Alberta Budget Takes a Cautious Approach to Tariff Threats, Increases Investment into Refocusing Health System

February 27, 2025 – Alberta’s Minister of Finance Nate Horner unveiled the UCP Government’s $79.3 billion budget for 2025, an increase of $4.4 billion from the year before. Total expenditure on health was increased to $28 billion, an increase of 5.4%, reflecting Premier Danielle Smith’s priority to reorganize the entire health care system in the province. This additional investment into health is aimed at supporting a more localized delivery model and building hospitals.

The expanded health expenditures outlined in this budget include $644 million for primary care, $4.6 billion for acute care, $1.7 billion for mental health and addictions and $7 billion for physician compensation and development. Additionally, $3.6 billion has been earmarked for capital projects including the construction of new urgent care and primary care centres across the province.

Other highlights in the budget include the introduction of the 8% income tax band for those earning less than $60,000, a 4.5% increase in education spending and an increase of 3.7% from 2024-25 for Public Safety and Emergency Services.

Overall, this budget is a cautious approach to a worsening economic climate as the threat of American tariffs looms over the country. Despite the increased revenue from oil and gas, the deficit this year is expected to be $5.2 billion, which could increase to $8.7 billion under a ‘worst case’ tariff scenario. This is a notable change from the budget surpluses the province enjoyed when oil prices were higher globally.

Summary of Health Care Commitments

Budget 2025 aims to refocus health care spending to”‘improve access to quality health services close to home, prioritize patients, build capacity at hospitals and rural facilities, expand surgeries, and compensate and retain health professionals.” This includes:

• $644 million for primary care, including $20 million to support the work of nurse practitioners. 
• $4.6 billion for acute care, to improve the acute care system in hospitals, urgent care centres, chartered surgical and other health facilities. 
• $45 million for Indigenous health initiatives over three years. 
• $7 billion for physician compensation and development, including $15 million for recruitment and retention. 
• $1.9 million for drugs and supplemental health benefits including the seniors drug program. 
• $1.7 billion to support addiction and mental health services to increase access to the supports and for implementation of the compassionate intervention framework. 
• $3.8 billion for Assisted Living Alberta, the new provincial health agency providing
• continuing care services.

Capital Investments in Health

A total of $3.6 billion in capital dollars over three years will support new urgent care and primary care centres, including:

• $769 million to increase the number of assisted living spaces and modernize existing assisted living homes in Alberta. 
• $265 million for the Alberta Surgical Initiative capital program to expand, renovate and build more operating rooms to boost surgical capacity. 
• $207 million for the development of specialized compassionate intervention facilities to provide care for patients. 
• $168 million in new funding to enhance diagnostic capabilities across the province. 
• $148 million to continue building Recovery Communities, a network of personalized, community based services for people at risk of or experiencing addiction. 
• $60 million over three years to purchase new EMS vehicles and ambulances, upgrade the existing fleet and buy more equipment.

Other Points of Significance

• A new personal income tax bracket of 8% on the first $60,000 of income. 
• $26.1 billion over three years from the Capital Plan, to support about 26,500 direct and 12,000 indirect jobs each year through 2027-28. 
• $29 million in 2025-26 for a new Interdiction Patrol Team within Alberta Sheriffs to tackle drug smuggling, gun trafficking, apprehension of persons attempting to cross the border illegally, and other illegal activities along Alberta’s international land border. 
• $45 million over three years for the Investment and Growth Fund to attract investment into Alberta’s economy. 
• $6.2 billion, or an 8.8% increase from 2024-25, to support core social programs, including a short-term bump to support more people affected by potential U.S. tariffs and rising grants for housing programs.

Additional Detail & Analysis

As one of the first provinces to unveil a budget in the post-Trump economic environment, Alberta is taking cautious steps forward by running a deficit while still delivering tax cuts for lower-income earners. While remaining optimistic, the doubling of the provincial contingency fund and the warning of an even bigger $8.7 billion deficit shows the government is preparing for the worst-case scenario. This gives Premier Smith some fiscal flexibility going forward as the economic outlook remains volatile.

The increased spending on health reinforces Premier Smith’s plans to restructure the system in Alberta, despite the recent controversies around Alberta Health Services (AHS) contract procurements, including chartered surgical facilities. This week, Peter Guthrie, Minister of Infrastructure resigned from his role in cabinet and spoke out publicly about the AHS investigation and his disappointment in the Premier and his cabinet colleagues. Today, Premier Smith appointed MLA Martin Long to succeed Guthrie in this role. Long previously served as Parliamentary Secretary to Rural Health.

Leader of the Official Opposition Naheed Nenshi has denounced this budget as one of “cuts, chaos and corruption.” He also criticised the lack of investment into reducing emergency room wait times and insinuated the $80 million going into chartered surgical facilities is a sign of further impropriety.