Opinion | MacKinnon report gives Kenney roadmap for Klein-style cuts
Former premier used 'spending problem' argument in 1994 to slash $950M in government spending
Reading the sky-is-falling report from the Blue Ribbon Panel on Alberta's Finances should give you a dreaded feeling of deja vu.
The report — and the rhetoric surrounding it — sound remarkably similar to the political arguments made by then-premier Ralph Klein 25 years ago to invoke massive cuts to government spending and services.
Back then Klein summed up the state of the government's finances by saying, "We don't have a revenue problem, we have a spending problem."
At the news conference to release the blue ribbon report on Tuesday, panel chair Janice MacKinnon channeled the ghost of Klein by stating, "It's not a revenue problem but a spending problem."
Finance Minister Travis Toews said the same thing. And Premier Jason Kenney has said "we don't have a revenue problem but a spending problem" so many times you have to think possession by spirits is a real thing.
Klein used his "spending problem" argument in 1994 to slash $950 million from government spending. He also chopped kindergarten hours in half, trimmed transfers to municipal governments and kicked 30,000 employable welfare recipients off benefits.
Hundreds of government workers lost their jobs and health care premiums went up, as did university tuitions. He privatized some government services including liquor stores and licence registries.
Kenney hasn't said what he'll specifically do when he introduces his first provincial budget near the end of October but it's clear he wants to cut spending and he'll be using the MacKinnon report as both road map and political cover.
MacKinnon says the government just can't freeze spending at the current $48 billion a year but has to cut spending by $600-million if it wants any hope of balancing the budget by 2022-23.
Among her report's recommendations: make greater use of private clinics to deliver health services; renegotiate fees paid to doctors and, if need be, use the hammer of legislation to bring doctors in line; end the tuition freeze on post-secondary students; assess the future of post-secondary institutions that "do not appear to be viable"; and use legislation to set wage levels in the public sector.
Overall, the report is recommending the government drastically re-evaluate what services it provides, how it provides them, and how it pays for them.
If Kenney follows through on the recommendations, his supporters will see this as an election promise kept.
Albertans who like their government services will see this as a step backward. Public sector unions will see this as a declaration of war.
The MacKinnon report provides Kenney with plenty of ammunition for that war, just as he asked.
Kenney told the panel to ignore an overhaul of the taxation system and focus on spending.
The result is a report that talks a lot about the Alberta government's high per capita spending compared with the governments of British Columbia, Ontario and Quebec.
The report is silent on how Alberta taxes are much lower than any other province. Alberta could more easily balance its budget, without the shock of massive cuts, through a combination of moderately reduced spending and moderately increased taxation. But that's not what Kenney wants.
There is a glaring irony here. While the Kenney government happily blames the former one-term NDP government for many of the province's fiscal woes, the MacKinnon report points the finger squarely at previous conservative governments.
"There are many current and underlying factors driving the debt and deficits," says the report.
"The most obvious one is that for years governments have spent more than they have collected in taxes, spending all of the province's non-renewable natural resource revenue in boom years and leaving the province with sizeable deficits when the economy slows."
Thanks to an oil-price-driven recession, Alberta never enjoyed any "boom years" under the NDP. The Conservatives certainly did. And, as the MacKinnon report suggests, previous Conservative governments put the province on a trajectory for chronic deficits and debt. The NDP came late to the party.
The old Conservatives (Progressive Conservatives) created many of the fiscal problems facing Alberta today and it's the new Conservatives (United Conservative Party) who are insisting they are the ones who can find solutions.
That might seem ironic or laughable.
But it's the same argument Klein used successfully 25 years ago. He blamed the old Conservative government of Don Getty for creating the "spending problem" and said only another Conservative government could fix it.
Klein did. He won election in 1993 and balanced the budget in 1995. But what really boosted his popularity and kept him in power election after election was a boom in energy prices, specifically natural gas. That allowed him to curtail the curtailments and start spending again.
Those boom days are over.
Kenney might be able to cut like Klein. But Albertans don't like politicians who only cut. They like politicians who eventually start to spend. Just ask the ghost of Ralph Klein.