Generally when governments appoint blue-ribbon panels, they mostly know what they’ll be getting back in the final report. More often, what these task forces ultimately provide is political cover for tough decisions that governments need to take.
In that regard, Alberta Premier Jason Kenney’s wise choice to have a panel led by Janice MacKinnon, the respected former Saskatchewan NDP finance minister, is no different.
Ms. MacKinnon and her team of notable financial and economic thinkers have been asked to look at the spending side of Alberta’s ledger sheet. Some are disappointed the group won’t also be advising on revenue matters, namely, the need for some type of sales tax to shore up funding shortfalls. But Mr. Kenney promised not to bring in a sales tax and is certainly not about to break that pledge in his first month in office.
Besides, there is more than enough to investigate on the spending side alone. The reality is, governments in Alberta have mostly done a terrible job of exhibiting restraint, even during bad times. The recently deposed NDP government racked up historic levels of debt on the dicey assumption oil prices would eventually return to levels from whence they came and that all would be fine again.
Yet, almost no one is predicting oil prices to ever hit $100 a barrel oil again.
For those wondering where Ms. MacKinnon’s team is likely to go with its report, a study the panel chair did with economist Jack Mintz for the University of Calgary two years ago provides a useful blueprint. It outlines a number of different ways the province’s balance sheet could again be viewed without wincing.
The authors’ paper begins from the premise that for too long Alberta has outspent – in some cases grossly so – its provincial counterparts on everything from health care to infrastructure. If expenditures were brought more in line with provincial averages, it would result in billions in savings alone.
The report noted that the average per capita spending level of the three other largest provinces in Canada – Ontario, Quebec and B.C. – was $9,233 in 2017-18 compared to $12,409 for Alberta. That’s a differential of $3,175, which adds up to a whole whack of money in the end. Ms. MacKinnon and Mr. Mintz estimated that Alberta could reduce its annual costs by $6.6 billion if it could cut that gap by half.
The pair also looked at infrastructure spending.
Alberta has a fast-growing population, which creates demand for infrastructure. But again, on a per capita basis, infrastructure spending has seriously outpaced other provinces. By bringing its outlays to something more in line with the three provinces mentioned, Alberta could save $4.6-billion over three years, according to the report.
Public sector compensation has always been a contentious subject in the province.
Over the years, salary increases have always been the preferred route over confrontations with public sector unions. (While provinces like B.C. have stared down these threats and given public sector unions contracts with zero increases over multiple years). According to the MacKinnon-Mintz report, Alberta could have saved $2.1 billion in 2016 alone if its public sector salaries were the same as the average of B.C., Ontario and Quebec.
Health care has also been another sector that has long had a target on its back. Albertans do not get results that justify or reflect in any way the amount of money being spent by government. The province spends $6,995 per capita on health care, which is almost $1,000 more than the average of the three other most populous provinces. That means Alberta is spending almost $4-billion a year more than the amount averaged by B.C., Ontario and Quebec – with outcomes, in many cases, that aren’t as good.
(It’s also noted by the authors that because Alberta has a younger population, its health care costs should be less expensive than more.)
There are other examples in the MacKinnon-Mintz study that provides the Kenney government with opportunities to cut costs, such as reforms that would allow government to deliver programs more efficiently and cheaply. Some of the recommendations in the report are relatively painless, while others would take more gumption on Mr. Kenney’s part to enact.
But the Premier’s panel is a positive first step. It’s acknowledging there is a problem and that something has to finally be done about it.
Gary Mason