Alberta’s Minister of Finance Nate Horner spoke to Calgary’s business community on Friday morning, addressing what he said are some of the biggest challenges the government faces and how those are to be addressed financially.
The focus, said Minister Horner, would be a continued effort to remain the province with the lowest tax rates in Canada, while continuing to offer what he said was stability and certainty for the business community.
Among the upcoming challenges is that the government will have to face the refinancing of government debt, currently at 2 per cent interest rate, into what is expected to be in the mid to high 4 per cent range.
“We have what 26-and-a-half billion dollars to refinance in the next three years. So about seven-and-a-half in this year, then six, and then 13-and-a half in one year, which is probably unheard of in Alberta’s history,” he said.
Labour shortages in the private sector, and the need to renegotiate collective bargaining agreements with five of the six major government labour groups, were also challenges that he said the government would need to address in the near term.
“If you look for the last 10 years, Alberta is no longer an outlier per se. In more of those public sector fields, a lot of the other provinces have caught up and we have true recruitment and retention challenges. So, I think some big costs are inevitable there.”
Minister Horner said that the Alberta Government has been continuing to push for collaboration between the private sector, the province, and municipalities to address economic issues in the province.
“We need to work with work with all of our partners, and make sure that we’re leveraging every dollar put things in the right place,” he said.
“I know Minister Nixon and the premier [have had] a lot of conversations with Mayors Sohi and Gondek to make sure that we’re trying to answer multiple questions: a lot of attention on housing, and trying to get the municipal partners to think that way if you’re looking for help on infrastructure here, how can you find that? How many doors will that open up in the next term, in the next four or five years.”
Fuel tax likely back, waiting on suggestions from other ministries
Addressing issues of affordability for Albertans, Minister Horner said that the fuel tax pause would remain until the end of 2023, but that the tax would likely have to return in January.
“Although we’ll keep the the linkage to the price of oil for that program will still exist,” he said.
He said that for other measures of affordability, his ministry was still awaiting suggestions from the other government ministries on what initiatives that could be put forward.
“They do have a fairly robust budgets and the ability to move things around, so we’ll see what they come back with as part of that process. But I know it’s front of mind for everyone,” Minister Horner said.
Minister Horner said that the government was still looking into how to support local businesses with their CEBA loans, which are set to come due for loan holders on Jan. 18, 2024.
“The premier has been very persistent that she would like to see me doing everything we can… we’ve had conversations with ATB and others, but at this point, it’s unclear if we’ll be able to provide any kind of a gap vehicle to help those businesses,” he said.
“One of the things that makes it challenging is just the data. Alberta took the CEBA loans at a higher rate than any other province in the country, and we don’t have a clear line of sight to how many have paid the loans back, or how many have the ability to by January.”
ATB offering low-interest gap loans was first promoted by the Alberta NDP in August, after local Calgary small businesses said they would be unable to make payments given the economic conditions in the country.
Samir Kayande, Alberta NDP Finance Critic for Fiscal Responsibility, walked back some support of that proposed plan on Friday, given the change in interest rates from August to now—but reiterated that the government had to do more to support small businesses.
“I’ll be a little bit couched on this because like like banks have to really operate to be stable, and yet we’re in a crisis right now with affordability and with small businesses,” he said.
“We have to use all of our levers that are available. People are seeing their mortgage payments skyrocket, they’re seeing their rents skyrocket, and a lot of these are because interest rates have moved up so much recently. We really need to be looking at a lot of our options in order to figure out what the right thing to do is support Alberta families.”
Alberta Pension Plan remains hot topic for conversation
During the Q&A portion of Friday’s event, Calgary Chamber CEO Deborah Yedlin asked multiple questions of Minister Horner about the plausibility of an Alberta Pension Plan (APP).
He referred back to the report prepared for the government by LifeWorks, as indicating that there were many benefits to an APP, and pushed back on commentary by economists and Canadian Pension Plan managers that paint the government’s plan as unrealistic.
“It just speaks to what this potential would look like, should Alberta choose to withdraw. It doesn’t get into anything about the investment manager, who they are and what type,” he said.
“It’s totally plausible that Alberta could want to do this, and would like to remain the CPPIB as the investment manager. That will definitely have a lot of advantages with not having to liquidate assets, and keep keep those economies of scale.”
Minister Horner made a slight gaff when responding to a question by Yedlin who asked how he was selling the APP to the rest of Canada, saying “well, my task is to sell it to Albertans,” before walking that comment back saying “I wouldn’t say sell it, but have the conversation with Albertans.”
Kayande criticized the gaff, saying that it was not the job of the Minister of Finance to be selling Albertans on a withdrawal from the CPP.
“The advertising campaign is absolutely misleading. They have a survey that doesn’t even ask you whether you want to leave the program or not—that’s called a push poll in the business. And they’re spending seven-and-a-half million dollars of our taxpayer money pushing us to a particular result that they want to see.”
“Mr. Horner himself, he slipped a little bit back there and he said, ‘my job is to sell this to you.’ His job is not to sell us on something that we don’t want, and it’s very clear that’s how he’s approaching this.”
The Alberta NDP have said they from their own poll of more than 30,000 Albertans, that 90 per cent of respondents to that survey have said they do not want an APP.
Minister Horner reiterated the government’s stance that an APP would not happen without the approval of Albertans, but stopped short of saying that would be by referendum.
“There’s going to be lots of objective ways to find out where Albertans are out on this. Mr. Dinning, he’s going to continue the telephone town halls that are advertised, they’re regional across the province. I intend to have a sit down with them and see where things are at,” he said.
“Things were originally intended to run to May, but I will after those telephone town halls have a conversation with the panel, and see if the feds have come back with their number from the chief actuary. If any of that information changes, it’ll change how we engage with Albertans.”
The government has claimed that Bill 2, the Alberta Pension Protection Act, if passed would ensure that a referendum would be held before the Alberta government moves to withdraw from the Canadian Pension Plan.
The act, as it has been currently tabled before the Legislature, provides a provision for a referendum to be binding if ordered before a vote is held, but does not automatically make the outcome of a referendum vote binding on the government’s decision to withdraw from the CPP.