Former NDP finance minister calls on Alberta New Democrats to cut deficit spending
'The problem is going to get worse. It's like a snowball going down a hill,' says Janice MacKinnon
Saskatchewan's former NDP finance minister has some blunt fiscal advice for Alberta's New Democratic government: come up with a deficit reduction plan.
Janice MacKinnon, who balanced Saskatchewan's budget in the mid-1990s after years of red ink, says Alberta needs to get serious about cutting its ballooning deficit.
MacKinnon, along with the University of Calgary's School of Public Policy's Jack Mintz, released a report Thursday warning the province against allowing its deficits and debt to rise unchecked.
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"The problem is going to get worse. It's like a snowball going down a hill — the problem is going to get worse and worse the longer you delay," said MacKinnon at the study's release in downtown Calgary.
Alberta's debt is projected to soar to $45 billion in the coming year as the NDP government continues to borrow heavily to finance services such as health, and build infrastructure.
The NDP government's 2017-18 budget did not offer specific details about how the province plans to return to a balanced budget or to start paying off the debt.
The government has said it may return to balanced budgets by 2023-24 at earliest.
Deficit higher than projected, says study
The School of Public Policy's report casts doubt on the province's deficit projections, suggesting Alberta's financial predictions rely on overly optimistic oil prices.
The study concluded that Alberta's accumulated deficit over the next three years could total $38.9 billion — $11.7 billion more than currently projected.
"In my view, there's no way that the province is going to be able to move to balance [its budget] by 2024," Mintz said.
"Alberta is not a sustainable path and it needs to do that. And it can do that by looking at balancing the budget in a realistic way over time," he added.
The study suggests a number of things to slow Alberta's deficit, including applying the brakes to infrastructure spending, curbing public sector salaries, restructuring government services such as health — and reforming Alberta's tax regime to boost economic growth.
'Common sense policies'
The report estimates that Alberta could save $12.7 billion a year by adopting what its authors' call "common sense policies," such as performing more surgical procedures in specialized private clinics instead of public hospitals.
Proposed policies and their projected savings include:
- Establishing public sector bargaining mandates to curb public service salaries: $1.5 billion over three years.
- Slowing infrastructure spending: $4.6 billion over the next three years.
- Restructuring government services to make then more efficient and reducing Alberta's per capita spending levels to other big provinces: $6.6 billion annually.
MacKinnon singled out Alberta's health care system, stressing that province does not have better health outcomes than the rest of the country.
"Alberta spends significantly more per capita than other big provinces on health care," said MacKinnon.
"If they were at the same levels as the other provinces, they'd spend $3.8 billion less. There's no reason for it to spend more."
Finance minister responds
In an email statement to CBC News, Alberta's Finance Minister Joe Ceci stressed the government continues "to have Albertans' backs" as the province recovers from the recent economic recession.
Instead of making "severe cuts to programs and services" in the wake of a drop in oil prices, Ceci said the NDP government "decided to protect the services that Albertans rely on."
Ceci added the the government has "found efficiencies of $500 million over the last two years and are on track to find another $400 million this year."
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