Premier Jason Kenney’s first budget imposes significant cuts across Alberta’s public sector, with more than $1.3-billion in reduced spending and the elimination of thousands of jobs – all part of a level of restraint that the province hasn’t seen in 25 years.
The goal is to eliminate the deficit by the end of the United Conservative government’s first term – a key election promise for Mr. Kenney – and to keep the province’s debt from reaching nearly $100-billion as projected by the previous NDP government. To get there, the budget introduces a level of austerity beyond what Mr. Kenney foreshadowed in the provincial election campaign this past spring.
First cuts in a generation
Actual cuts to spending have been a rarity in Canada in recent years, even among conservative governments that have come to power on promises to balance the books. Most have instead turned to spending freezes or simply eased back on growth.
Alberta hasn’t had substantial year-over-year cuts to operating spending since the early 1990s, when then-premier Ralph Klein implemented deep reductions that sparked protests (though that anger didn’t prevent him from being re-elected several times over). In the span of just three years, from 1993 to 1996, operating expenses dropped by 18 per cent.
Mr. Kenney’s first budget doesn’t forecast anything close to that, but many departments will feel the pain. The government will start in 2020-21 with a single-year cut of about $1.3-billion. Cuts to operating spending and capital grants will make up the bulk of that reduction. After that, spending will gradually increase by less than 1 per cent a year as revenues exceed spending – in other words, a surplus – for the first time in eight years.
‘Surgical’ budget reductions
Before the budget was released, Finance Minister Travis Toews had described the pending cuts as “surgical.” The reductions in spending are not happening across the board, with some ministries such as Education and Health seeing their budgets frozen. However, economists have said such a freeze amounts to a cut in itself, especially as school enrolment continues to increase and the population ages. Other departments will need to make do with less.
The budget cuts more than half-a-billion dollars from Agriculture and Forestry, or about 38 per cent, while there are also significant reductions in Culture, Multiculturalism and Status of Women ($86-million, or 29 per cent); Energy ($159-million, or 22 per cent); and the Finance Department ($417-million, or 19 per cent). Several climate programs that were funded by the provincial carbon tax, which was cancelled earlier this year, have been cut, though the government also introduced its levy on large industrial emitters, some of which goes to emissions-reducing technology.
A smaller public sector
The budget calls for the elimination of more than 2,000 public-sector positions over the coming years. The government says the goal is to take care of most of that through retirements and other departures but acknowledges there will be layoffs.
In the first year, advanced education is among the hardest hit, in terms of numbers, with 300 full-time equivalent positions gone. The Alberta Energy Regulator, which is funded through an industry levy and not directly by taxpayers, is also seeing significant cuts with 270 full-time equivalent positions eliminated in the current fiscal year. Transportation has the largest percentage of its staffing levels cut, at 22 per cent.
Postsecondary a target
The government struck a panel to examine the province’s finances, chaired by former Saskatchewan finance minister Janice MacKinnon, and the resulting report identified several areas for cuts. (The panel was not permitted to look at revenue or potential tax increases). The report concluded there were many areas where Alberta spends more than other provinces only to get worse results, and postsecondary education was singled out as a particular concern.
Universities were bracing for cuts and they were right. The total budget for advanced education will be cut by nearly 12 per cent by 2022-23, with tuition projected to increase sharply as the government lifts a tuition freeze. Hundreds of jobs at postsecondary institutions will be eliminated and student aid will be reduced by more than 7 per cent.
The budget cuts and delays capital spending, which local officials such as Calgary’s mayor have warned will jeopardize projects such as that city’s Green Line light-rail expansion. The capital budget will be 10-per-cent lower in 2022-23, when it will be $5.4-billion, compared with the $6-billion that was spent in 2018-19.