Time to put Alberta government on a diet
After years of overindulging, the Alberta government needs to include a diet plan in its New Year’s resolutions.
The provincial government has been enjoying the gravy train for quite some time, having doubled its program expenses between 2004 and 2015.
Unlike many Albertans who were forced to tighten their belts in recent years, the current government continued the spending spree. Instead of pumping the breaks and giving taxpayers much-needed relief, the government increased its operating spending beyond inflation and population growth every year since 2015.
Even with half a million fewer people than British Columbia, the Alberta government’s 2018 budget spending is billions of dollars larger. Alberta now has a deficit that’s over $7 billion, a debt bill growing by $1 million every hour along with new and higher taxes.
The Alberta government could have guarded against this fiscal mess with a simple strategy, as Fraser Institute’s Steve Lafleur and Ben Eisen recently outlined.
“If the government had taken a different course—simply holding nominal spending at 2015/16 levels—Alberta would have likely balanced the budget this year,” wrote Lafleur and Eisen.
But there’s room to go further. Far from the boogeyman argument that the sky would fall if spending is cut, the Alberta government still has fat in need of trimming.
The first place to start is with the ballooning bureaucracy. At $27 billion, compensation for government employees makes up over half of the operating budget. Employees (all levels of government) in Alberta earn a 10 per cent wage premium compared to counterparts in business.
Government employees are also much more likely to be covered by a registered pension plan, retire earlier, lose more work hours for personal time and are less likely to experience job loss than those working for a business.
Alberta’s government employees are overpaid compared to those in other provinces. In fact, Alberta taxpayers could have saved $2 billion in 2016 if salaries were in line with the average of Canada’s three largest provinces.
But employee compensation is only half the story. According to another Fraser Institute report, total government jobs in the province exploded upwards between 2014 and 2018, while the number of jobs outside government declined.
Alberta’s health-care system also needs reform.
“Alberta spends $3.8 billion more than the average [per person spending] of Ontario, British Columbia and Quebec on health care,” according to public policy experts Janice MacKinnon and Jack Mintz. But with Alberta’s relatively young population and absence of chronic diseases its “health-care costs should be lower, not higher, than provinces like British Columbia.”
According to a Conference Board of Canada study, Alberta’s health outcomes lag behind B.C., Ontario and Quebec, even though the province spends hundreds of dollars more per person. In 2016, Albertans also endured longer wait times for treatment than the national average. All of this adds up to an unacceptable conclusion.
“Provinces like Ontario and British Columbia spend less on health care, even though their populations are older and less healthy, but they have better outcomes,” wrote MacKinnon and Mintz.
It’s clear the Alberta government hasn’t turned down tax-dollar dessert in quite some time. But it’s never too late for the government to change its glutenous ways. With the new year now upon us, it’s the perfect time for the Alberta government to commit to a diet, hop on the treadmill and trim some fat.
Franco Terrazzano is the Alberta Director with the Canadian Taxpayers Federation.