CALGARY – With the state of Alberta’s finances expected to dominate the legislative session that begins Tuesday, the Redford government is warning that Thursday’s budget will see the most sweeping changes since the early days of former premier Ralph Klein.
But Finance Minister Doug Horner insists the Progressive Conservative government won’t be following Klein’s model of “hacks and slashes across the board.”
And Horner told Tory supporters he expects to get a rocky reception from some corners once the budget is dropped.
“It’s important that government show you we can be lean and we can be mean with what we’re doing. So we’re going to head in that direction in a very big way, probably bigger than what’s happened in this province in the last 20 to 25 years,” he told a local Tory fundraising breakfast on Friday.
“It’s not going to be easy … it’s going to get hairy.”
After taking office in 1992, Klein moved to slash the provincial deficit, cutting government programs, laying off civil servants and rolling back public sector salaries by five per cent.
The Redford government has been warning for months that its bottom line has been battered by a deep discount in bitumen prices that will lead to a $6-billion shortfall in natural resource revenue for the 2013-14 budget year.
Premier Alison Redford has promised a “once-in-a-generation” budget that will revamp the province’s financial framework and begin to wean the government from its dependence on energy revenue. The Tories have said they will institute significant borrowing to pay for needed capital projects and also plan to introduce a new savings plan.
On the spending side, the government has already frozen MLA and government manager salaries and taken a hard line on public sector contracts, saying there is no additional money for doctors and teachers. Promises of set funding increases for the departments of health and education have also been swept off the table, along with a pledge to balance the books this year.
“When you have to contract your expenditures, there are going to be things you will do without, there are going to be people expecting things they’re not going to get – and that never makes anybody happy,” said Horner in an interview.
At an Edmonton news conference on Monday, public sector unions warned of “Klein-style cuts” they say are coming to hospitals, schools and other public services.
Gil McGowan, president of the Alberta Federation of Labour, said Redford was elected for her “progressive” PC agenda, but is betraying those promises with a “slash and burn” budget.
“The (budget) will be ‘Klein lite’ and this is not what Albertans thought they were getting when they voted for Alison Redford as opposed to the Wildrose party,” said McGowan.
Five of the biggest public sector unions – the Alberta Teachers’ Association, Alberta Union of Provincial Employees, United Nurses of Alberta, the Health Sciences Association and the Canadian Union of Public Employees – also released polling data to show most people do not want to see cuts, and instead favour some kind of tax reform, such as higher royalties or a return to a progressive income tax.
Liberal Leader Raj Sherman said in the 1990s, Klein had the benefit of a progressive income tax and a surtax on the wealthy – not the current flat tax on income – when his government balanced the books.
Instead of contemplating such measures, Redford has “gone on the attack” against teachers, doctors and nurses, Sherman said.
But Wildrose Leader Danielle Smith – whose party supports a public sector wage freeze and the status quo on taxes – said the “ugly” budget expected on Thursday is the result of the government massively overestimating revenues and overpromising to the public last year.
“You can’t try and pretend this is somehow a tough budget because of economic circumstance,” said Smith. “It’s a tough budget because of bad decision making and incompetent management, and they have to take responsibility for that.”
On Monday, the Canada West Foundation called on the budget to focus not only on the short-term deficit, but the long-term economic challenges facing Alberta.
That means initiatives to deal with the provincial labour shortage and steps to lessen the Alberta’s dependence on resource revenue and make new investments in the Heritage Savings and Trust Fund.
Likewise, a Fraser Institute report also released Monday said Alberta has done little to save for a rainy day through the Heritage Fund.
The account currently sits at $16.4 billion, but it could be double that if the province followed a model similar to Alaska and earmarked 25 per cent of resource revenue into the fund, according to the report.
With files from Edmonton Journal and The Canadian Press.
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