Alberta Politics

MacKinnon Report endorses Jason Kenney’s political agenda, doesn’t fix Alberta’s big revenue problems

The report and recommendations of the Blue Ribbon Panel on Alberta’s Finances, known widely as the MacKinnon Report, after the panel’s chairperson – former Saskatchewan cabinet minister and history professor Janice MacKinnon – was released yesterday.

Jason Kenney Alberta Politics
Jason Kenney

The report is an endorsement of the United Conservative Party government plan to implement deep cuts to public sector funding, a wide-range of drastic changes to how Alberta’s public services are delivered (or delivered at all), and the use of legislative tools to interfere with the collective bargaining process.

When reading the panel’s report and recommendations, it is important to remember this is not a neutral or academic document. The MacKinnon Report is very much a political document written by political people who were appointed because they share the government’s vision.

Despite her past political affiliation as an NDP cabinet minister in Saskatchewan, MacKinnon’s fiscal conservative views make her more likely to feel welcome in the UCP or the Fraser Institute than in a party led by Rachel Notley or Jagmeet Singh. For decades MacKinnon has been a champion of fiscal conservatism and more recently provided an enthusiastic endorsement that was prominently displayed in the UCP’s election platform.

The MacKinnon Report calls for funding freezes or cuts to public services across the board, including increased privatization of health services, changing the funding formula for Alberta schools (and likely introducing more private and charter schools), increasing government control of post-secondary institutions and lifting the current freeze on tuition fees, and downloading more infrastructure costs on municipalities.

Premier Ralph Klein
Ralph Klein

In yesterday’s press conference announcing the report, MacKinnon suggested that “fewer hospitals” could be a solution to cutting the health care budget, which should raise giant red flags in rural communities across Alberta. During her time as Saskatchewan’s finance minister, 52 rural hospitals were closed as a result of budget cuts.

The report’s suggestion that the government scale back capital investments could also spell trouble for the much-needed new hospital in southwest Edmonton, which was announced by the previous New Democratic Party government in 2017.

The recommended cuts and creation of legislative mechanisms to interfere with the collective bargaining processes are likely designed to create strife with public sector unions whose members would be directly impacted by these cuts – a group that the UCP is eager to pick fights with.

For anyone who grew up or lived in Alberta in the 1990s, it may feel like deja-vu.

When premier Ralph Klein and treasurer Jim Dinning imposed drastic cuts on public services, Albertans were told that balancing the budget and paying down the provincial debt was necessary to get Alberta’s fiscal house in order. At the time, a young anti-tax crusader named Jason Kenney cheered on those cuts, going so far as to tell the Western Report that “Education will be the toughest area to cut, but it will also be the most important. If the government backs down on this one, then the entire Klein revolution will fail.”

Successive governments, both Progressive Conservative and NDP, spent decades trying to fix the damage those short-sighted cuts had on Alberta’s communities, public infrastructure and public services.

The “blue ribbon” panel was created to provide an endorsement of Premier Kenney’s political program, and, if its recommendations are adopted, could be the most radically ideologically conservative agenda Albertans have seen in decades. It is a far cry from the technocratic conservative agenda meticulously implemented by former prime minister Stephen Harper, who Kenney served dutifully in Ottawa.

Unlike Harper, there is no indication that Kenney is interested in half-measures or incrementalism.

Alberta still has a big revenue problem

The narrow mandate of this panel was a missed opportunity to actually address the fiscal challenges facing Alberta, which includes issues with revenue ranging from low taxation and over-dependence on oil and gas royalty revenues.

Rachel Notley Alberta Premier NDP
Rachel Notley

The report briefly mentions that over-dependence on unreliable natural resource revenue is an issue, but the panel was specifically told not to provide recommendations to fix the revenue problem – only spending. Both MacKinnon and Finance Minister Travis Toews repeated the government’s well-used talking points during yesteday’s press conference – that Alberta has a spending problem and not a revenue problem.

The report frequently compares public sector spending in Alberta with British Columbia, Ontario and Quebec, but only when it comes to government spending. The big problem with comparing Alberta with our provincial counterparts on the spending side is that our revenue – generated through taxes – is significantly lower than every other province.

If Alberta had the same level of taxation as BC, which is the second lowest in Canada, then Alberta could have no deficit and could be collecting billions of dollars in additional revenue each year. 

By not addressing the revenue challenges faced by the Alberta government, the MacKinnon Report shows it was created to justify the spending cuts and privatization of public services that the UCP was likely already planning to implement. Remember, this is a political document.

It’s hard to criticize the MacKinnon Report without also laying some criticism at the feet of the past PC and NDP governments who did not fix Alberta’s revenue problems when they had the chance. Had the NDP been as aggressive in fixing Alberta’s long-standing revenue problems as the UCP will be in attacking government spending, we might not be reading the MacKinnon Report today.

19 replies on “MacKinnon Report endorses Jason Kenney’s political agenda, doesn’t fix Alberta’s big revenue problems”

Michael Binion:
What left in Alberta are responsible for causing Alberta’s finances to be in such a shambles? The NDP are not the culprits for wrecking havoc on Alberta’s financial situation. You, as well as all Albertans should know who is to blame. It was not a so called “left” government, but a right leaning government, that is the culprit. The Alberta PCs, after Peter Lougheed left office. This includes Ralph Klein.
Since 1986, the Alberta PCs allowed rip off royalty rates for our oil, depriving Alberta of $200 billion. Since 1986, the Alberta PCs virtually depleted the Heritage Savings Trust Fund, leaving hardly anything in it. Ralph Klein used it for very costly scandals, like Alpac/Mitsubishi, to help fund his provincial election campaigns, and to help pay off the provincial debt/deficit. Since 1986, the Alberta PCs did the most costliest scandals in Canadian history. The $67 million Gainer’s scandal, the Principle Trust scandal, wasted $110 million on a metal smelting plant screwup, did the now $5 billion, (and growing), Swan Hills waste treatment plant blunder, did the $180 million Miller West Pulp Mill debacle, did the $240 million MagCan scandal, blew almost $500 million, trying to bail out West Edmonton Mall, did the $125 million ambulance amalgamation screwup, did the $100 million A.I.S.H scandal, (which was complete with Ralph Klein and his colleagues, laughing at and mocking the handicapped on T.V), made us pay for the Stockwell Day defamation lawsuit costs, did the $400 million B.S.E bailout failure, did the $34.5 billion electricity deregulation disaster, did the $7 billion PPA debacle, that went with it, wasted $2 billion on carbon capture and storage, wasted money on luxury penthouse suites, wasted money on expensive plane flights, that had no extra passengers, did the $26 billion Northwest Upgrader fiasco, that had $9 billion in added costs, lost $10 billion on Alison Redford’s tobaccogate lawsuit scheme, which she did, and got away with, has expensive lawsuit costs against the Alberta government, in relation to numerous deaths of foster children in Alberta, left Albertans with a $260 billion bill, to clean up abandoned oil wells in Alberta, and so much more. Ralph Klein’s flat tax, lost billions of dollars in revenue from Alberta coffers. As of 2014, corporations in Alberta owed $1.1 billion in inpaid taxes. For many years prior, corporations in Alberta owed very large amounts in unpaid taxes, that the Alberta PCs never collected. After Peter Lougheed left office, the Alberta PCs badly neglected infrastructure in Alberta, leaving Alberta with a $26 billion infrastructure debt. Oil prices took a downward spiral in 2014. This is because of Saudi Arabia and the U.S.A. Oil booms are over. The UCP’s corporate tax cuts have lost Alberta $4.5 billion. The UCP’s costly mistakes are triple that price. Jason Kenney has a history of corruption, and he was doing it in the CPC. The CPC made Canada’s debt nearly $150 billion –
$170 billion, all by themselves, so how can he think he is fiscally smart? The robocalls scandal comes to mind. He cheated to become UCP leader. The PCs bankrupted Saskatchewan, from being so corrupt. Grant Devine had at least 13 cabinet members end up in the slammer. The NDP had the balanced budgets and hefty surpluses, but the Conservatives ruined that very fast. Gordon Dirks was an Alberta PC cabinet minister, who was part of Grant Devine’s bad PC cabinet in Saskatchewan. The Conservatives sure do make a big mess of things.

Joan: It was a fixed panel. They are die hard Conservatives in that Blue Ribbon Panel. More Ralph Klein style cuts will come. We are still paying for those today.

I don’t understand the revenue/spending issue from your perspective. Indeed, if we increase revenue through higher taxation, resource revenues, etc. we can always overcome a spending problem. But if we are spending more per capita than other large population provinces then spending may be excessive, no?

Spending per capita only tells part of the story. Smaller provinces generally spend more per capita on things like Healthcare, Education, Postsecondary and so on. Newfoundland, last time I looked at these comparisons, had higher spending per capita than Alberta. Choosing only the provinces larger than us is to extent cherry picking to make us look more out of line than I think we actually are.

In terms of spending on programs as a % of GDP, Alberta is among the lowest provinces, and the absolute lowest for PSE for example.

So it kind of depends what comparisons you choose.

We can get away with spending a low % of GDP because we are still a very rich province, with a young population. We spend a lot per capita because we are a rich, often booming, province, and pressures in the private sector have, during good times, driven salaries in the public sector quite high.

But I can not understand why stabilizing revenue and making it independent of highly volatile energy prices would not be a priority of any government. Nor can I understand this pathological fear of taxation, and the necessity of Alberta to be, by far, the least taxed province in the country.

Dave C : While I agree with all you say, I believe you’ve missed some important points and beyond those gaps need a bit of the devil’s advocacy, so here goes. First to what you missed. Bench-marking as was done as the only justification for our blue ribbon panel’s findings, is a fraught exercise when you exclude historical and granular detail. Our history tells us that we had a conservative premier once upon a time, who actually laid our future success before us. Hold industry that serves us all close and reap the profits from those industries to help stabilize the financing of our growth. Do not entertain vampire capitalists. That’s my take on Lougheed or what might be termed a doctrine of Alberta conservatism of the past. A benchmark for this? Why (I know you’ll hate it it) Norway. They waited two decades to adopt his formula and haven’t looked backed back since. They now are likely the highest taxed people with the largest sovereign wealth fund at over one trillion. Start late get buy in from your population and show literally everyone else how a resource dependent northern economy can succeed. That should be the first Alberta benchmark until my ashes are scattered! The second should be debt to GDP. I have bemoaned our mismanagement but in spite of all our efforts to elect people who want to offshore the profits of our resources and our daily living expenses, we still have the lowest debt to GDP of any province or state that might attract our current leader’s affections. Again though, remember, we are the number 4/5 energy producer/reserves on the planet and Norway is not. Benchmark that. What’s their population? Do they buy their own military? Their own healthcare? Their own global diplomatic service? The entire operation of a country that was annexed by Germany and maintains a physical border with Russia is a high tax environment that actually serves it’s citizens with a debt of approximately thirty billion paying interest to itself while it currently divests from fossil fuel energy investments. Now, devil’s advocacy. From the “Blue Ribbon” report I glean two things. First, I believe MacKinnon alluding to hospital closures was a plea for sensible restructuring of rural healthcare delivery. To understand what she was talking about you would need to understand what it means to have a hospital in Olds, another one in in Sundry, and yet another one in Didsbury. They all look radically expensive on a per patient stay basis, but would make sense if their stay beds were converted to long term care adjoined to emergency and day clinic. This change would remove bed blocking from Red dear and Calgary while pissing off Jason Nixon! Win win! In my book!

Erwin: The Alberta PCs put in various taxes for Alberta. Taxes on alcoholic beverages, on smokes, with beverage container purchases, with health care premiums in Alberta, on motel stays in Alberta, with VLTs, (known as a regressive type of tax), with electronic purchases in Alberta, and with a carbon tax, that Ed Stelmach put in. Jason Kenney did not get rid of Alberta’s carbon tax, because we still have it. Where did all this tax revenue go? What was it used on? It did not go to other provinces.

The NDP didn’t address the revenue issue because, like Harper, they were interested in half measures and incrementalism.

But seriously, they were in a tough spot — trying to be (and appear) more moderate than skeptical voters feared they would be, and right in the midst of a global energy downturn. Damned if they did, damned if they didn’t. Apart from the carbon tax, they acted very un-NDP-like and look at the backlash — imagine if they would have introduced a PST?

I really don’t agree with blaming previous governments for Kenney’s potential drastic cuts. Yes, perhaps the long serving previous PC government might have found an opportunity to be more candid with voters about structural revenue problems, but I suspect they sensed it was a message voters really did not want to hear. The NDP was busy cleaning up other messes accumulated over the years and mitigating the economic downturn during its shorter time in office.

No, the responsibility for what may be coming rests solely with Kenney and the UCP. In the election they promised modest restraint and downplayed major cuts. I suppose it remains to be seen how far they will go to adopt the report released, but it seems quite likely they will break that election promise. I think Albertans still expect a fairly high level of government services and despite all the whining and moaning over the last year or so, Alberta remains one of the best off provinces in Canada.

Ironically, I think once voters fully experience UCP austerity, it may cause them to more seriously consider whether a better more balanced approach might also involve some structural adjustments to the revenue side. Until then, back to the PC, or now UCP, financial roller coaster – spend when oil prices are high and cut when oil prices are low.

Trickle down economics is a fraud on the people. It causes homelessness and income inequality. The International Monetary Fund has a full report on cause and affect.

Totally agree that this was a predetermined report.

However, two items not mentioned might save millions of education and healthcare dollars.

There was no mention of the duplication of services and administration costs by having large Separate and Public School Boards.

These are anachronisms from a time when religion was bipolar in Alberta.
The Lord’s Day Observance Act was abolished in the 1980’s and immigration has given Alberta a plurality of religions.

The supposed secular public system hosts some of them.

Other provinces have abolished separate school boards and amalgamated them .

If parents want their children to have a religious education this should be done outside of the Provincial Education System.

There are home schooling options.

The Alberta curriculum should have a comparative history of religion component that might increase the knowledge and tolerance of religion among all students.

To bestow one Christian sect with special priviledges over other religions is unfair, expensive, possibly unconstitutionnal and a relic of the past.

A similar argument could be made for having religious institutions involved in healthcare.

The duplication of administrative services and procurement must cost the province millions of healthcare dollars.

Lets take a lesson from the business world and do some merging and cutting of duplicated high priced managers.

The education system should be student outcome focussed as the healthcare system should be patient outcome focussed.

A further item missing from the MacKinnon report was a study of possible cost saving and better health outcomes from having a Pharmacare component to AHS.

People unable to afford their prescriptions often end up clogging the emergency departments and costing thousands in uneccessary emergency treatment because their diagnosed condition went untreated.

This does seem like a no brainer.

The healthcare system we have now is like a three legged stool with two people owning it , but with the stool missing a vital leg.

My thoughts on this are really simple. Blame the Alberta PCs, after Peter Lougheed left office, for virtually depleting Alberta’s finances, from multitudes of very costly scandals and neglect. Also, blame those who allowed this to happen, by constantly voting them in. The UCP is repeating this.

it’s so much worse than i feared. bye bye progress on child poverty. sorry babies. shouldn’t have been born in alberta

Have to disagree with your final point. If the NDP government had been more “aggressive” in “fixing” the revenue problem i.e. raising taxes, we’d still be reading the MacKinnon report, except that it would include a section on the damage done to Alberta’s economy by higher taxation. Also, whatever measures had been introduced by the Notley government would have been repealed, and the Opposition would have fewer members than it does at present.

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