Alberta Budget: With the debt set to surpass $100 billion, Alberta needs further spending restraint, says the MEI

• Debt is expected to surpass $100 billion for the first time in the province’s history.
• Rising public sector compensation costs behind the increased deficit.
• Think tank supports the implementation of mixed practice, which should help improve access to care for Alberta patients.

Edmonton, February 26, 2026 – The government of Alberta’s forecast for large chronic deficits highlights the need to cut spending to align with the province’s revenues, according to an MEI researcher reacting to today’s budget.

“It’s an unfortunate milestone that the Alberta government expects to pass this year, as debt is projected to exceed $100 billion for the first time in our history,” said Taylor MacPherson, economist at the MEI. “As worrisome as this year’s deficit is, the fact that there’s still no return to balance in sight means we’ll keep piling on more and more debt on our collective credit card, at great expense.”

The government of Alberta expects to finish the 2025-2026 fiscal year with a $4.1-billion deficit. This is $1.1 billion below the $5.2-billion deficit projected last February.

The 2026-2027 budget projects an even larger deficit of $9.4 billion. This represents an increase of a whopping $7.0 billion over the $2.4-billion deficit it forecast a year ago. There is still no return to balance in sight.

As a result, the province’s debt is expected to climb by $16.8 billion, to $108.9 billion by the end of the coming year. This will mark the first time that the province’s debt will pass the $100-billion mark. It is expected to keep climbing to $137.5 billion by March 2029.

Interest on the debt will cost $3.4 billion this year, amounting to $675.88 per Albertan. This is expected to increase 42.7 per cent, to $4.9 billion, by 2028-2029.

“Of particular worry is the rate at which public sector compensation spending is growing,” explained Mr. MacPherson. “With recent collective bargaining agreements putting a large strain on the province’s finances, the government will need to find ways to reduce staffing levels to compensate and make its finances more sustainable.”

Compared to two years ago, in 2024-2025, the province’s operating expenses will be 13.5 per cent higher in 2026-2027, reaching $70.4 billion.

Much of this increase occurred in the past year, with operating expenses projected to come in 8.0 per cent higher than in 2024-2025. Close to two-thirds (60.7 per cent) of this can be attributed to an increase in public sector compensation costs.

On a different front, the researcher praises the government’s adoption of Bill 11, paving the way for physicians to engage in mixed practice, which means enabling them to work in both public and private practice at the same time.

“By implementing mixed practice, Premier Smith and her government show they can think outside the usual policy box we have in Canada and try different methods to improve services,” explains MacPherson. “While uncommon in Canada, mixed practice has been shown to increase treatment capacity elsewhere. This means more patients being able to get access to health care faster, which is the objective of all health systems, after all.”

In a publication released earlier this month, the MEI explained how mixed practice has helped increase overall treatment capacity in European countries with universal health systems similar to ours.

Research conducted in Denmark shows no statistically significant difference in the number of regular and overtime hours worked in public facilities by physicians engaged in mixed practice compared to their colleagues in public-only practice.

Those in mixed practice, however, worked an additional 5.2 hours a week on average in private care settings.

Similarly, research conducted in Norway found no statistically significant difference in time spent working in public facilities between physicians in public-only practice and those in mixed practice.

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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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