June 29, 2004

“The government accomplished exactly what it set out to do; fund Albertans’ priorities, build on our fiscal strengths and bring predictability and sustainability to the budget planning process.”

-- Minister of Finance Pat Nelson

Strong fiscal performance in 2003-04 brings Alberta closer to elimination of accumulated debt

2003-04 Highlights

• The budget was balanced for the tenth consecutive year.
• Revenue exceeded expense by $4 billion.
• The strong 2003-04 fiscal results allowed:
  • accumulated debt to be reduced by $1 billion, to $3.7 billion
  • $1.4 billion to be added to the Capital Account, and
  • the Sustainability Fund to reach its target level of $2.5 billion.
• Revenue was $25.9 billion, $4 billion higher than budgeted.
• Expense was $21.9 billion, $962 million higher than budgeted. Increase primarily due to BSE assistance, higher forest-fire fighting costs and natural gas rebates.
• Alberta continued to have the highest personal disposable income per capita among the provinces and the lowest overall tax load among the provinces.
• 47,900 jobs were created in Alberta during 2003, the highest rate of job growth in Canada.

Edmonton... A strong fiscal performance in 2003-04, and higher than anticipated revenues mean Alberta has moved a step closer to being the first debt-free government in Canada, while maintaining its commitment to fund Albertans’ priorities. Results of the 2003-04 fiscal year were released by Finance Minister Patricia Nelson in the Government of Alberta Annual Report.

The strong fiscal performance allowed the government to focus program spending on Albertans’ health and education priorities, provide sustainable and predictable funding for roads, schools and other capital projects and manage revenue volatility and costs for emergencies through the Alberta Sustainability Fund. “The 2003-04 fiscal year was about making Alberta even better, and we achieved that,” said Nelson. “We reduced the debt even further, improved our overall tax advantage by indexing personal taxes to inflation and reducing corporate taxes, and ensured Albertans’ priorities in health, education and infrastructure were supported.”

Health and education continue to account for over 60 per cent of all government spending. Health spending was $7.6 billion, an increase of 10.4 per cent from 2002-03 and education spending was $5.9 billion, an increase of 7.1 per cent from 2002-03. The increases reflected higher spending on programs and increased capital grants to health authorities, school boards and post-secondary institutions.

Health reform initiatives were introduced to reduce the number of regional health authorities, implement an Alberta Electronic Health Record to allow physicians easier access to health records, establish a provincial on-line Waitlist Registry and set up Health Link Alberta, a 24 hour province-wide telephone line and website.

Alberta’s Commission on Learning released its final report, with the government supporting 86 of the 95 recommendations contained in the report. Increased support for post-secondary education, through the Access Fund, allowed for the creation of 658 additional new entry spaces primarily in the health care field and 5,700 additional apprenticeship training spaces.

The Sustainability Fund provided emergency assistance to cattle producers impacted by the BSE crisis, additional funding to fight forest fires and natural gas rebates to Albertans. “This is exactly what the Sustainability Fund is for,” said Nelson. “We were able to use the fund to respond to these unforeseen circumstances without impacting funding for priority programs.”

To provide more predictability to capital funding, the government established a Capital Framework that includes a required three-year Capital Plan. Funding for capital projects increased by 66 per cent in 2003-04 under this new framework.

Accumulated debt less cash set aside for future debt repayment was $3.7 billion, a $1 billion reduction from 2002-03. Debt servicing costs were $271 million in 2003-04. This was $205 million lower than in 2002-03 and $194 million lower than estimated at budget.

“Alberta is clearly the place to be,” said Nelson. “For the seventh consecutive year, Alberta had the highest level of net inter-provincial migration in Canada. The province led the country in overall population growth, and registered the second lowest unemployment rate among the provinces in 2003.”

Other major government initiatives in 2003-04 included the release of the government’s water strategy called Water for Life: Alberta’s Strategy for Sustainability that outlines a series of actions to ensure Albertans have a safe, secure and sustainable water supply. Municipalities benefited from ME first!, the Municipal Energy Efficiency Assistance Program, which will allow Alberta municipalities to access interest-free loans for energy efficiency projects.

Year-end results were about $800 million better than forecast in the Third Quarter Fiscal Update. After adjusting for retained income of funds and agencies and other cash items, this allowed an extra $510 million to be transferred to the Sustainability Fund, bringing the value of the Fund to $3 billion. After the Annual Report was prepared, the government decided to reallocate this $510 million to the Capital Account to help pay for health capital. This leaves the value of the Sustainability Fund back at the $2.5 billion target level. In total, the strong 2003-04 results have allowed $1.4 billion to be added to the Capital Account.

• Click here for a backgrounder, which includes the following tables: fiscal summary, fiscal year assumptions, revenue and expense, capital plan summary, capital investment and amortization, capital grants to local authorities and other infrastructure support.
• Quick Facts; or
• Go to 2003-04 Government of Alberta Annual Report (includes Executive Summary, Measuring Up and Consolidated Financial Statements).

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For media inquiries, please contact:

Jerry Bellikka Director of Communications Alberta Finance (780) 427-5364
Dial 310-0000 for toll free access outside of Edmonton.