Health Minister Fred Horne announced the figure Wednesday, acknowledging it's "a lot of money," but it's the sum the independent inquiry came up with in order to do its job.
"It's an exercise in the public interest," Horne told reporters. "It's for Albertans."
He said $1.7 million will be held back as a contingency for cost overruns. Additional money may later be approved to provide assistance for witnesses and interveners in the inquiry.
The province announced in February that a judge-led inquiry would look into allegations that some patients have been given preferential treatment to jump the queue on wait lists.
Critics said the government broke an earlier promise to also probe broader allegations of systemic bullying of doctors and political interference.
A Health Quality Council report that prompted the review said it had already investigated the intimidation and meddling issue and recommended money would be better spent fixing the problem.
Liberal Leader Raj Sherman repeated Wednesday his call for a broader inquiry.
"They're wasting money on a political dog and pony show. Albertans want real answers," Sherman said in a news release.
"What’s the point in spending millions of dollars on an inquiry when it is designed not to get the answers on how to improve our health care system?" echoed Wildrose health critic Heather Forsyth in a statement.
Sheila Marie Cook, executive director of the inquiry, said she realizes health care is a priority for Albertans.
"These allegations concerning this issue of preferential access created so much anxiety and concern among the general population, the government responded by appointing this inquiry. And I know that we will conduct it with the benefit and well being of all Albertans in mind," Cook said.
She said the budget was well planned and spending reports will be made public throughout the process.
"I think Albertans can rest assured that there will be very careful management of these funds."
Cook added that applications will be made available next week for those who want standing at the inquiry. Meetings to determine whether or not they get status will be held in October.
Public hearings are to be held in December in both Calgary and Edmonton.
Justice John Vertes is to complete his inquiry report by April 30, 2013.