News Release - Alberta Finance - Sustainability Fund is on track to be fully funded in its first year

News Release

August 27, 2003

“Fiscal policy in Alberta has been very focused and effective for many years. The changes made this year with the introduction of the Sustainability Fund and Capital Account will only act to further strengthen the fiscal framework and help to ensure positive future outcomes.”

Moody’s Investors Service
Analysis, July 2003

Sustainability Fund is on track to be fully funded in its first year

Edmonton… The Alberta government’s first quarter fiscal update for 2003-04 forecasts a strong outcome for the Alberta Sustainability Fund in its inaugural year. Finance Minister Patricia Nelson made the announcement today, but cautioned the numbers are based on a forecast from now until the end of the fiscal year.

The Honourable Pat Nelson, Minister of Finance
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“I’m pleased the fund appears to be on track to be fully funded this fiscal year,” said Nelson. “However, it’s a long way to March 31, 2004.” The Alberta Sustainability Fund is a key component of the new fiscal framework that was introduced as part of Budget 2003-04. The fund is designed to protect ongoing operating spending from volatile revenue and the costs of emergencies and disasters. The priority for surpluses and non-renewable resource revenue over $3.5 billion is the Sustainability Fund until it reaches a minimum of $2.5 billion. The first quarter forecast puts the fund at $3.4 billion ($1.27 billion higher than the budget estimate) after withdrawals for emergencies in agriculture and forest fires.

“The legislation is clear that excess cash in the Sustainability Fund cannot be used for operating expenses. Under the legislation passed in the spring session, excess funds can only go towards debt repayment, the Capital Account or to improve other assets,” said Nelson. “The whole point of the new fiscal framework is to even out up and down spending that results from volatile resource revenue and from that perspective, the Alberta Sustainability Fund is doing its job.”

Program expense is up by $650 million from budget, including $470 million for BSE disaster assistance and $75 million for forest fire emergency assistance, which was withdrawn from the Sustainability Fund. The government also allocated $112 million from the contingency allowance for facility operations and maintenance costs for publicly supported facilities, the Integrated Organized Crime and Gang Enforcement Unit, the Seniors Special Needs Assistance Program and several other initiatives. Debt servicing costs are down $70 million from budget due to a higher Canadian dollar.

The forecast for total revenue is up $1.7 billion from budget estimates, due primarily to a higher forecast for non-renewable resource revenue. The oil price assumption is revised from US $23.30 to US $25.00 per barrel. The first quarter forecast for natural gas is up from Cdn $4.05 per thousand cubic feet at budget to Cdn $5.00 per thousand cubic feet.

Click on the links below for:

First Quarter Fiscal Update and First Quarter Activity Report which outlines some of the government’s activities in support of its core businesses of People, Prosperity and Preservation.

Backgrounder
(PDF version)

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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.