Alberta’s new United Conservative government appointed a former Saskatchewan finance minister to lead a panel that will identify the “difficult” decisions required to freeze spending over the next four years and balance the province’s budget.
Premier Jason Kenney announced Tuesday that Janice MacKinnon, who served as Saskatchewan’s finance minister under the NDP government of Roy Romanow, will oversee the six-member panel and report back by mid-August ahead of a fall budget. Ms. MacKinnon and her team will make recommendations on spending but will not wade into the contentious areas of taxes.
The UCP’s election platform promised to eliminate deficits by 2022-23 without increasing taxes, although critics warned that the plan would lead to painful cuts to services such as health-care and education.
Mr. Kenney said more than a decade of poor financial decisions have sent government budgets out of control and left Alberta with the second-highest per-capita spending in the country.
“Albertans understand that in the long run, debt cripples our ability to provide high-quality public services,” he told a news conference in Edmonton.
During the campaign, Mr. Kenney repeatedly denied that a UCP government would implement cuts to public services; in fact, he promised to improve areas such as health-care waiting times. He did not say how he would do that while keeping spending frozen, even as inflation and population growth add pressure to the province’s finances.
Mr. Kenney said a second panel will look at government revenue in several years, although he has already ruled out any tax increases.
Ms. MacKinnon, who relied on a combination of tax increases and spending cuts to eliminate Saskatchewan’s deep deficits in the 1990s, said getting deficits under control quickly will allow Alberta to avoid “draconian” cuts in the future.
“If we act now to balance the budget in a measured way, over a period of time, we can make difficult choices but also protect front-line services and programs,” she said at Tuesday’s news conference.
The previous NDP government projected Alberta would end 2018-19 with a deficit of nearly $7-billion and the party campaigned on a platform to return to balanced budgets by 2023-24, largely by relying on resource revenues to rebound.
Deron Bilous, an NDP MLA who was economic development minister in the previous government, said the panel was little more than an attempt to provide cover for “massive” cuts to services.
“The numbers just don’t add up," he told reporters in Edmonton. “There will be cuts, and my concern is that he’s using this panel as a way to justify it.”
Trevor Tombe, an economist who teaches at the University of Calgary, said keeping spending frozen at 2019 levels for the next four years would amount to a spending cut of about 14 per cent after taking into account inflation and population growth. He said health costs in particular are expected to grow significantly.
As a point of comparison, he noted Ontario’s recent budget under Premier Doug Ford’s government outlined spending cuts of about 8 per cent.
“This plan does represent an effective reduction in the size of government,” he said. “That won’t be easy.”
Dr. Tombe said a spending freeze won’t be enough to address all of Alberta’s fiscal challenges. He has previously called for a sales tax to get the province off the “royalty roller-coaster” that causes revenues to fluctuate wildly as oil and gas prices rise and fall.
“Of the overall long-term challenge that the province faces, how much does the spending freeze buy us? It gets about half of the longer-term challenges out of the way,” Dr. Tombe said.