A new bill would put default limits on annual increases to the benefit payments many lower-income and disabled Albertans rely on to cover basic costs.
If passed, Bill 32, the Financial Statutes Amendment Act, would see increases to benefits in programs like the seniors’ benefit capped at two per cent per year at most. Hundreds of thousands of Albertans rely on such benefits to cover food and shelter.
Alberta Finance Minister Nate Horner says the bill would also give cabinet the option of boosting benefits by more than two per cent in a given year, if the ministers wish.
“It gives government the discretion to maybe use this as a tool. If you were in a crisis situation, maybe it’s more efficient to provide relief in this regard than it is to, say, have affordability payments,” Horner told reporters at an embargoed news conference on Monday.
Horner said cabinet will review indexation of benefits and income tax brackets every autumn to set the appropriate rate. Cabinet could consider boosting benefit amounts if government coffers are in better shape than Albertans’ pocketbooks, he said.
Horner said the 2025 indexation rate will be two per cent, which will cost the treasury an extra $200 million.
If the rate of inflation is lower than two per cent in the prior calendar year, the default indexation would be tied to the consumer price index instead.
Indexing tax brackets — which allows citizens to earn more money at a lower tax rate — and benefit programs has been a political football for years in Alberta.
In 2018, the NDP government linked benefit hikes to the cost of living. In 2019, when the UCP government took power, premier Jason Kenney de-indexed benefits and tax brackets, saying the province couldn’t afford it.
In 2023, in the face of surging inflation, Danielle Smith’s UCP government re-indexed the benefits and brackets, giving a six-per-cent boost to benefits that year, followed by a roughly four per cent bump in 2024.
There are nine benefits affected by the indexation decision, including Assured Income for the Severely Handicapped (AISH), income supports for people who do not, or cannot, work, and the Alberta Child and Family Benefit.
Bill would allow credit unions to offer halal financing
If passed, Bill 32 would also enable provincially regulated financial institutions, such as credit unions and ATB Financial, to offer “alternative finance mortgages,” such as halal lending.
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 arrangement, that is permitted by the Muslim faith.
If passed, the law would make Alberta the first province to allow such mortgages under provincial regulation. 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. “Allow more people to get into home ownership. That’s the goal.”
Although some financial institutions already offer halal products, Horner said those organizations do not take cash deposits and aren’t considered banks.
Existing halal arrangements 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 fall economic statement.
Statistics Canada’s 2021 census found that about 200,000 Muslims were living in Alberta that year.
Said Omar, Alberta advocacy officer for the National Council of Canadian Muslims, said the organization was consulted by the Alberta government.
“Our communities have been asking for a long time — have been asking our government — to provide alternative finance mortgaging options,” Omar said in an interview with CBC.
“Many folks in the community often avoid interest-based predatory mortgages because of our faith’s prohibitions on predatory lending. So to see our government take this step and to really provide options for all Albertans is a right step.”
Electric vehicle tax planned for 2025
Bill 32 would also introduce a promised tax on electric vehicles registered in Alberta. Announced in last spring’s budget, the EV fee would be $200 a year, paid when owners register their vehicles. The tax is is to make up for the loss of provincial gas tax revenue, which helps pay for road and bridge maintenance.
Electric motorcycles and off-highway vehicles, hybrid vehicles, diplomat cars, government vehicles, and vehicles belonging to people who live on a First Nation would be exempt from the fee, which will take effect in 2025.
There are around 14,000 EVs registered in Alberta, 45 per cent of which are in Calgary, and 25 per cent of which are in Edmonton, according to the finance ministry.
The bill also seeks 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 ballooned.
“They would tell us that this falls short of what they really need to address the rising costs that they have experienced in this province,” he said.
Giving government the flexibility to raise rates is no guarantee that hikes will keep pace with inflation, Ellingson said.
The NDP’s affordability and utilities critic, Sharif Haji, says constituents have been asking for more halal financing options.
Although the bill aligns with what the province has promised, Haji said it’s unclear how many financial institutions or Muslims were consulted.
Finance officials said in a technical briefing they consulted with religious leaders representing about 90 per cent of Alberta’s Muslim population.