Alberta Budget 2025: Construction Association Stakeholder Brief

Executive Summary

Budget 2025 delivers a $26.1B capital plan -- $1.1B larger than Budget 2024 -- creating the strongest public construction pipeline in recent budget history. Schools ($2.6B), health facilities ($3.6B), roads and bridges ($2.5B), municipal infrastructure ($7.5B), and housing ($1.1B) provide diversified project opportunities across institutional, civil, and residential construction. However, 15% tariffs on imported construction materials, a tight skilled trades labour market, and construction cost inflation threaten to reduce the real purchasing power of this capital investment. Construction associations must advocate for fair procurement frameworks that account for tariff-driven cost escalation while ensuring members can access the project pipeline.

Top 5 Relevant Budget Measures

1. Total capital plan at $26.1B over three years -- with $8.6B in 2025-26, $8.7B in 2026-27, and $8.8B in 2027-28. This represents a sustained, growing investment in public infrastructure that provides a strong project pipeline for the construction industry.

2. School construction at $2.6B -- including $1.68B for previously announced school projects, $618M for SCAP accelerated school projects, $150M for modular classrooms, $62M for planning and design of 30 new schools and eight modernizations, and $389M for education capital maintenance and renewal.

Health facilities at $3.6B -- highlighted by the Red Deer Regional Hospital Centre Redevelopment at $557M, Alberta Surgical Initiative at $261M via Infrastructure, and Diagnostic Imaging Enhancement at $168M. This includes major institutional construction projects of significant scale.

Skilled trades funding at $135M annually -- maintaining investment in apprenticeship delivery, grants, and adult learning. Advanced Education capital includes projects like Northwestern Polytechnic Skilled Trades Expansion and NAIT Advanced Skills Centre Planning.

Capital maintenance and renewal at $3.8B -- including $486M for health facilities, $439M for post-secondary facilities, $389M for education, $328M for government-owned facilities, and $116M for provincial parks. This sustained maintenance investment provides steady work for renovation and retrofit contractors.

Risks

Tariff-driven cost inflation. A 15% tariff on goods imported from the U.S. affects structural steel, lumber, mechanical equipment, electrical components, and specialty construction materials. The construction sector is heavily exposed to cross-border supply chains. Industry estimates suggest tariffs could add 5-15% to total project costs depending on the materials mix.

Skilled trades shortages. Despite $135M in annual skilled trades funding, the construction industry faces competition for workers from the $26.1B capital plan itself, plus private sector energy, petrochemical, and data centre construction. Public sector compensation for health entities ($10.5B) and school jurisdictions ($7.5B) sets wage expectations that private sector contractors must match or exceed.

Fixed-price contract risk. Contractors who have signed fixed-price or lump-sum contracts for public projects may not have provisions for tariff-driven cost escalation. Without contract adjustment mechanisms, margin compression or losses are possible. The industry needs government to adopt fair risk-sharing provisions in new procurement.

Project schedule delays. Supply chain disruptions from tariffs, combined with labour shortages, may extend project timelines. The capital plan assumes spending profiles that may be optimistic if construction capacity is constrained.

Housing market uncertainty. Housing starts are forecast to moderate from 47,800 units to approximately 41,000 units per year. While this remains a healthy level historically, it represents a decline in residential construction activity.

Opportunities

Diversified project pipeline. The capital plan spans institutional (schools, hospitals, post-secondary), civil (roads, bridges, water), residential (housing, seniors housing), and industrial (government accommodation, parks) construction. This diversification reduces sector concentration risk for construction companies.

School construction acceleration. SCAP represents a new, accelerated pipeline of school projects with $618M for advancing 22 projects, $150M for modular classrooms, and $62M for planning 30 new schools and eight modernizations. The compressed timeline creates urgency that benefits contractors ready to mobilize quickly.

Health facility major projects. Red Deer Regional Hospital Redevelopment at $557M is one of the largest single health facility projects in recent Alberta history. Combined with other projects like the Gene Zwozdesky Centre ($81M), Foothills Medical Centre Neonatal ICU ($66M), and Medical Device Reprocessing Upgrades ($243M), the health construction pipeline is substantial.

Seniors and continuing care. The Continuing Care Capital Program at $649M, Affordable Housing Partnership Program at $655M, and Seniors Lodge Modernization at $150M create a significant pipeline of residential and institutional construction focused on an aging population.

Capital maintenance and renewal. The $3.8B capital maintenance envelope provides steady, recurring work. Renovation and retrofit projects are less sensitive to tariff-driven material cost inflation than new construction, as they often use domestically-sourced materials and smaller quantities.

Likely Government Intent

The government is using capital investment as both economic stimulus and capacity building for a growing population. The $1.1B increase from Budget 2024 signals commitment to maintaining construction activity despite the deficit. The emphasis on schools and health facilities responds to the most visible impacts of population growth. The government is aware that capital plan execution depends on construction industry capacity and cost conditions, which is why skilled trades funding is maintained. The capital plan also serves as employment stimulus, partially offsetting the economic slowdown from tariffs.

Immediate Questions to Ask Ministries

1. Infrastructure: Will the government adopt tariff-escalation provisions in new construction contracts to fairly allocate the risk of tariff-driven cost increases between government and contractors?

2. Treasury Board and Finance: How will the government manage the capital plan if construction cost inflation exceeds budgeted amounts? Will project scope be reduced, timelines extended, or additional funding allocated?

3. Advanced Education: What mechanisms connect skilled trades program graduates with capital plan construction employers, and how is program capacity being scaled to match the $26.1B project pipeline?

4. Transportation and Economic Corridors: What is the anticipated tender schedule for major highway, bridge, and water infrastructure projects in 2025-26?

5. Education: What is the procurement timeline for SCAP school projects, and will the government use standardized designs to accelerate delivery?

48-Hour Action Checklist

• Distribute detailed capital plan summary to association members with sector-specific project lists
• Compile tariff exposure analysis across major construction material categories
• Contact Infrastructure and Transportation procurement offices for 2025-26 tender schedules
• Survey member companies on current workforce capacity and anticipated hiring needs
• Prepare advocacy brief on tariff-adjusted procurement framework requirements
• Identify SCAP and health facility project timelines for early contractor engagement
• Brief association board on key budget opportunities and advocacy priorities

30-Day Monitoring Checklist

• Track government procurement portal for new capital plan tender releases weekly
• Monitor tariff implementation details for specific construction material categories
• Engage Advanced Education on apprenticeship program capacity and intake scheduling
• Develop comprehensive tariff cost impact study for presentation to government
• Coordinate with member companies on collective workforce recruitment strategies
• Follow housing starts data and building permit statistics monthly
• Advocate for contract change-order provisions reflecting tariff cost realities
• Monitor quarterly fiscal updates for capital plan spending execution rates

Suggested Message Frames

Frame 1 -- Building Alberta's Future: The $26.1B capital plan invests in schools for growing families, hospitals for aging communities, and roads for economic growth. Alberta's construction industry has the capacity and expertise to deliver these projects and create thousands of well-paying jobs.

Frame 2 -- Workforce Partnership: Construction associations are the primary pathway for Albertans to enter skilled trades careers. The $135M annual trades investment flows through our members, creating the apprenticeship placements and on-the-job training that builds Alberta's workforce.

Frame 3 -- Fair Procurement in Uncertain Times: U.S. tariffs have fundamentally changed the cost structure for construction materials. Government procurement frameworks must evolve to fairly allocate tariff-related risk, ensuring projects proceed on schedule while contractors can operate sustainably.

Opposition Narratives to Anticipate

"Capital spending during deficits is irresponsible." Counter that deferring infrastructure investment during growth periods creates larger costs later, and that construction activity supports employment and economic stability during trade disruption.

"Construction companies profit from government contracts." Emphasize the competitive bidding process, thin margins on public work, and the employment multiplier effect of construction spending in communities across Alberta.

"Tariff costs should be absorbed by industry, not taxpayers." Advocate for fair risk-sharing, noting that contractors cannot absorb unpredictable tariff costs on materials over which they have no control. Fixed-price contracts were signed under different trade conditions.

"The capital plan is a political document, not an investment plan." Point to the economic analysis supporting infrastructure investment in growing communities, the maintenance deficit in existing facilities, and the correlation between public capital investment and long-term economic productivity.

Data Points to Monitor

• Government tender releases and procurement timelines across all capital plan categories
• Construction material price indices including tariff impacts on steel, lumber, and equipment
• Housing starts and building permit data monthly
• Skilled trades apprenticeship enrollment and completion statistics
• Capital plan spending execution rates in quarterly fiscal updates
• Construction employment data and wage surveys
• Public sector compensation trends as benchmarks for labour cost projections
• SCAP school project design and procurement milestones
• Major health facility project approvals and construction start dates
• Tariff implementation schedules and rates on specific material categories