March 19, 2002

Budget Overview Budget 2002 maintains Alberta Advantage by responding to global economic challenges The right decisions for challenging times

Budget 2002 Highlights:

• Alberta continues to have the lowest per capita debt in Canada. Accumulated debt, less cash set aside, is projected to be $5.8 billion by the end of 2002-03 fiscal year and less than $5 billion by March 31, 2005. Alberta remains nine years ahead of its 25-year legislated debt retirement schedule.
• Debt servicing costs to be $585 million, a decrease of $251 million from 2001-02.
• Economic cushion of $724 million.
• Total revenue of $20 billion for 2002-03, a drop of $1.2 billion or 5.6 per cent from 2001-02 fiscal year.
• Total expense for 2002-03 will be $19.2 billion, a decline of $1.7 billion or 8.1 per cent from 2001-02 fiscal year.
• Spending on Health and Wellness in 2002-03 will be $6.8 billion, an increase of 7.3 per cent.
• In 2002-03, Learning's budget will go up 4.7 per cent to $4.7 billion.
• Children's Services' budget will rise another 4.2 per cent to $675 million in 2002-03.
• Starts implementation of health reforms from the Report of the Premier's Advisory Council on Health.

Alberta Advantage

"Like a business, our government has to stay within a realistic fiscal plan. This means watching the bottom line, paying off our debt and not spending money that we don't have while targeting available dollars to key program areas," said Nelson. "The fiscal blueprint outlined in Budget 2002 encourages consumer confidence, job creation and economic growth in Alberta."

• Albertans to continue to enjoy the lowest overall personal and business tax load in Canada. Alberta has no sales tax, no payroll tax and no capital tax.
• Business tax reductions will proceed, but at a slower rate and over a longer period. Small business and general corporate income tax rates will be reduced by half a percentage point in 2002-03. Small business exemption level to rise to $350,000 from $300,000. These initiatives will save Alberta businesses $81 million, which is in addition to the $286 million that was cut from business taxes in 2001-02.
• Economic growth to be 2.5 per cent in 2002, rising to a strong 3.9 per cent in 2003.
• Employment to grow by an average of 2.2 per cent per year.
• Over 35,000 new jobs to be created in Alberta in 2002 and a total of approximately 144,000 additional jobs by 2005.

Responding to Challenges

"While Alberta's economy continues to be strong, dramatic drops in the price of oil and gas translate directly into a significant hit on provincial revenues," said Nelson. "The fiscal realities faced by our government have meant making some prudent fiscal adjustments to ensure Alberta's fiscal plan remains on track."

Budget 2002 addresses the decline in revenue, which has been faster and deeper than expected due to the weaker world economy and the rapid drop in natural gas prices. Overall, changing world conditions cut $1.6 billion from government revenue for 2002-03 compared to what was expected in Budget 2001. Resource revenue is expected to be down 37 per cent from last year.

• To help pay for the rising costs of health care in Alberta, effective April 1, health care insurance premiums will go up for the first time since 1995 from 11 per cent to just under 13 per cent of the $6.8 billion in total health and wellness ministry spending. This change will generate $184 million in revenue. Monthly premiums to rise by $10 for individuals and by $20 for families. Lower-income individuals, families and seniors will continue to pay no or reduced health care premiums.
• To encourage Albertans, especially young Albertans to stop smoking, tax on tobacco will increase by $2.25 a pack. Initiative will raise $281 million in revenue in 2002-03.
• Increases in liquor markups, motor vehicle fees, highway traffic fines and various other fees will add an estimated $112 million to revenue in 2002-03.
• Freeze on school property tax revenue has been lifted, increasing government revenue by $45 million in 2002-03.
• Public service is being reduced by 1.2 per cent or 298 positions. There are about 25,000 civil servants in Alberta.
• One-time infrastructure spending of $631 million that was planned for 2002-03 has been deferred until affordable. However, $1.1 billion in infrastructure projects will still proceed in 2002-03.

"Budget 2002 does what Albertans expect from a Ralph Klein government, which is to face the challenges head on and make the right decisions," added Nelson. "The result is our budget is balanced, we are still on track to pay down debt, we are the lowest taxed province in the country and we continue to spend on Albertans' priorities."

The Minister of Finance also confirmed David Tuer, Chair of the Calgary Health Region and past Chief Executive Officer of PanCanadian Energy Corporation will chair the Alberta Financial Management Commission, which was announced in the throne speech. The commission will review and assess current fiscal and accounting policies to ensure Alberta remains a leader in fiscal planning without losing sight of this government's commitment to balanced budgets and debt elimination. Further details will be announced shortly.

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Attachments:

• Charts and Graphs:
  • Download charts and graphs in pdf format
  • Revenue:  2002-03 Estimate
  • Expense:  2002-03 Estimate
  • Accumulated Debt at March 31
  • Change in Resource Revenue forecasts since Budget 2001
  • Natural Gas Price Volatility
  • Oil Price Volatility
• Backgrounders:
  • Budget summary by ministry
  • The Alberta Advantage
  • NHL Players Tax
• Budget 2002 Logo in Different Formats

• News release: Budget 2002 - Protecting priorities and assisting those in need
• News release: Budget 2002 - Responding to challenges
• Budget 2002 Documents

Charts and Graphs
Download in pdf format

For media inquiries, please contact:

Ed Greenberg Alberta Finance Communications (780) 427-5364 (780) 718-5699 (cell)