‘Surgical’ cuts to Alberta budget
Deficit to rise despite cuts as carbon tax ends
EDMONTON • Jason Kenney’s government introduced its first Alberta budget Thursday, fulfilling his promise of slight austerity, promising cuts to spending programs and the elimination of hundreds of bureaucracy jobs. Those, along with a corporate tax cut aimed at spurring business investment, were the key planks of a four-year plan to bring the budget into balance.
In plain numbers, the United Conservative government says it plans to bring expenditures $1.3 billion below spending levels in 2018-19; cumulatively, the budget says, this amounts to a $4-billion reduction in government spending over four years. Alberta Finance Minister Travis Toews maintained this was the best way forward for the province, a plan predicated on cautious estimates on revenues and oil prices.
“This is not a boom-time scenario,” Toews said.
Nevertheless, the 2019-20 budget will still run a deficit of $8.7 billion, roughly $2 billion higher than in 2018-19.
Toews also acknowledged the possibility of a global recession or pipelines not coming online and said the government was prepared to further restrain spending, citing a commitment to bringing the budget into balance, come what may.
“The theme of our platform was overwhelmingly supported by Albertans,” said Toews. “I believe the most extensive and important consultation was that consultation that we did with Albertans back in April.”
On Wednesday, Kenney took to television for a prebudget suppertime address to Albertans. He warned this was going to be a tough budget on Albertans. That was borne out on budget day.
Repeatedly on Thursday, government officials harkened back to the Mackinnon report, an analysis of Alberta’s spending growth over the last several decades commissioned by the government and released last month, which concluded that Alberta spent more per capita on public services than other provinces, in some cases considerably more, with no better outcomes. The report argued that the provincial government was going to need to reduce spending to levels more in-line with other provinces to head off what it said had become a “fiscal crisis” for Alberta.
The budget plans for major government line items, such as K-12 education and health-care spending, to remain roughly stable over the next four years. Savings are expected to be found instead in spending cuts sprinkled across ministries and programs. There are, as well, some new spending commitments on the Technology Innovation and Emissions Reduction program, and spending on veterans’ scholarships.
Significant changes are coming in some areas, in particular, to post-secondary education: a 12-per-cent funding cut — found via unspecified “departmental efficiencies” and reducing government grants to post-secondary institutions — will save an expected $1.9 billion; tuition rates, meanwhile, will be allowed to increase by seven per cent per year as the freeze is thawed.
Many of the other changes tinker around the margins: the budget plans for a 7.7-per-cent reduction in the size of the civil service, amounting to nearly 800 people, by 2022-23, which is expected to save $552 million; various “red-tape reduction” measures should save another $140 million.
Several targeted tax credits are being eliminated in favour of a more broadbased corporate tax cut; for instance, the Alberta Small Brewers Development program aimed at subsidizing craft breweries is being shut down, saving $123 million over four years.
Reductions in road-maintenance services will save nearly $200 million. Smaller reductions are scheduled for other areas ($88 million to the Ministry of Agriculture and Forestry, $60 million to the Ministry of Multiculturalism and Status of Women) and there are plans to pause inflationary indexes on various payments, such as disability and seniors’ benefits.
The United Conservatives were elected in the spring as Albertans turfed the oneterm New Democratic government under Rachel Notley. At the time, Kenney’s party was pitching Albertans on a program of cleaning up Alberta’s ballooning deficits and debt; given a prolonged economic slump, rising unemployment and difficulties getting petroleum products to market, they were elected with a strong mandate for spending restraint.
Toews emphasized the focus on restraint when discussing plans for a $2.9-billion reduction in capital spending and the deferment of LRT funding to Edmonton and Calgary until after the budget is balanced. This, he said, would “reflect the province’s ability to pay and minimize the need to borrow when funds are not available.” Toews called the whole document a “thoughtful, surgical approach” to the province’s finances.
Additionally, some measures were announced that are designed to increase government revenues over the next four years.
The budget anticipates a $5-million per year boost in tourism levies and increases in revenues from everything from fuel taxes and cannabis use. And, income tax exemptions will hold steady instead of increasing annually at the rate of inflation, until “economic and fiscal conditions can support it,” the government said, keeping an escalating amount of money in government coffers per year, adding up to $600 million by 2022–23.
The end of the NDP’S carbon tax means cancelling around $1 billion in tax revenues, but the government argued that it will leave $5.7 billion in the economy.
THE BUDGET WILL RUN A DEFICIT OF $8.7 BILLION, ABOUT $2B HIGHER THAN IN 2018-19.