Since the Leduc oil strike of 1949, Alberta’s wealth has grown, wealth that allowed politicians to spend like drunken sailors until the oil price crash five years ago.
The spending hasn’t stopped, even as the oil royalties wilted like a summer rose on a 40-degree day.
Faced with a need to justify financial austerity, Alberta Premier Jason Kenney appointed a blue-ribbon panel to study the issue.
The panel, headed by the fiscally conservative former Saskatchewan NDP finance minister Janice McKinnon, recently reported with 25 recommendations.
If Kenney adopts only the main recommendations, life for Albertans, accustomed to lots of government spending, will become relatively harsh.
The panel, backed up by KPMG studies, found the Alberta government spends more per capita than comparable governments in B.C., Ontario and Quebec with often poorer outcomes.
If Alberta per capita spending equaled the average of the three comparable provinces Alberta would save $10.4 billion a year.
In hospital care, Alberta spends $5,132 per capita — one third more than the next highest province of B.C.
Health outcomes are no better than in the other three provinces. Alberta has lowest life expectancy, highest infant mortality rates, highest death rate from cardiovascular disease, highest rates of suicide and longest wait for treatment.
Alberta doctors and nurses get paid more than elsewhere, with growth in physician spending averaging 7.6 per cent since 2009.
In education, Alberta spends $11,121 per student, one-sixth more than the next highest B.C.
Alberta universities are the most reliant on provincial grants at 54 per cent of revenues.
In social services annual 2.9 per cent growth in spending is comparable to the other three provinces.
At this rate, the annual Alberta government deficit, now 3.59 per cent of the budget, will almost double in four years to an amount that could hire 30,000 teachers or fund 35,000 long-term care beds.
Something has to give in the absence of new revenue sources or higher oil prices. Slow global oil demand and growing use of alternate energy put a crimp on higher oil prices.
The panel recommends “decisive action.” That action includes reducing the education portion of the budget by almost one-third to match the 17 per cent of the budget in neighboring B.C.
A $600 million expense reduction for four years amounts to 1.2 per cent but suggested reductions in capital grants and investment would hit hard.
For 25 years, says the panel report, growth in Alberta government spending has exceeded the other 10 provinces.
It is doubtful that Kenney can accomplish these reductions and stay popular by next election in 2023.
The deficit could be obliterated with two measures — a sales tax and addressing the lowest personal and corporate income tax rates in Canada. Kenney just cut corporate income taxes.
Doing either of these measures is political suicide. Not having a sales tax is a matter of extreme pride for Albertans.
Deep cuts to health care and education salaries and capital projects are in store if Kenney pushes forward with plans to balance the budget by next election.
Labour turmoil, parental complaints and health care disputes will become the norm in what was once Canada’s wealthiest province.
Ron Walter can be reached at [email protected]
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
