PHOTOS: Finance Minister Joe Ceci. Below: Interim Progressive Conservative Ric McIver showing off his Three Stooges tie, the sale of which puts the gross in Gross National Product; Opposition Leader Brian Jean; and Alberta Liberal interim Leader David Swann.
“Admit it, Alberta, after yesterday afternoon’s Budget Speech was read by Finance Minister Joe Ceci, you were secretly relieved.”
I first wrote those words not quite a year ago – on April 15, 2016 – when Mr. Ceci got up on his hind legs in the Legislature and read the first NDP budget written by the first truly new Alberta government in more than four decades.
Here we are one year later, and little has changed. This is a good thing.
That’s a dramatic change from what conservative governments instinctively do and what conservative oppositions habitually demand.
As a result, this year’s deficit is expected to be $10.3 billion. That is down about $500 million from last year’s budget deficit. But, Mr. Ceci pledged yesterday, again, “we’re not going to make drastic cuts to the things that would only hurt Albertans to get to balance more quickly.”
Instead, they NDP Government has taken advantage of low interest rates to keep people working building things we actually need as the province’s principal industry edges back toward better days – which it seems to be doing.
In addition to not gutting health care, education and other front-line public services, this approach includes building 24 new or significantly upgraded schools, a new public hospital for Edmonton’s under-served south side, a court house in Red Deer and 200 public long-term care beds in Calgary for seniors with complex needs and another 145 in Edmonton. Those 345 beds are part of a planned build of 2,000 LTC beds across the province.
The downside, if it really is a downside, is the amount of debt the government in incurring to avoid raising taxes. The province’s debt is predicted to rise to $45 billion in the next fiscal year. The Royal Bank’s reliable fiscal tables indicate Alberta’s debt-to-GDP ratio will be 3.1 per cent at the start of next month, rising to 7.1 per cent by April 1, 2018.
This, according to yesterday’s overheated Opposition rhetoric, is pretty much hell on wheels – especially when the TV cameras were turned their way, and there were plenty of video cameras in the Legislative Building’s Rotunda yesterday.
Brian Jean, the Opposition Leader, called it a “debt-fuelled disaster.”
“This budget threatens to send us over the fiscal cliff with higher spending, higher taxes and a plan that plunges Alberta, believe it or not, into $71 billion of debt by the time the NDP face voters in 2019,” Mr. Jean hyperventilated. (To give Mr. Jean his due, he sounded pretty reasonable when he said he wouldn’t lay off any front-line workers if he were running the show.)
Ric McIver, the interim leader of the Progressive Conservative Party for another 48 hours or so, bemoaned the same stuff. “Alberta’s children, 20 and 30 years from now, will be paying for things that they don’t get to enjoy, which is why I call this a huge intergenerational transfer of wealth,” he huffed, wearing a spectacularly ugly Three Stooges tie that he said symbolized the way the NDP is running things. (Others might draw a different conclusion.)
Well, that’s their story, and they’re all stickin’ to it. Perhaps they actually long for the days of Ralph Klein, when Alberta was the poorest little richest place on earth, lurching from cash giveaways to brutal austerity, while leaving a huge infrastructure deficit for a future generation to pay.
But how bad a thing is this level of debt, really? There’s lots of room for reasonable disagreement about this, of course, but it’s interesting to note that between 2007 and 2012, public debt in the world’s rich countries grew from an average of 53 per cent of GDP to close to 80 per cent.
A debt-to-GDP ratio of 60 per cent is often said to a reasonably prudent upper limit for developed countries – Canada’s is around 66 per cent and the United States’ is well over 100 per cent. Quebec, which like Alberta is not a sovereign country with its own currency, has a debt-to-GDP ratio around 50 per cent and there’s no sign le ciel is about to tomber.
So, is 7 per cent too high? Probably. Mr. Ceci certainly thinks it is. Does it justify the Opposition’s rhetoric? It does not.
No political party – including the one that will soon be led by former Harper Cabinet minister Jason Kenney, who with his PC leadership campaign in its last hours didn’t take advantage of all the cameras in Edmonton – could have come close to balancing this budget at present tax rates without doing grave harm to Alberta and its people.
That is why, presumably, the sense of relief was almost palpable in the halls of the Legislature again yesterday.
Even the Chicken Littles of the Opposition secretly liked Mr. Ceci’s budget, I suspect, because it lets them loudly proclaim their quasi-religious market fundamentalist faith that, sooner or later, if we don’t do what they demand, the god of the Market will be angry, and the sky truly will fall.
They should ask themselves WWBWD … that is, What Would Brad Wall Do? The answer, as a matter of fact, is right on page 99 of the 2017 Alberta Budget Fiscal Plan, handed out in the pre-budget lockup yesterday afternoon.
Presumably Saskatchewan’s conservative premier, viewed by Alberta conservatives as having messiah-like qualities, would make us pay $9 billion more in taxes, to get us up to the rate he collects from Saskatchewanians.
Not the Alberta NDP, though.
NOTE: This post has been amended to replace misleading information from a mainstream media organization with more accurate information from the Royal Bank’s financial tables, which also happen to be significantly more favourable to the government. The post also appears on Rabble.ca.
What’s the point in building new schools only to have the children in them pay off the debt until their senior years?
We need deep cuts and deep cuts now!
Chris, consequences of deep cuts is a real part of the problem we have now. The new schools you are complaining about needed doing a long time ago. When I taught in rural Alberta during the Klein era we actually had an engineer tell us not to use the gymnasium on windy days, for fear of its structural integrity. Apparently the gym walls weren’t willing to listen to a mantra like ‘Do more with less.’ The long term care facility my father-in-law stayed at needed extensive renovations due to the discovery of mould caused by leaking pipes. I would love to know if there ‘was no money’ to deal with the pipes when they first started leaking.
Ralph Klein himself even said the time to spend on projects is when the economy is down. He said that, of course, when the economy was hot so he could have an excuse not to spend then. In retrospect I believe he was right, but it would be nice if he had hung on to those Ralph Bucks so we could pay for our needed capital expenses.
The point is to have the schools, hospitals and other infrastructure that has so far been denied to this generation. So to change you question to a more meaningful one – What is the point of providing a generation of our youth with poor quality education, poor schools and shoddy health care and no roads to get to what remains?
AMOF, CHRIS, this is an ideal time to borrow money, because municipal bonds are selling at less than the rate of inflation. The extra money doesn’t just disappear into a black hole, either, despite what Kenney and Jean, et. al., would have you believe. Unlike foreign owned oil companies that send profits offshore, the government’s infrastructure spending will be paid to Alberta taxpayers that will again spend that money in Alberta on food, clothes, and so on. The government’s tax base actually INCREASES, wiping out a good portion of that debt, and creating good jobs for Albertans in the meantime.
NO! We need more democracy and less capitalism! We need post ww2 regulations and higher taxation for the highest income earners! We need a modernized “NEW DEAL”! Not austerity against the poor to benefit the privileged. Do you want a repeat of the 1929 crash, and the hardships that caused fascism to rise in the 1930s?
What a pile of garbage!
This budget is the direct result of having a Premier whose husband is a public union leader (talk about conflict of interest) and a finance minister who is an advocate for poverty.
The result of this budget is we’re all poorer and the Premier’s husbands business gets more membership.
My first reaction was absolute disbelief! The Alberta electorate and by extension the Alberta NDP continue to spend at a champagne level but only collect beer level taxes. Roughly 54% of the budget consists of wages, going by memory so I could be out a bit, roughly 26 billion dollars. Even though I personally think there is room for savings here obviously you can’t save 10 billion on wages and that won’t balance the budget. I can see saddling future generations with some debt related to infrastructure but putting the cost of services we recieve today onto our kids is in my opinion immoral. The only hope shown in this budget for a return to balance is based on oil recovering and filling the pot with royalties. This government was elected on getting us off the oil roller coaster, that has not changed. We just have higher taxes, higher spending, bigger deficits. Look at our interest payments, soon to exceed 2 billion a year, that would eat up 40% of a 5% sales tax. The future I see coming is beer level services and champagne level taxes!?!?!
Hey, Farmer B.
I share your concern about running a deficit on operating expenses, as opposed to capital costs. What to do about it, however, is a difficult situation. My concern is that a far-right party will use the same ill-thought out procedure Ralph Klien did – balance the budget exclusively on cuts, cuz they are such good money managers they don’t need to raise taxes. This will produce the same infrastructure deficit Ralph Klein left us with, and declare war on the civil service, who have already seen their wages cut by an austerity-minded government.
I am pleased you acknowledge that an increase in taxes is part of the solution. The whole mantra of ‘We have a spending problem, not a revenue problem’ flies in the face of the reality that Alberta has managed to collect the lowest taxes in Canada because of oil revenue, yet when the oil revenue dries up our expenses are supposed to stop with it. (Quit getting sick, people, the price of oil is down) I heard the radio program when Jim Prentice made his fateful ‘look in the mirror’ comment, and honestly I admired him for his candour. Unfortunately Albertans have come to expect the champagne level services for beer level taxes, and that, I believe, is the real source of our problem.
As a former civil servant, I would personally feel better about having my salary cut if I saw that everyone in the province was feeling some of the pain. To that end, I would definitely feel better having my salary cut by an NDP government, that I know would prefer not to, than by a Wildrose government that would really feel like they are doing so simply to satisfy their support base.
The solution has to include a tax increase. Can you envision a far-right party having the courage to do so?
You are confusing capital and operational spending. Cutting $7B to eliminate the operational deficit would do nothing to influence infrastructure.
AB’s public sector enjoys substantial compensation premiums compared to other provinces. It hasn’t faced austerity in 20 years. Why should a teacher, for example, earn more in AB than in BC or ON? Comparables to the private sector do not exist because compensation is based on productivity. AB’s private sector has traditionally been more productive than that elsewhere in Canada. Its public sector can only earn a premium if it too were more productive than elsewhere in Canada (ex. a teacher able to produce better student outcomes or the same outcomes with higher class sizes/less prep time).
The NDP cannot be trusted with additional revenue. It enjoyed a favorable $1.5B revenue surprise this year and managed to spend it all and more. I would only support tax increases that are matched dollar for dollar with real cuts to operational spending.
I also disagree that Albertans enjoy “champagne level services”. Even though AB spends far more per capita on education and healthcare than do other provinces, outcomes are not measurably better. Could that be due to lack of accountability structures (ex. incremental educational spending would be lost if it didn’t lead to some measurable outcome)?
Why should the MAJORITY poor have to pay the price economically for more greed for the MINORITY top wage earners?
And what’s wrong with a modernized FDR-style “NEW DEAL”?
More regulation and higher taxation for the wealthiest wage earners is justice and majority rule democracy when it comes to economics!
Here’s something for all you blind fiscal CONS to read that should be aware of history so it doesn’t repeat itself concerning the depression and ww2!
There is another way to look at it. Servicing the debt is about 2% of Govt. revenue. So keeping things steady is not a big problem. Austerity has been tried and failed in Europe and in Alberta under Klein. Without government pump priming the economy falls apart and the rich buy up everything of value on the cheap.
Raising corporate taxes would be a better alternative to, a sales tax on the poor or gutting services. Since the Cons want to break labour contracts, if the corporations go on a capital strike and leave the province, nationalize them WITHOUT compensation and keep all the money in Alberta.
How was Klein a failure? His government unleashed a boom where AB lead most of the developed world in terms of economic and population growth. It was the public sector’s own failing that it was unable to match the productivity growth that the private sector delivered. Stelmach was the real failure in signing overly generous contract settlements.
His “pedal to the metal” approach was unsustainable. This made Alberta a high cost area to do business in and flooded the market with government-subsidized oil and natural gas that depressed the price. He did not invest in the schools and hospitals needed (there’s that high cost thing again).
The prosperity he created was an illusion which blew away with the lower resource prices.
Please provide examples of how O&G was government subsidized. I disagree that schools and hospitals are needed. Calgary, for example, has many unused rooms at Rockyview and South Health Campus. School enrollment has not grown at anywhere near the rate of population as a whole due to declining family sizes. Again this is off topic. Schools and hospitals are capital. Alberta’s problem is unsustainable operational spending.
The term “risky conservative ideological experiments” is amusing, but not accurate. They are not “risky” and they are not “experiments.” They have been tried time and again, and they NEVER work. A better phrase would be “proven conservative ideological disasters.”
It was such a disaster that Ralph Klein got Alberta out of debt. Our credit rating is degraded every other year, our interest payments will be in the billions, we have record unemployment, and we are spending money like it’s falling from heaven.
Derek, all Ralph Klein did was switch a fiscal debt for an infrastructure one.
As Dave has correctly noted, Klein did not get Alberta out of debt in real terms because what he needed to spend on infrastructure was not spent, the results of which you can see everywhere and probably even affect your life directly. A real economy is more complicated than a game of Monopoly.
“(To give Mr. Jean his due, he sounded pretty reasonable when he said he wouldn’t lay off any front-line workers if he were running the show.)”
But without a definition of the term front-line, thrown about with no rigor at all by the right and left, that means pretty much nothing. He’s letting some imagine it’s only a few, upper management types who will be laid off, while his base can imagine it’s nearly the entire public service, for whom they have no respect anyway. It will probably be somewhere in between, and seeing the Wildrose operate, have little concern for operational needs or functions, leaving the remaining workers (I guess they’ll be defined as “frontline” then simply because they are the ones left standing) floundering with lack of direction to emerging issues and lack of coordination. If the public service (we already are experiencing attrition with a maintenance of 20% vacancies) keeps shrinking, we are going to see a brain drain from the public service and along with monetary debt and infrastructure debt, that too will negatively affect Albertans for generations.
Except the public service isn’t shrinking. According to the budget, total FTE’s will grow by almost 3,700.
There will be no brain drain from the public sector as even a 10% wage roll back would leave it the best paid in Canada.
Fact: Alberta public sector workers have never been the highest paid in Canada.
No amount of alternatives can change that fact.
Indeed. “Front-line workers” need leaders: to hire them; to coordinate their work; to sign their payroll and vacation requests; to provide guidance, performance evaluation and, when necessary, discipline; to set policies and determine priorities; to set budgets for their departments; to ensure they have the tools and supplies to do their work; and all those other leadership & management tasks necessary in any large organization. In turn, front line managers need middle- and top-level leaders to allocate resources, both human and material, to different portfolios based on government priorities and to provide overall oversight of service delivery. Of course there is always room to look for efficiencies, but too few senior leaders sets up a span of control problem in which there is not enough oversight or leadership and important decisions don’t get made in a timely fashion, creating bureaucratic inertia.
To add to this, here is an interesting, and possibly, for some, surprising survey which includes findings from polling Alberta NDP, PC and Wildrose supporters:
Other commentary on this opinion poll felt that it “also shows that Albertans don’t want to pay increased tax themselves and that we need to grow up.”
The PC’s should be the last ones to criticize deficits after they run 5 in a row under their last few leaders and that was when oil prices were much higher than now. Also current PC leader McIver was a part of those governments – how quickly they forget. I suppose it is easier for Wildrose to criticize as they have never governed anything and they have no track record or either balancing a budget or running a deficit.
I can understand with the economic recovery still being so fragile this is not the time for austerity so I am not overly concerned with the deficit this year. However, in a year or two there may need to be a bit more restraint, particularly on the capital side if the economy does start to recover more. I am hopeful that 2017 will be the year that the economy does turn around. I also hope that the recovery comes about partly because of our economy starts to become more diversified – I think we are all a bit unsettled from years and years of riding the up and down roller coaster of oil prices.
There is plenty of opportunity for restraint on capital:
1) The recession has hit the construction industry hard. Costs are down significantly from 3 years ago
2) The province is growing much more slowly and will continue to grow slowly for the foreseeable future so demand for roads, schools, hospitals etc will be much less than expected
Except that while economic growth has slowed, population growth, both natural increase and in-migration, hasn’t. We are also the youngest province in terms of demographics. We are still going to need those schools… and hospitals… and roads, bridges, tunnels, etc.
Well said! It’s pretty rich for the Conservatives to talk about the next generation having to pick up the tab for today’s spending. This generation is ‘picking up the tab’ for the money wasted by Conservatives during their reign of high oil prices. Nothing wrong with debt and deficit at this time of low interest rates and the need to fix neglected infrastructure. I wonder how many of the Wildrosers and Conservatives have their personal finances in order. Are they all debt free?
“Nothing wrong with debt and deficit at this time of low interest rates”
are you sure about this?
i’m debt free. it doesn’t bother me, don’t wakes me up during the night and in fact gives me more flex options for another things.
if you so much cares about infrastructure, just imagine, how many schools, hospitals, roads, etc. can be build each year for 2 billions in Alberta?
with present approach of our NDP government, this 2b will be paid to bankers and already rich investors. that’s roughly $500 every albertan, including infants, pays them each year, beside principal.
sort of, on one hand lots of advocacy about social equity, on another hand, make the rich even more richer on behalf of majority (so call middle class) obedient taxpayers.
the hypocrisy either left or right isn’t even surprising anymore.
may i kindly ask to what kind of diversification you had referred to?
No one, including Premier Notley, wants a deficit. Alberta’s fragile economy needs this budget. I am grateful that this government did not attack the most vulnerable.
I remember when rapacious Ralph staggered around the legislature, back handed women, berated the poor, and advanced the private interests of his puppeteers. Ralph’s version of how to make Alberta great again is getting CPR at PCA convention. There is plenty to worry about other than Budget 2017. Sobering!
Public sector workers are far from the most vulnerable. They can do more with less.
Alberta public sector employs over 200000 people with a total compensation of over 26 billion with the highest compensation levels in Canada. How are they the most vulnerable, far from it in my opinion!
Repeat after me all you right wingers: Austerity budgets do not work. This is something the NDP know very well and they are showing everyone the correct way to run a province.
I applaud the latest budget for its strong commitment to keep as many Albertans employed as possible.
growth of tax funded employment at the time of decline in value added productive sectors, normally (in not marxist view) considered to be regressive trend.
Nobody is talking about increasing the amount of tax funded employment. the NDP have been clear that what they want is not to be the cause of increased unemployment. There is a difference.
What’s a regressive trend are austerity budgets. You do not improve the economy and grow the GDP by creating additional unemployment. In point of fact you end up with more people drawing on government funds when they are unemployed than when they are employed. Moreover, austerity budgets only cause a delay in the recovery timelines.
i’m nor talking about growing government/public sector workforce and definitely i’m not advocating austerity measures.
what i mean is an attempt of government to sustain economic activities (employment) in their jurisdiction by borrowing money from private banks and hedge funds investors and giving it to private sector enterprises. for every borrowed dollar interest must be paid but will be returned into budget as taxes only from sum about 20~30% of overall debt.
i can understand if government borrow to establish crown/public, profit generating enterprise but how they doing it now, it’s total absurd.
you won’t borrow against your house, to hand this money to me with hope to earn something. wouldn’t you?
so, when you read in news about such cases, first thought comes to mind – an idiot. but when government doing this – it’s a progressive thinking, right?
If austerity budgets reduce debt (future taxes) are current taxes they grow the economy by removing barriers to private sector growth. Each public sector job protected through delaying austerity destroys at least equivalent job levels outside the public sector. Alberta needs to cut spending 20% right away. The percentage will only grow over time as debt accumulates and interest rates rise.
Right-wing reactions to the responsible investments in this budget are the result of getting their way for far too long, like spoiled children. The right-wing children need to learn that they can’t have a treat every time the adults go to the store. Sometimes the money has to go to necessities instead of toys.
What outcomes can be measured from these so-called responsible investments beyond maintaining over-market levels of public sector employment and compensation?
“Love’ the right-wing, broken-record mantra that it is immoral to saddle our grandkids with debt, while completely denying that we are saddling them with a warming planet that will affect their economic fortunes a hell of a lot more.
The grandkids are indeed being saddled with debt, but much of that debt is being incurred because of the rising cost of health care that previous generations use most.
I finally had a chance to read the budget speech – https://www.alberta.ca/release.cfm?xID=4647775389976-D7C0-833F-A73B0782A8305CEE. It is so hopeful and encouraging and KIND. I’m so proud of this government! They are showing how a genuine NDP government protects its citizens in a downturn. If their projections turn out to be wrong, they have room for tax increases next year. Meanwhile, Albertans will continue to take care of one another.
I wish the people who are complaining about future debt were also the ones willing to protect our future environment and diversify our future economy.
And there’s the rub Andrea.
In truth those who complain about future debt are really just hiding their real motive that is their reluctance to pay taxes to support younger generations.
It sounds more socially acceptable to frame their selfishness in such a way as to make it look as if they care about future generation, when they don’t. If they did care, they would be just as militant about saving the environment for younger people to enjoy into the future.
Actually In my case I don’t like my taxes to go to service debt. Taxe money dedicated to interest payments does not help anyone. Look at Ontario 1 billion in interest payments per month!
You are confusing household budget models with macro-level provincial/national budgets. Completely different kettle of fish that operate completely differently.
Wrong. Provincial governments cannot conjure money. Its debt must eventually be repaid. All borrowing does is defer austerity.
In truth those who support government borrowing are really just public sector employees hiding their real motive that is their reluctance to accept market levels of compensation.
It sounds more socially acceptable to frame their selfishness in such a way as to make it look as if they care about helping the most vulnerable or diversifying the economy, when they don’t. If they did care, they would be just as militant about pursuing every efficiency measure possible in delivery of public services, including performance based compensation, defined contribution pensions, no seniority rules and no restrictions on outsourcing delivery of public services to other entities that offer better pricing.
The debt does the opposite of protecting the environment or diversifying the economy. The more AB spends, the more it relies on O&G development.
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