THE ALBERTA NDP MAY BE ON TRACK TO ACCOMPLISH SOMETHING THE PREVIOUS CONSERVATIVE GOVERNMENT NEVER COULD: SLOW DOWN THE GROWTH OF PUBLIC SECTOR WAGES. JEN GERSON REPORTS.
Image depends on closing in on deficit
The Alberta NDP may be on track to accomplish something the previous Progressive Conservative government never could: slow down the growth of public sector wages.
Given the NDP’s traditional affinity for unions and the working class, this may seem like an incongruous goal.
During a fiscal update at the end of November, Finance Minister Joe Ceci indicated to the myriad unionized public workers that wage hikes were out. “The teachers’ negotiation is what I really hope will be achieved in other negotiations,” he told media at the time. “That’s what my hope is ... that people will see the benefit of long-term job stability and the fact that there are no raises, they’ll have their ongoing jobs.”
Teachers recently signed a deal with the province agreeing to two years of zero wage hikes — although there was a suicide clause in the terms. If other major unions get a hike, so do they.
“I think that’s the wise way to go and I’m hopeful that, as we extend our negotiations to other labour contracts, we’ll find similar kinds of support there,” Ceci said. “That’s the kind of support we need to make sure we ... get back to balance.”
On the whole, the province’s oil-trashed economy is showing some signs of improvement. Alberta is projected to grow by four per cent in 2017, significantly better than was forecast during this year’s budget.
But at least some of the NDP’s reputation as fiscal managers — and it’s claim to practical Prairie populism — must hinge on the outcome of several contracts currently up for negotiation, including the Alberta Union of Public Employees and United Nurses of Alberta. While the province is still running a $10-billion deficit and racking up debt at an alarming pace thanks to the drop in oil prices, the NDP can’t be blamed for at least one significant chunk of the province’s systemic overspending problems: longterm labour costs.
According to a recent report from the University of Calgary’s School of Public Policy, Alberta’s spending on public sector wages has increased by 119 per cent since 2000 — double the rate of the growth in the rest of Canada. While Alberta’s spending used to be relatively close to the national average in almost every category, its public sector salaries now out-strip those of other provinces.
Overall, Alberta spends 40 per cent more per capita than Ontario; 30 per cent more than B.C.; and 15 per cent more than the average spent in the nine remaining provinces. Alberta would need to cut $12 billion annually to bring its per capita spending in line with Ontario’s — a province that is, itself, not winning any awards for fiscal prudence.
While the reasons for that spend are not nefarious — high public sector wages are a reflection of the province’s oil-fuelled private sector ones — there is no doubt that the previous PC government bought labour peace by jacking up salaries as long as oil royalties continued to fill the gap between low taxes and high spending.
Well, the good times are gone. In the absence of oil royalties, the only thing papering over the gap now is debt. According to local economists, Alberta’s debt isn’t unmanageable, per se. But it’s only sustainable as long as the government can keep its spending growth curves, and its labour costs, in particular, under control.
If the economy continues to claw its way back, and the NDP can keep a handle on wages, over time Alberta will be able to slowly close in on the deficit without catastrophic spending cuts.
The overall picture isn’t exactly rosy. There is a reckoning coming for the budget if the oil prices stay at their current levels indefinitely. The province is eventually going to need to look at short-term cuts, long-term wage stagnation, tax increases, or a combination of all three in order to replace the lost boom-time oil revenues.
But small improvements now, even if they seem to have only a marginal impact on spending in any given year, will put the government as a whole in a much stronger financial situation over the next 10.
In short, the province’s public sector workers would do well to play kindly with this government. Alberta workers have done well here over the past two decades, and they should know it.
Meanwhile, an NDP that has stanched the outlandish spending growth that had become rampant under the PCs will be able to make a much more credible pitch to the Alberta electorate in 2019. Particularly if the economy continues to improve.
Ceci may be coming to the bargaining table with a basket bereft of the usual goodies. But United Conservative Party leader Jason Kenney is coming to this picnic with the knife.