Smaller benefit increases are coming to hundreds of thousands of Albertans who rely on provincial programs

A new bill would set default limits on the annual increases in benefits that many lower-income and disabled residents rely on to cover basic costs.

If Bill 32, the Financial Statutes Amendment Act, is passed, benefits in programs such as the senior citizen benefit would increase to a maximum of two percent per year. Hundreds of thousands of Albertans rely on such benefits for food and shelter.

Alberta Finance Minister Nate Horner says the bill also gives the government the ability to increase benefits by more than two per cent in a given year, if ministers wish.

“It gives the government the freedom to perhaps use this as an instrument. If you are in a crisis situation, it may be more efficient to provide relief in this regard than, for example, to make affordable payments,” Horner told reporters during an embargo. press conference on Monday.

Horner said the government will review the indexation of benefits and income tax bands each autumn to determine the correct rate. The government could consider increasing benefit amounts if the state’s coffers are in better shape than Albertans’ pocketbooks, he said.

Horner said the indexation rate will reach two percent by 2025, costing the treasury an additional $200 million.

If inflation in the previous calendar year is less than two percent, the standard indexation is instead linked to the consumer price index.

Indexing tax brackets – allowing citizens to earn more money at a lower tax rate – and benefit programs has been a political football in Alberta for years.

In 2018, the NDP government tied benefit increases to the cost of living. In 2019, when the UCP government came to power, Premier Jason Kenney de-indexed benefits and tax brackets, saying the province could not afford it.

In 2023, in the face of rising inflation, Danielle Smith’s UCP government reindexed benefits and benefits, increasing benefits by six percent that year, followed by an increase of about four percent in 2024.

There are nine benefits to which the indexation decision applies, including Insured Income for the Severely Disabled (AISH), income support for people who do not (or cannot) work, and the Alberta Child and Family Benefit.

The bill would allow credit unions to offer Halal financing

If Bill 32 passes, it would also allow provincially regulated financial institutions, such as credit unions and ATB Financial, to offer “alternative financial mortgages,” such as Halal loans.

Islam forbids paying interest on borrowed money. Horner said the changes would allow banks to offer products that use alternative approaches, such as a rent-to-own scheme, which is permitted by the Muslim faith.

If the bill is passed, Alberta would be the first province to allow such mortgages under provincial supervision. Government officials said the changes are not limited to Halal mortgages and could allow products tailored to people of other faiths.

“Hopefully it’s just more availability,” Horner said. “Get more people to buy their own homes. That’s the goal.”

While some financial institutions already offer Halal products, Horner says these organizations do not take cash deposits and are not considered banks.

Existing Halal schemes often cost consumers more than a conventional mortgage. The provincially regulated products are expected to be offered in 2025.

The federal government has also said it will announce the parameters for Halal mortgages from federally regulated banks in its autumn economic statement.

Statistics Canada’s 2021 census showed that there were approximately 200,000 Muslims living in Alberta that year.

Electricity tax planned for 2025

Bill 32 would also introduce a promised tax on electric vehicles registered in Alberta. In last spring’s budget, it was announced that the EV fee would be $200 a year, paid when owners register their vehicles. The tax is intended to offset the loss of provincial gas tax revenue, which pays for road and bridge maintenance.

Electric motorcycles and all-terrain vehicles, hybrid vehicles, diplomat cars, government vehicles and vehicles owned by people living on a First Nation would be exempt from the fee, which will come into effect in 2025.

There are about 14,000 electric vehicles registered in Alberta, with 45 per cent in Calgary and 25 per cent in Edmonton, the Ministry of Finance said.

The bill also aims to extend the Alberta Child and Family Benefit to grieving families for six months after a child dies. Now the benefit ends immediately.

Court Ellingson, the NDP’s finance critic, said Albertans who rely on provincial benefits are already struggling to cover costs after a four-year freeze while inflation has soared.

“They would tell us that this doesn’t meet what they really need to address the rising costs that they’ve been experiencing in this province,” he said.

Giving the government the flexibility to raise rates does not guarantee that rate increases will keep pace with inflation, Ellingson said.

NDP affordability and utility critic Sharif Haji says voters have been asking for more Halal financing options.

Although the bill is in line with what the province has promised, Haji says it is unclear how many financial institutions or Muslims have been consulted.

Finance officials said in a technical briefing that they had consulted with religious leaders who represent about 90 per cent of Alberta’s Muslim population.