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Spending restraint in the 2019 Alberta budget

  • February 01, 2020
  • Danica P. McLellan

The Alberta UCP government’s first budget, tabled on October 24, 2019, made no bones about taking action to deal with the province’s dire financial situation. The government hasn’t shied away from defending it either.

And that’s exactly what the majority of Alberta voters voted for on April 16, 2019.

The UCP made a number of key commitments to voters in its election platform: repealing the provincial carbon tax, lowering the business tax rate to attract investors and their capital back to Alberta, reigning in government spending, and maintaining or increasing spending on healthcare and education, among a long list of others.

With lowered government revenues projected as a result of axing the carbon tax and decreasing the business tax rate, accomplished in Bills 1 and 3 of the legislature’s spring session, the budget was the government’s first real opportunity to prove they had the stomach to tackle bloated government spending and put Alberta on a path towards balanced budgets.

Supporters of the last NDP government (or just naysayers of the current UCP one) like to frequently proclaim that Alberta had forty years of conservative governments, and that those conservatives were the ones who got us into this mess. While there’s no disputing a messy financial situation, there’s much dispute as to whether it’s a result of small “c” conservative governance. Alberta has not had a fiscally conservative steward of taxpayer dollars in office in the better part of two decades.

Successive post-Klein PC governments blew through Albertans’ hard-earned money like a kid at the taxpayer-funded candy store. The result is entrenched government spending that is head and shoulders above other Canadian provinces. While it was easy for a government to justify avoiding labour disputes by doling out big public sector pay increases during the boom years, it takes much more discipline to restrain costs when times are hard. The UCP government is the first one to take that challenge seriously since the Ralph Klein hospital demolition derbies of the 1990s.

Despite what you may have heard from opposition voices and the narrative being pushed by the press gallery, the UCP’s spending restraint is nowhere near the radical action from the Klein days. No one is blowing up hospitals. On the contrary, the UCP increased healthcare spending by $200M, or 1%, in its inaugural budget. It’s true that there have been ample news stories about possibly impending layoffs, contracting out of hospital services like laundry and lab services, eliminating doctor compensation perks that don’t exist elsewhere in Canada, and other cost-saving measures. But, the government has committed to re-invest all these savings directly back into the healthcare system to decrease surgical wait times, increase mental health care options, and expand palliative and long-term care provided at non-hospital facilities which are more appropriate for many patients’ needs and costs the healthcare system exponentially less.

Government-wide, the UCP budget proposed a modest 2.8% cut in operating expenses over four years. That’s despite around $270 million dollars in increases to healthcare spending, a 15% increase in social services spending, and holding the line on education spending. Per student, Alberta’s education system spends $11,121 per student, compared to British Columbia which spends $9,68. Having been educated primarily in British Columbia’s system as a child, I can confirm it is excellent. Don’t just take my word for it, though. In 2014, the Conference Board of Canada ranked B.C. as the country’s best education system. That, despite spending significantly less per student than Alberta. Since the 2004-2005 fiscal year, Alberta’s operational funding for education has seen an 80% increase, significantly outpacing both inflation and enrollment levels. That, despite a global economic downturn and plunging oil prices which have historically funded so much of Alberta’s prosperity and public institutions.

The Education Minister, Adrianna LaGrange, has been insistent that school boards across the province look for ways to reduce their administrative overhead and any bloat within their boards. In Calgary, for example, the Minister has been embroiled in a very public battle with the city’s largest school board over questions about their fiscal prudence. One notable example was the Board’s years old decision to enter into a lease for their headquarters at a shiny new building on prime downtown real estate. Reports suggest that this lease cost significantly more than outright buying the building. They entered into a 25-year lease that included a built-in escalation rate of 2.5% per year at the time when Calgary’s real estate values were at their peak. Today, in the wake of tumbling oil prices and a challenging local economy, some 25% of office space in Calgary is vacant, while the Board is stuck paying 2.5% more every year to lease their space.

This year, after initially threatening to lay off hundreds of teachers to cope with budgetary pressures, the Board ultimately backed down and are now using money reallocated from elsewhere in their budget to cover the teacher salaries. All this to say, all parties involved in the spending of taxpayer dollars have an obligation to do so judiciously. While the government isn’t increasing spending to school boards, they are asking that folks at these boards exercise their common sense and discretion to keep costs down.”

While the Health, Education and Community and Social Services departments saw either budget increases or budget freezes, other departments have been asked to bear the brunt of the government’s 2.8% spending reduction.

Alberta Justice was not immune to spending restraint. While this upcoming year will see a modest operating expense budget decrease of 0.2%, the government is targeting a 6.6% decrease over the four years of the government’s mandate. Some of this decrease will come as a result of automating and digitizing an overwhelmingly manually performed, paper-based system. The proposed modernization of the province’s court records system will be music to the ears of anyone in Alberta who has struggled to get basic records from courthouses around the province, or wanted to pay various kinds of tickets online. Other provinces, like British Columbia and Ontario, have been light years ahead of Alberta in this regard. The budget also hints at the possibility of modernizing courtroom operations and “innovative ways to address citizen’s legal disputes” as cost-saving measures, but little has been announced to date in that regard.

As part of the Ministry of Justice’s budget, and despite the relatively flat spending this year, the government also included new funding for a number of high-profile campaign promises. This includes funding for 50 new Crown prosecutors (on top of the approximately 30 vacant prosecutor positions that will also be filled); doubling the number of articling students hired by the Crown; expanding drug treatment courts, doubling the program’s capacity to 80 participants per year; and providing additional funding to the Alberta Law Enforcement Response Teams (ALERT) that tackle enforcement of serious criminality such as child exploitation, illegal firearms, and drug houses.

The government’s budget indicates savings will be found across the Justice department, and the Minister of Justice and Solicitor General, Doug Schweitzer, has stated that much of these savings will come from careful spending and reducing the total number of full-time equivalents (FTEs) through attrition and by realigning how the department provides services. This has included the elimination of positions in the department’s legal services division, though it’s not clear how many positions were filled or what role attrition will play in the downsizing. Other big measures announced by the government have included requiring small municipalities to begin paying for a portion of their policing costs, and requiring municipal police agencies to begin paying for forensic DNA lab work to support police investigations.

While the Justice department saw the elimination of some positions that provided legal services to the government, the Ministry of Labour received funding for a new program included in the UCP’s election platform to provide legal assistance to workers affected by applications before the Labour Relations Board. Under the Employee Labour Relations Support Program, employees are entitled to one hour of legal advice to learn about their rights and receive assistance with respect to various labour relations matters and applications.

On the whole, the Alberta 2019-2020 provincial budget protects funding for healthcare and education, while respecting the Alberta electorate’s decision to vote in a government committed to getting government spending under control. The budget lays out a path to balanced budgets by 2022-2023, and begins fulfilling dozens of the UCP’s election commitments. Albertans are already spending $5 million every single day in interest payments to banks. A responsible government would get Alberta’s debt under control so that money can be used to help Albertans instead.

Danica P. McLellan is a Student-at-Law at Neuman Thompson in Edmonton. She completed her bachelor of laws at the University of Calgary Faculty of Law in 2019, where she was co-President of the Runnymede Society. Danica also has a Bachelor of Social Sciences, majoring in Political Science.