Q&A with Janice MacKinnon, architect of proposed path to balanced budget in Alberta
Former Saskatchewan finance minister explains reasoning behind panel's recommendations
A new government report is calling for sweeping changes to the way services are delivered in Alberta, laying the groundwork for a $600-million cut to the operating budget and steep reductions in capital spending.
The blue ribbon panel publicly released 26 recommendations on Tuesday. They touch all areas of government spending, including health, education, public sector wages and municipal funding.
- Read the full report here.
The panel was chaired by former Saskatchewan finance minister Janice MacKinnon, who joined Calgary Eyeopener guest host Doug Dirks to explain the reasoning behind those recommendations.
Below is an edited transcript of that conversation.
Q: You say that Alberta "has a spending problem, not a revenue problem." What do you mean by that?
A: If Alberta spent per capita what the other large provinces spend, it would spend $10.4 billion less, and it wouldn't have a deficit. Alberta spends more across the board everywhere we looked.
But the results aren't better. In some cases, the results are actually worse. For example, wait times for health procedures in Alberta are worse.
So what you have to do is get your spending in line not just by cutting, but by transforming the way you deliver services to do what other provinces are doing to get better results at a lower cost.
Q: Let's start with your proposal then for health care. What are you recommending?
A: What we're recommending — and this is actually better health care, too. It's better for the patient. Don't focus as much on hospitals, the most expensive place to treat people. Use more community-based services. Saskatchewan uses private clinics for some procedure — 26 per cent cheaper. More convenient for people. They don't have to go to the hospital, they just go to another location.
Use the full range of health care professionals, not just doctors — the most expensive people to use — but nurse practitioners.
And also, we have to change the way that we pay doctors. We're behind the curve. Other provinces have moved away from fee for service to other payment schemes that are not as expensive and more suitable to the the health system we have today, where maybe you don't have to see a doctor; you should be seeing a physiotherapist or whatever.
And so a broad range of changes that'll take two or three years probably to implement to make this system closer to the best one in Canada, which is in Ontario. It's cheaper. People are healthier and the wait times are shorter now.
Q: [Former premier] Ralph Klein came up with a public-private health care idea called The Third Way, and it never got off the ground. What makes this time different, do you think?
A: One of our main recommendations is with the union contracts, which restrict what you can do and make it more costly to perform procedures. But this is beyond health, too. More services to be delivered by not-for-profits or by private clinics. But the caveat is, if you do it, you have to do it carefully.
And you need a really good public service to see that you have the right contract with the right conditions, and it can work. But if you don't — and Alberta has had experience where they haven't had the right contracts and conditions — then there's problems.
So it is totally dependent on the public service doing a good job of negotiating what is in the public interest with the not-for-profit for the private institutions or entities.
Q: Your panel is also calling for a reduction in K-to-12 school administration costs from about 25 per cent of overall education spending to 17 per cent, which is in line with B.C. And you're recommending that it comes out of administration and governance — 8 per cent. How are you going to find that?
A: We said that the government should look at the funding formula, because now the funding is just based on enrolment — which should be one factor. But one of the problems is the funding doesn't reward or incentivize co-operation. So you have districts duplicating services. No co-operation of procurement, no co-operation on transportation, because there's no reason to.
And so we say change the funding formula and move closer to where British Columbia is. Are you actually going to get to exactly where that other province is? Maybe not. But close that gap. I think that changing the funding formula to reward school districts for co-operating and sharing services is one of the ways that you do that.
Q: What kind of changes are you proposing for post-secondary institutions?
A: Well the issue there is you have 26, which is a huge number for a province this size. Some of them have good results; their graduation rates are good. Some of them are very poor. Some of them are small. So the province has to look at them and say, "Let's assess the long-term viability of all these institutions."
Now what they do with them, that's up to the government. But that's a question that has to be asked. Do they have to co-operate? Do they have to eliminate? We don't conclude the answer, but we say, if you have that many and some of them are very small, and some of them are struggling, look at them now, and discuss with them what a future looks like.
Q: You're also recommending lifting the freeze on tuition fees at post-secondary institutions.
A: Yes. If you look at Alberta relative to Ontario and British Columbia, the post-secondary institutions rely much more on government grants than in the other two provinces. So we're saying go closer to what the other provinces are, and allow the universities to decide what their tuition should be.
Freezing tuition sounds good, but if you're not putting huge amounts of new money into the institutions, it can actually just lead to a decline in the quality of what the students are getting. Lift the tuition freeze. All of the institutions and the government have programs to assist students that need financial assistance.
Q: Your plan promises to balance the budget in four years. What's the rush?
A: I think four years is a reasonable time frame. First of all, look at salary restraint. We're saying that. We don't say rollbacks; we say salary restraint. You can do that for a period of time because it's an unusual time. You're trying to balance the budget.
But you can't drag restraint out over a longer period of time. Four years is a good time frame though, because some of the changes, like the ones I talked about in health, can't be implemented in one year or even probably two.
So four years allows you enough time to transition to a new kind of service delivery, but it's short enough that the province knows that there's an end date. And after you balance the budget, then you have money to reduce taxes or invest in programs.
With files from the Calgary Eyeopener.