Alison Redford plans to overhaul her province’s finances in her imminent budget by slowing spending growth, pouring money into infrastructure and starting a savings plan – all while backing away from election promises and sending her province back into debt.
The Alberta government will reveal Ms. Redford’s second budget as Premier on Thursday, after months of warnings about falling oil revenues and “tough choices.” Bit by bit, Ms. Redford has hinted at what will be in store, ruling out immediate tax hikes, cancelling earlier pledges such as full-day kindergarten, and warning of red ink instead of the once-predicted surplus.
“We will make tough decisions, but they will be responsible. They will ensure that we are protecting vulnerable people, that we are supporting families and communities, that we are growing our economy, living within our means and continuing to open international markets,” Ms. Redford said on Wednesday. “Because every piece of that puzzle must fit together to allow us to have the economic success that we’ve had in the past.”
The austerity was underlined by Finance Minister Doug Horner, who skipped the new pair of shoes customarily worn when presenting a budget. Mr. Horner instead shined up a two-year-old pair.
Ms. Redford told the Edmonton Chamber of Commerce on Wednesday to expect a budget that “will profoundly change the direction we can have with respect to our economic development, and the economic development of the country,” one that will help Alberta “overcome our reliance on volatile commodities, and the price swings that go with them.”
It means doing away with “parochial” questions about debt and deficit, she later told reporters, and financing billions in road, school and hospital construction. “Alberta is in the midst of sweeping change, and it’s necessary change, and it’s what Albertans told us last election they wanted to see,” she said.
It will mean a sixth-consecutive deficit budget.
Ms. Redford’s critics say the promises of saving, spending, no tax hikes and an eventual return to surplus don’t add up.
“Something’s got to give,” Wildrose Leader Danielle Smith said. “… I think it’s out of step with what Albertans want to see. If you wanted a mandate to go into debt, why didn’t you talk about it [earlier]?”
Liberal Leader Raj Sherman called on Ms. Redford to reintroduce a progressive tax system in which high-income earners would pay more, instead of slowing or cutting spending. “The Premier’s plan is wilder than the Wildrose plan,” the Liberal Leader said. He may get his wish. During Wednesday’s Question Period, the Premier was twice asked to rule out any tax hikes before the next election, but dodged each time.
New Democrat Leader Brian Mason said Ms. Redford “misled Albertans” by promising social spending in last year’s election campaign. “Once they got elected, these amazingly new progressive Alison Redford PCs have become the same-old, tired Tory Party,” he said.
Ms. Redford said the province’s budgeted spending growth will be “far below, far below” the rate of population growth plus inflation, meaning bureaucrats in the fast-growing province will have to do more work with roughly the same amount of resources at a time when unions are warning the front lines are already overstretched. “It’s not about cuts, it’s about better effectiveness,” the Premier said.
The budget tabled on Thursday – Ms. Redford’s 48th birthday – will be split into three parts: an operational plan, a capital plan and savings plan. The first covers all services. The second will see the government borrow for infrastructure projects – it has already, as of this week, raised $400-million in bond sales to expand the highway to the oil sands. “Make no mistake: we will keep building the roads, the schools and the hospitals we need,” Ms. Redford said.
As for the third budget component, Ms. Redford said Wednesday her province will start saving money even as it invests in infrastructure. “This government will do both,” she said.
But Ms. Redford can’t do it all. Last year’s budget promised annual 2-per-cent increases in school funding. Now that’s “just not possible to deliver on,” Education Minister Jeff Johnson said. Gone, too, is the full-day kindergarten pledge. Universities across the province are bracing for cuts, and Ms. Redford’s government remains in bitter contract battles with teachers and doctors.
But Ms. Redford said she wanted “fundamental” change in how the province pays for infrastructure, manages its resource wealth and continues to build as new residents flood in. “I truly believe [it] will set the future of our economy in a new direction,” she said.