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Old Posted Nov 19, 2016, 1:02 AM
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Quote:
Originally Posted by MalcolmTucker View Post
I guess the big thing for me about spending is what would you cut? The core civil service is barely larger than during the modern low in the late 90s and everyone out in agencies is delivering services. Most departments save for health, education, advanced ed and human services have had their budgets frozen since 2012. Most staff have had at least three years of zeros and more of under inflation increases.

We have the fiscal advantage of waiting a bit longer before making informed choices about the $5 or so billion structural deficit - I do want to see plans for taxes, cuts, and changes to solve it, not just imaginings and fantasy fixes.


The NDP has a credible plan to close the gap by 2022 - 2024, of holding increases down and letting existing revenue streams catch up. Going faster means using the three tools above. I think most including the NDP want to go faster, but want to wait to see if this is a forever situation we are in before acting.


I also expect any party that wants to run the province to be serious about carbon as well. Show me a plan that has less impact on the economy but achieves a similar goal - the options are reduce or offset/buy credits. We can do the first by pricing, regulating, and/or incentivizing. We can fund the incentives for reductions or offsets/credits by pricing or with other revenues. I think doing little or nothing has a great price not just environmentally but for our ability to sell our products in increasing volumes outside of PADD 2 and the price discount we 'enjoy' there.
A few points:

1) AB has plenty of room to reduce health and especially education spending. It vastly out spends all Provinces per capita on education. Some of that is due to younger demographics but spending has still grown much faster than school enrollment plus inflation. On health, AB spending is similar to NL and SK, which have poorer, older and more dispersed populations. BC and ON spend considerably less and do not experience meaningfullly worse outcomes.

2) Even with freezes since 2012, AB's public sector is still far more bloated than those in other provinces. A teacher, for example, earns 10-20% more in Calgary than they would in Toronto or Vancouver

3) Freezes can rake many years to restore balance. For example when I worked as a medical lab tech in the early 90:s, the HSAA pay scale had been frozen since 1982. Even after the 5% roll backs in 1993, the scale in AB was still roughly 5‰ ahead of BC or ON. I also worked for AB Health under a AUPE contract that had been frozen since 1983 and still vastly out earned counterparts in other provinces. The City was even more restrained. Under Mayor Duerr employment fell slowly between 1989 and 2001. Wages were mostly flat. The legacy of that can be seen today in the almost complete absence of Gen X'ers working for the City. For example, the police and fire departments hardly hired anyone during the 90's.

4) As construction shares larfely the same resource poosl as O&G development, Infrastructure costs have declined substantially. Combined with reduced population growth, AB could easily cut 15.to 20‰ from the capital budget with negligible impact

5) The NDP is not on track to a balanced budget. It's tax increases have not brought in additional revenue. Each budget update presents ever deteriorating finances.

6) AB sits on a massive pool or cheap and largely stranded natural gas reserves. Power generation would likely have transitioned away from coal with no government action. The NDP's climate actions are largely symbolic and unnecessarily expensive.

7) The structural deficit us more like $10B. Coincidentally if AB spent the same per capita as BC that deficit would be sub $2B

8) The luxury or waiting to acknowledge AB's dire finances is rapidly disappearing as the bond market turns. Expect significantly higher interest rates and worsening deficits due to rapidly rising interest payments

The solution would be definitely action to restore finances and eventually a friendlier investment climate:

1) Absolute hiring freeze. The deficit would be substantially lower if AB has froze hiring in 2014. Instead the provincial payroll has grown by tens of thousands

2) Present a - 5% wage roll back followed by 4 years of freezes and substantial cuts to pensions and benefits as union contracts expire. The government has all the negotiating power as the public backlash to strike action would not be sympathetic. A Calgary teacher with 6 years education and 10 years experience earns over $100k per year plus generous time off and benefits. The real kicker is the pension plan which awards 75% of a teacher's best 5 years of salary. Given that a teacher could be retired for as long as they worked, the all in compensation approaches $200k which would make it close to the highest paying profession. The thousands of Education new grads each year and slowly rising school enrollment would suggest supply would equal demand at much lower levels or compensation

3) The US is likely headed towards lower corporate taxes and less activist climate policy. AB will almost certainly follow to remain competitive
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