Alberta premier should use overwhelming party support to finally enact reforms

Premier Danielle Smith received 91.5 per cent support from members of the United Conservative Party (UCP) in this weekend’s leadership vote, which means she will continue as head of the UCP and premier of Alberta. Clearly there’s confidence in her leadership—but what will she do with it?

In Alberta, government spending is too high. When today’s relatively high resource revenue (e.g. oil and gas royalties) declines, the government may fall back into deficit. In fact, Smith recently warned that her government may incur a budget deficit this fiscal year due largely to lower-than-expected oil prices. When the government runs a deficit, it racks up debt, which Albertans must service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $700.

This is all part of the resource revenue rollercoaster that successive governments have ridden for years. Smith has recognized this problem and committed to restrain operating spending to inflation and population growth. But it’s simply not enough.

To avoid budget deficits, Alberta needs real spending reform. That means eliminating wasteful spending in areas such as business subsidies (a.k.a. corporate welfare) where the government spends billions of dollars each year on select businesses and industries, despite a significant body of research showing these subsidies fail to generate widespread economic benefits.

Premier Smith also promised to create a new 8 per cent tax bracket for personal income below $60,000, which would be lower than the current bottom rate of 10 per cent, and save Albertans earning $60,000 or more an estimated $760 annually. But there’re two problems with this tax cut: 1) It’s been continually delayed and 2) it doesn’t go far enough.

Alberta has the 10th-highest top combined (federal and provincial/state) personal income tax rate in North America. Crucially, we’re less competitive than key U.S. energy jurisdictions such as Texas, Wyoming, Oklahoma, Colorado, Louisiana, North Dakota and Alaska, which compete with Alberta for talent and investment. Replacing Alberta’s current multi-bracket personal income tax system with a single rate of 8 per cent would significantly improve our tax competitiveness. Alberta would have the lowest top combined personal income tax rate in Canada and one of the lowest top combined rates in North America. That would help attract skilled workers, entrepreneurs and businessowners that fuel innovation, job creation and economic growth, which benefits everyone.

Premier Smith won the leadership vote, but her work is just beginning. It’s time to rein in spending, stabilize provincial finances, and reduce taxes.