is higher today than under any Premier since Don Getty, excluding COVID-19. Things might work out if oil prices rise as they have sharply done following last week's attacks on Iran. But who knows how things unfold from here.

7:13None of this means Alberta is in fiscal crisis, nor does it suggest the province is incapable of managing its affairs. It remains the richest province in the country, with debt levels far below and fiscal capacity far above, those elsewhere. But the deficit now projected is not simply the product of bad luck or global events. It reflects choices to increase spending beyond population and inflation, to loosen or abandon fiscal constraints, and to deepen reliance on volatile resource revenues. Those choices may be defensible, but they are choices nonetheless, and they've come with consequences. That was an analysis by Trevor Tum. He is a professor of economics at the University of Calgary. You can read the full text of his article on our website, TheHub.ca. Our second essay is by Patrick Luchiani, writing on how we are all liberals now. Let me make the case. When Mark Carney succeeded Justin Trudeau as Prime Minister, Whispers quickly spread that the former Bank of Canada Governor was a conservative wolf in liberal clothing, methodically dismantling his predecessor's progressive legacy and moving his party to the right.

8:26A year in, the evidence points elsewhere. Canada's major parties are converging on shared liberal terrain where their battles are more stylistic than substantive. After reading on liberalism by Cass Sunstein and listening to conservative leader Pierre Polyèvre's speech at the Calgary Convention in late January. I saw the conservative leader's views align with traditional liberalism, which is crucial for understanding current Canadian political dynamics. Sunstein illuminates this shift. He recasts liberalism beyond partisan lines, rooting it in core commitments. Freedom, democracy, human rights, pluralism, security, rule of law and private property. This shifts the scope of who is a liberal wide open. The definition of liberalism spans John Stuart Mill and John Rawls to Milton Friedman and Friedrich Hayek, Franklin Roosevelt to Margaret Thatcher, Adam Smith to Pierre Elliott Trudeau and Charles Taylor.

9:29To Sunstein's view, they are all united not by policy blueprints but by faith in open debate, individual rights and constitutional legitimacy. In short, they form liberalism's broad church and essential character, which centers on individual freedom. By this measure, Karni and Polyèvre are fellow travelers under a liberal philosophy. Both embrace elections, the rule of law, markets and personal liberty within the bounds of non-harm to others. But not everyone is invited into the liberal tent. Sunstein's true adversaries, those scorning democracy, pluralism or law, better describe revolutionary Marxists or identity-driven leftists who desire to curb free speech, topple monuments, and impose ideological litmus tests. Where society has failed is in believing diversity, equity and inclusion dogmas would eventually yield to Mill's marketplace of ideas. Instead of taming progressive ideas, we watched as universities and other major institutions bypassed qualified applicants to advance political agendas.

10:36If liberals and conservatives are not divided by their attitude to basic rights, where does the real difference lie? Partly in their view of time. Temperamentally, liberals are drawn to faith in new public policy ideas, new regulations, nudges and incentives to make us more rational, productive and compassionate. They tend to believe human nature is improvable, that better policy can coax better behavior, and that the future can be engineered. Conservatives, by contrast, are students of unintended consequences and the constant nature of human behavior. They see whatever progress we enjoy as the slow pace of trial and error. They are wary of trading known institutions for speculative gains. William F. Buckley's famous vow to stand a thwart history, yelling, stop, captured not simple obstructionism, but a belief that some inherited practices embody wisdom we do not fully understand. That's why conservatism is so hard to define. It is centered on place and tradition, not on universal ideals that apply everywhere.

11:44Conservatives extend obligation across generations, to ancestors, descendants, and the community. Poiliever receives the most enthusiasm among conservatives when he defends family, faith and community. Here he's conservative to the core. On matters of religion and family, liberals are more tolerant of what defines a family and an individual's conception of faith. On economics and public administration, however, Poiliever fits comfortably inside Sunstain's liberal big tent. He wants more housing and faster permitting, supports free trade and deregulation, and speaks the language of markets rather than that of nationalizations or five-year plans. In a country accustomed to a thick welfare state, his talk of smaller government sounds almost quaint. Neither business nor voters are clamoring for a wholesale withdrawal of the state from healthcare, education, or income support. It is difficult to picture a Poiliever government scrapping Trudeau's modest dental program, let alone dismantling the childcare system or abandoning federal support for struggling households.

12:53On the big files, housing, infrastructure, defense, industrial policy, Karni and Poiliever will reach for the same toolkit. Tax credits, subsidies, regulatory tweaks, and the mobilization of public balance sheets to prod the private sector. They will differ at the margins on speed, rhetoric, and targets, but not on the basic assumption that Ottawa must act and spend to get big things done. There's a reason three members of the Conservative Party found it easy to cross the floor to join the Liberals. The divides between Karni and Poiliever are tonal, not tectonic. That first principle for both parties is liberalism. Not the crusading liberalism of the 1960s social democracy, nor the austere market liberalism of the 1980s, but a broad, managerial creed that takes constitutional democracy and a mixed economy for granted and quarrels over adjustments at the margins.

13:53We are all liberals now. The question is whether anyone still remembers what that used to mean. That was a commentary by Patrick Luciani. He is a writer and book reviewer for The Hub. You can read the full text of his article on our website, TheHub.ca. That's it for today's edition of Hub Headlines. We hope you enjoyed the program. Hub Headlines is produced by Alicia Rao. This program was narrated by automated voices. Thanks for listening.