Alberta session to feature watershed budget, new Financial Management Act

EDMONTON – Alberta politicians – facing billions of dollars in red ink – get back to business in the house Tuesday to pass what Premier Alison Redford calls a watershed budget along with a new centrepiece Financial Management Act.

“It’s been some time in Alberta since we’ve taken the time to be thoughtful and deliberate about setting that fiscal framework, and I think it’s going to be a really exciting session,” said Redford in an interview.

“I’m really, really proud of this budget,” she added, referring to the 2013-14 spending document to be unveiled Thursday by Finance Minister Doug Horner.

“(And) I’m proud of the work that we’ve done on our financial management structures, and the legislation that you’re going to see with respect to the Financial Management Act.”

The spring sitting of the legislature, a continuation of the fall sitting, will focus on what Redford has called a “once in a generation” budget to begin moving Alberta away from its dependence on the roller-coaster revenues of oil and gas.

While Alberta’s economy remains strong, falling prices for oilsands crude are expected to halve the $13 billion in oil and gas revenue Redford’s team had hoped to take in for 2013-14.

Those same falling revenues have ballooned the current year’s budget deficit from $886-million to $4 billion.

On top of that, Alberta’s rainy day savings Sustainability Fund has fallen from a peak of $17 billion four years ago to $3.4 billion, and it may be gone altogether by this time next year.

For the last six weeks, Redford and Horner have warned Albertans that while spending will continue in key areas like health and education, lean times have arrived.

Provincial politicians are forgoing their inflation-linked salary hikes this year, and Horner has announced a three-year freeze on management salaries along with a 10 per cent cut in management jobs.

Public sector unions have been told that there’s no extra money.

Redford’s promises of a balanced budget have been shattered. The government is now borrowing for major infrastructure projects like twinning the overburdened and often-dangerous highway to the oilsands hub of Fort McMurray.

Horner has warned it will take a lot of work to even balance the day-to-day operating side of the upcoming budget.

Redford has repeatedly rejected claims by opposition critics that she’ll bring in a sales tax to balance the books.

“So much of what I’ve heard from all opposition parties has been an awful lot of rhetoric without an awful lot of specifics, lots of crying wolf and suggesting that the government will do this and will do that – none of which we’ve ever done, nor will we,” said Redford.

However Official Opposition Wildrose leader Danielle Smith said Redford has only herself to blame. In last year’s election, Redford campaigned on returning the budget to the black while also spending more on schools, health clinics, and to help those in need.

Smith said the PC government’s conversion to sound fiscal management is too little, too late after three years of spending hikes culminating in a record $41-billion budget last year.

“I wish they had taken the fiscal agenda seriously three years ago when we started raising the alarm and putting forward our alternative budgets,” said Smith.

“The spending promises that (Redford) made during the election were absolutely unattainable, and now she’s trying to backpedal. She’s created the problem that she now finds herself in.”

The Wildrose has championed cuts to what they term bloated civil service management, extending timelines on infrastructure projects to save money, and abandoning speculative big-ticket public-private initiatives like carbon capture and storage.

Opposition Liberal Leader Raj Sherman agreed that the PCs created the problem, mainly by moving to a flat tax on personal income over a decade ago.

The 10 per cent flat tax, said Sherman, saw levies go down for the wealthy and up for everyone else, he said.

“We’ve essentially had a multibillion-dollar giveaway to the top three per cent (of earners). This is the reason we’ve had six successive deficits at a time the economy is booming,” said Sherman.

He called for Redford to return to a progressive tax on individuals to go with a “modest” boost to corporate taxes.

“The reality is you can’t cut $4 billion and improve services. We have to address the issue of revenue,” said Sherman.

NDP House Leader Rachel Notley noted that all economic indicators show Alberta’s economy is not doom and gloom but in fact strong and growing.

She said Redford’s reluctance to hike oil royalties to the levels of comparable jurisdictions, coupled with her refusal to increase taxes on the wealthy, is a familiar PC refrain that calls for those with the least to give to give more.

“Redford is going to make Alberta families and perhaps those who are most vulnerable pay for the mistakes of her government’s inability to manage our fiscal situation,” said Notley.

“Whether she calls (Thursday’s budget) holding the line or whether she admits it’s cuts, it’s still going to be some serious steps backward for most Albertans.”

Government house leader Dave Hancock said while the session will focus on the “fiscal agenda” there will be some other legislation, but he declined to be more specific.

He said debating and passing the budget takes a couple of months, and said he still expects the sitting to last as late as June 6.

The opposition has said its effective attacks on the Tories in the recent fall sitting prompted Hancock to dictate marathon late-night sittings to wrap things up in a hurry.

Not so, he said.

“The opposition likes to suggest they are somehow scaring us out of the legislature,” said Hancock.

“The reality is we go into the legislature to do the work that needs to be done, and the legislature will be there as long as we need to be to get it done.”