Rumours swirled through the halls of the Legislative for weeks. Whispers and warnings of cuts and rollbacks not seen since Ralph Klein and Jim Dinning unleashed a scorched earth policy on the provincial budget in the mid-1990s. Back in debt. Broken promises. Bankrupt budgets.
The end was nigh.
And today, the budget was tabled and the massive cutbacks did not emerge.
The end is not nigh, but remains difficult to figure out what long-term goals Finance Minister Doug Horner and Premier Alison Redford plan to accomplish with Alberta’s 2013 provincial budget. The devil is in the details and the posturing for the next provincial election, expected in 2016, has already begun.
The Sustainability Fund that has saved our provincial government from going back into debt for five years is gone and in its place, the government is introducing the Fiscal Management Act, which Minister Horner says will mandate annual savings. In hindsight, and the world of smart fiscal management, this is probably something that the Tories should have started doing when they first formed government more than forty years ago.
Different than most years, this year’s budget is separated into three categories – operating, capital, and savings. This helps the government deflect criticism that it has returned to capital financing in order to build much needed public infrastructure and poses roadblocks to opposition groups hoping to make straight comparisons to previous budgets. The split also allows government ministers to argue with the deficit-hawks in the Wildrose official opposition that the “real” deficit, in the operating budget, is only projected to be $2 billion.
Overall, the budget for 2013-2014 is projected to stay the same as last year’s provincial budget, though the funding within the $36 billion has shifted. Cuts have been made.
The largest slice of the budget, going Alberta Health Services budget was increased by 3%, rather than the promised 4.5%. AHS Chairman Stephen Lockwood, the trucking magnate from Okotoks, weeks ago publicly declared that he would not fight for the full promised increase.
The Municipal Sustainability Initiative grants awarded to cities, towns, and counties have been frozen at $846 million, the rate in last year’s budget. This may feel problematic for some municipalities, who have already borrowed funds based on expected MSI funding in order to finance critical infrastructure projects. Alberta’s municipalities are responsible for so much of the critical infrastructure and services Albertans interact with daily.
The Alberta Association of Municipal Districts and Counties, known to political insiders as the “Tory farm team” because past rural Tory MLAs who have emerged from its ranks, expressed its disappointment in the cuts to municipal funding programs.
“Rural municipalities are responsible for the roads that keep our economy moving and the government’s lack of support for this critical responsibility will have a huge impact on our members’ budgets,” said AAMDC President Bob Barss.
The Advanced Education budget was cut by 6.8%, creating a likely situation that will see Universities and colleges turn to raising tuition and non-instructional fees levied on students to fill their financial gaps. University of Alberta President Indira Samarasekera sent a mass-email to staff and students earlier this week warning them that changes are on their way.
Calling the post-secondary cuts the largest in two decades, Council of Alberta University Students chair Raphael Jacob said “these cuts are going to have an immediate impact on the quality of our post-secondary education, and potentially longer impacts on the affordability and accessibility of degrees in Alberta.”
The budget also leaves unresolved a number of outstanding political issues facing Premier Redford’s government, such as the two ongoing labour disputes with Alberta teachers and doctors. These fights remain unresolved as the budget included a one year wage freeze for all public employees, including remuneration for doctors. The wage freeze should not be an issue for the teachers, who proposed a deal for two years without wage increases, but the doctors may move to escalate their dispute.
There will be no shortage of commentary on the political implications of this year’s provincial budget, but it is the long-game that matters. This budget is the first of a potential four before the Tories are expected call the next election in 2016. Whether they hope the Fiscal Management Act will earn them dividends from voters or that revenue from an increased price of oil will once again overflow government coffers, we are just in the first year of a four-year long political game.
22 replies on “Alberta Budget 2013 a confusing start to the Tory re-election strategy.”
Would Alberta have a deficit if we were not forced to send 12 plus billion to the rest of Canada with 8.5 going straight to Quebec? 2014 is when the equalization formula is to be renegotiated I think, it is time Quebec was weaned, a petulant teenager still breast feeding Alberta cash while supplying its inhabitants with cheap tuition cheap daycare etc while spitting in the face of the ROC with their language laws and the like, will never make a responsible grown up province. It is time Alberta helped Quebec grow up, and put our cash toward the Alberta deficit, not the 250 billion debt of Quebec, they just squander it.
Bartinsky,
You’re betraying an awful lot of ignorance about how equalization works. Alberta does not cut a cheque to Quebec, or any other province.
Then why have a transfer payment agreement Corey, enlighten me on the new age meaning of “transfer payments”. Extra-terrestial bankers, magic money wands? Money changes hands, I’ll type slow for us ignorant ones, but after 40 years of business, the process of paying bills requires money being transfered, your teachers should have put away the bananas and brought out the Wealthy Barber or any finance book for your class. And yes I am “betraying” ignorance, I leave that domain for the left to dominate.
Yeah, I’m with Mr. Hogan on this one. I don’t think Doug Horner’s sitting in his office with a $13 billion oversized novelty cheque, thinkin’ to himself “Jeez, we could really use this here, but I guess we’ll send it to Québec instead so they spend on beer and popcorn.”
While I understand that hating on Québec is very fashionable, please keep in mind that the per capita GDP in Alberta is nearly twice what it is in Québec. Under what kind of federation would the citizens in the richest province have their federal tax dollars go exclusively to their own province, and leave the poorer provinces in a trap of deficits and service cuts? I might be missing something, so I would like you to explain how that kind of Canada would work.
And if you might be interested in reading some fun stuff about equalization, I’d recommend this paper:
http://www.business.ualberta.ca/Centres/~/media/business/Centres/WCER/Documents/Publications/155ElectronicApril2final.pdf
It’s kinda long, but one of the fun facts for me was that Alberta finances fully 1.1% of Québec program spending. I’m not really an expert on parenting, but I don’t think that’s how you breastfeed someone.
The assumption in this budget, as Redford and her ministers have made clear, is that public servants, including health professionals, teachers, university professors, social workers, clerks in government offices, etc., will agree to no wage increase this year or indeed a falling wage. But the Conference Board of Canada has projected that the average salary or wages in Alberta will rise 3.8 percent this year. Why would employees who receive their paycheque from the government, and who have not had as good a pay increase as the average private sector worker for years, accept zero or less when the average person outside government is getting over 4 percent? A competent government can manage to raise enough funds to pay its employees equivalent wages to private-sector workers. But this government is not competent. It’s just a tool of the oil companies and the very wealthy who don’t want to pay a fair share of taxes.
One thing I really don’t understand is why you left wingers support the PC’s over the Wildrose. If you’re going to have a Conservative government (absolutely inevitable in Alberta for at least the next fifteen years) why not have a competent one! It’s utterly foolish not to support WR over the PCs at this point.
It would be foolish to support a party like the WRA that’s so ideological and extreme. Maybe if they had a better leader!
I suggest that, while painful to some, most of this budget will be acceptable to many, despite the opposition parties’ cries because the hits aren’t really on anything that most feel.
Even the biggest losers, post secondary institution, won’t make much noise with the public. Students don’t vote and in AB won’t take to the streets. Profs make ‘too much’. And the general public won’t notice if departments or programs are canned.
Heck, they won’t even care if MRU became a south campus of U of C, MacEwen the northern bit of U of A. Nova Scotia consolidated its universities….watch for AB to do the same.
Education at all levels will be hit hard; and students in Quebec complain about tuition. Teachers did not agree to take zero. They are still in negotiations and the sticking point is workload. If one works fewer hours and makes the same money, that’s an increase to the individual and cost as boards need to hire more teachers to maintain services.
And although I don’t agree with the comments on Quebec, equalization does need to be reformed. Ideas are being presented today at the Manning conference.
I would agree with Alex that there is no longer a reason for anyone who is a “left winger” or indeed left of Atilla the Hun to choose the Tories over WR. There never was. They are equally horrible. The NDP and the Liberals are better choices (so are the Greens and Alberta Party but at the moment there is nowhere where they do not represent a wasted vote in the FPTP system). But the point is to figure out which of them can defeat the Dinosaur Right parties in a particular constituency. That’s what Change Alberta tried to help with in the last election, but Lying Alison pretended to be a closet liberal (and she may even be, but it’s irrelevant since her party is a creature of the hard right)and many small-l liberal strategic voters chose to park their votes with her rather than consider options to the left of the Tories.
Finkel, The Liberals are the only moderate alternative with a solid 5 seats
To grow from. Its time to give the Liberals a chance. PC’s can balance anything, while WR keeps company with socially contentious politicos who
raise the ire of progressives. Libs seem to NOT be advocating a sales tax, but a progressive taxation to spread the burden in a thoughtful manner and tax revenues collected would balance the budget and still make us the best place to do business in Canada. We need to start saving money and revisit transfer Fed payments. Quebec needs to be encouraged to develop its hydro power, put its people to work, generate revenue and become a full financial contributor to the business of confederation. Its time Quebec seeks its own sense of dignity and becomes a financially productive member of confederation. The staus quo emPowers disunity. Alberta has some of the worst financial management known to mankind.
bartinsky – equalization transfer payments go from the _federal_ government to the provinces, not _between_ provinces. The money Quebec receives “from Alberta” (as opposed to “from Saskatchewan”) is just the total amount Quebec receives in equalization payments, times the amount of federal tax paid by Alberta taxpayers expressed as a fraction of all federal tax. No money goes from the Alberta treasury to the federal treasury.
If equalization were to be renegotiated or eliminated, it wouldn’t affect the Alberta provincial government’s finances at all; it would simply reduce federal expenditure.
Chris, I know that. But there is no pot of gold, there is no money tree, I am not trying to be mean, but money is money, matters not where it comes from, it is all usable to buy things, even tickets to a Quebec Nordiques game.
As Graham Thomson of the Edmonton Journal said, this is a huge fudge-it budget. Unprecedented you might say. That is it’s purpose.
We can definetly say this: anyone that likes transparency, simple and direct accounting, and straight-shooting from their government does not get it here. This is meant to obscure deficit problems, was designed to be complicated, and may be ultimately self-defeating for this government. You have to believe the government is hoping they will be rescued by the markets and outside decisions, moves to ship oil to energy markets at a higher price. If things don’t go as planned, we will see a Decore- style election – with wallets being shaken on the election trail – and this government will be fighting for their life.
So, just to clarify, bartinsky, yes, Alberta would still have a deficit in a no-equalization world. But you knew that.
Alvin I have to same this to you – Even Raj is now to the right of the PC’s – Brian, the elder statesman, makes more sense than the PC’s. Look at who supported Redford, the ATA ,that vote group shifted the PC party to the left.
Also the PC gov’t is facing a unified opposition. That is something they have never had to deal with. First a unified opposition has manage to stand against the might of the PC jugernaught. Second if the Libs, the WR and the ND’s want to come together to oppose this gov’t you know there must be something very very wrong with the PC’s direction for Alberta.
Welcome to the year of the snake, or in this case the political snake in the grass.
Chris; say you, and your 9 other brothers farmed ten sections of land, your father controlled the finances, brother Peeair is a whineing gambling womanizing drunkard who has his personal debt to an obsecene level. Brother Dalton falls for every Nigerian letter scam and talked your father into a solar powered tractor for 5 million. Your brother Joey likes to fish and stay in the house a lot, brothers Ned Jimmy and Ashley like to play music a lot, sometimes they work but they would rather sit in the house and play music. Brother Greg helps out some but has strange ideas on what to grow, tried cotton, tried hemp but just can’t focus on wheat and canola, brother Gordon tried some new” crops” some worked mildly made a bit of money but at least he tries when he is not smoking dope. Brother Brad didn’t help for years but now he is right there with you working and making up for lost time and production, but for all those years for the most part it has been you Chris working and paying the familys debts and making financial decisions that made sense most of the time and all this time your father has been doling out the farms money as he saw fit to the other brothers, with the lions share going to Peeair and his family while your family goes into debt to buy a new truck while helping on the farm all these years, seems fair right. There is no equalization in the US, Texas Alaska and most right leaning states are doing just great in these times, it is the leftie states that are suffering financial disasters, helping some people only breeds contempt, biting the hand remember.
I’ve looked at the Fiscal Management Act. The government has 3 years before it has to put money into the Contingency Account and the Heritage Fund. If the PCs don’t have the necessary cash they’ll simply scrap this legislation (just like they did with the Financial Responsibility Act and the Government Accountability Act which made it illegal for them to go into debt in their operating account) and start again, all the while telling us that the new legislation was necessary in order to move into the future and away from the old parochial way of doing things. It reminds me of that bank commercial where a father and daughter are talking about managing their finances. The father says the bank helps him manage his assets, the daughter says the bank helps her manage her debt. The big difference is that the dad has economic freedom while his daughter does not. What a mess.
[…] The Provincial Government released its budget, and it wasn’t good. There’s lots to read out there, and I recommend you start with Dave Cournoyer’s post on it. […]
As someone that has to deal with government agencies of all sorts, I would recommend that the cuts start by chopping the jobs of government employees who never answer their phones. Like the arrogance of the elected imbeciles, they think that taxpayers (the ones who actually pay their salaries) can just wait around and they will get back to them when they feel like it. Listen up Alison there are thousands of government jobs that can be cut so chop,chop.
The political threat for the PC’S is the Wildrose. So they came up with a hard right wildrose budget to stop that party. I thank the lib’s and NDP for this budget. Why because the ndp and libs are not united in either the same party or electoral cooperation. No talk of increasing taxes because the left is a divided bunch of happy losers. Why do we have a flat tax system and no talks about it being replaced. Because the left is divided and the government is only scared of losing votes to the right. So cut not increase revenue because of lib/ndp small differences I blame this budget on them. So sad.