NDP prepares to tighten belts as economy grows

Unions protest provincial push to freeze hiring, wage increases

A resurgent Alberta economy hasn’t yet translated into a stronger bottom line for the NDP government, but Finance Minister Joe Ceci signalled Tuesday the province will cut costs by holding the line on public-sector jobs and wages.

In its second-quarter financial report, the government is now projecting GDP growth of four per cent in 2017, up from the 2.6 per cent increase forecast in the budget.

The provincial deficit is only slightly improved from the spring, however, currently at $10.3 billion compared with $10.4 billion at budget.

In a legislature news conference, Ceci touted a $180-million reduction in planned spending that came in part from cost-containment measures.

And he said the improving economy means the time is right for more belt-tightening in the next provincial budget, announcing the province would bring in a hiring freeze and push for zero salary increases in negotiations with public-sector unions.

“We’re moving from hiring restraint to implementing a hiring freeze. This will let us reduce the size and cost of government through attrition,” said Ceci.

“We’re also asking our labour partners to join in our efforts. We’re looking for more commonsense settlements like those we negotiated with teachers, which provide job stability in return for no raises and better services for our kids.”

Ceci said the hiring freeze will mean that any expansion of jobs within government must be approved by the Treasury Board.

The full scale of the freeze remained unclear however, as Ceci said front-line services within health and education will be maintained.

The minister also said an ongoing wage freeze for government managers has been extended from March 2018 to September 2019 and expanded to cover officials in the agencies, boards and commissions sector.

Meanwhile, major public-sector contracts that are now in bargaining include the deals with the Alberta Union of Provincial Employees, the Health Sciences Association of Alberta and the United Nurses of Alberta.

Ceci’s comments didn’t sit well with labour leaders.

AUPE president Guy Smith said implementing a hiring freeze makes little sense when the economy is picking up.

As well, the finance minister shouldn’t be musing publicly about contract negotiations, Smith said.

“The relationship is somewhat tense at the moment,” he said of AUPE’s dealings with the government.

“That can be resolved through successful negotiations, when and if that happens.”

Mike Parker, president of the HSAA, also took umbrage at Ceci talking about bargaining.

He isn’t impressed with the government taking a hard line on hiring or contract talks.

“Day in and day out in Alberta we’ve been working more with less. We’ve got staff now that are having their paper and pens rationed. This is the kind of cutbacks we’re talking about that are going on in Alberta,” said Parker, whose union represents more than 24,000 paramedics, lab workers and support staff.

“Resource levels need to keep pace with growth in this province.”

UNA president Heather Smith called the minister’s remarks “worrisome,” though talk of no raises isn’t surprising.

The Notley government maintained program spending through the two years of recession triggered by low oil prices. Its plan to only return to balanced budgets by 2023 has prompted fierce criticism from the opposition parties and has led to a series of credit downgrades from rating agencies.

Despite the tough talk Tuesday, Ceci said the government is not at this point changing its 2023 target date for a return to surplus.

The government says it has found $300 million out of its target of $400 million in in-years savings for the year.

Operational spending is still higher than at budget, however, and major savings have come from moving capital spending into future years.

Ceci said rebounding growth allows the government to throttle back infrastructure spending that had been ramped up as a stimulus measure. Capital spending sits at $8.3 billion, down $883 million compared to budget, with $359 million less in Transportation, $258 million less in Education and $126 million less in Health.

The province will still borrow $9.3 billion for capital and operations, with debt forecast to rise above $42 billion this year.

Alberta Party MLA Greg Clark said the fiscal update shows the NDP can’t get a handle on spending or deliver on infrastructure.

In question period, United Conservative Party house leader Jason Nixon said the NDP was only able to show any progress on the deficit by taking $250 million out of the $500-million risk adjustment fund intended to hedge against low oil prices. “It’s a shell game,” said Nixon. In its first-quarter update, the province downgraded its oil price projection to US$49 a barrel.

While benchmark price WTI has hit its highest level in two years, at levels around US$58, the government is maintaining its current oil price for now.

Resource revenue is up $96 million from budget, while personal and corporate income tax revenue is still coming in lower than was expected in the spring.

But increased drilling activity and energy production are one of the main factors boosting the Alberta economy this year.

The province says 70,000 fulltime jobs have been added since mid-2016.

While Alberta is expected to lead Canadian provinces in GDP growth in 2017, growth is expected to moderate next year, with the province projecting a 2.5-per-cent expansion of the economy.