Pre-Budget 2018.Pdf

8 The Canadian Taxpayers Federation (CTF) is a federally ABOUT THE incorporated, not-for-profit citizen’s group dedicated to lower taxes, less waste and accountable government. The CTF was CANADIAN founded in Saskatchewan in 1990 when the Association of Saskatchewan Taxpayers and the Resolution One Association TAXPAYERS of Alberta joined forces to create a national organization. FEDERATION Today, the CTF has 130,000 supporters nation-wide. The CTF maintains a federal office in Ottawa and regional offices in British Columbia, Alberta, Prairie (SK and MB), Ontario, Quebec and Atlantic. Regional offices conduct research and advocacy activities specific to their provinces in addition to acting as regional organizers of Canada-wide initiatives. CTF offices field hundreds of media interviews each month, hold press conferences and issue regular news releases, commentaries, online postings and publications to advocate Canadian Taxpayers Federation on behalf of CTF supporters. CTF representatives speak at PO Box 14043 Richmond Road PO, functions, make presentations to government, meet with poli- Calgary, AB ticians, and organize petition drives, events and campaigns to T3E 7Y7 mobilize citizens to affect public policy change. Each week CTF offices send out Let’s Talk Taxes commentaries to more than Authored by: 800 media outlets and personalities across Canada. Colin Craig, Interim Alberta Director Any Canadian taxpayer committed to the CTF’s mission is welcome to join at no cost and receive issue and Action Up- Phone: 1-800-661-0187 / Cell: 403-909-2055 dates. Financial supporters can additionally receive the CTF’s flagship publication The Taxpayer magazine published four Email: [email protected] times a year. Website: www.taxpayer.com The CTF is independent of any institutional or partisan affilia- tions. All CTF staff, board and representatives are prohibited from holding a membership in any political party. In 2015-16 the CTF raised $4.7-million on the strength of 29,102 donations. Donations to the CTF are not deductible as a charitable contribution. - 2 - TABLE OF CONTENTS Executive Summary 4 Summary of Recommendations 5 Part I: Big Picture Goal – Balance the Budget by 2021-22 6 Wild spending, wild deficits 6 Trouble on the horizon 8 Balanced budget by 2021-22 9 Balanced budget scenario 1: Immediate restraint 10 Balanced budget scenario 2: Restraint beginning in 2019-20 10 Part II: Ten Steps Towards More Cost-Effective Government 11 Communication 11 Lead by example 12 Restore investor confidence 12 Focus on core services, urgent needs 13 Contract out/managed competition 14 Gainsharing 15 Eliminate corporate welfare 16 Salaries and benefits 17 Streamlining and partnerships 19 Broad spending reduction 20 Part III: Other Recommendations 21 Eliminate the carbon tax 21 Equalization/reform 21 Reverse beer tax hikes and subsidies 22 No new taxing powers for municipalities 22 No regressive sugar/fat/soda taxes 23 No funding for a Calgary arena 23 Introduce a legislated spending cap 24 Part IV: Budget Modeling 25 Balanced budget scenario 1: Immediate restraint 25 Balanced budget scenario 2: Restraint beginning in 2019-20 26 - 3 - Sustainable Government, Prosperous Future EXECUTIVE SUMMARY Financially speaking, the Alberta government is on the wrong Former Saskatchewan NDP Finance Minister Janice MacKin- track. non put it best when she noted: During the current term of office, the Notley government is “Alberta is becoming a more difficult and more expensive on pace to more than triple Alberta’s debt and continue to place to do business … you’ve got to change that.”1 increase spending at an unsustainable rate. - Janice MacKinnon Currently, 19% of the bill for services provided to Albertans today is being put aside for the next generation to pay in the Based on results from CTF supporter surveys in 2016 and form of higher debt. Not only is the situation reckless, it’s 2017, this pre-budget report focuses on how to curtail ex- especially unfair for young Albertans. penditures, balance the budget by 2021-22, bring back the Alberta Advantage and restore investor confidence. The province’s rapid increase in debt, and refusal to restrain spending, has already led to several credit rating downgrades While efforts to balance the budget and restore the Alber- and a significant increase in annual debt interest charges. ta Advantage will not be easy, contrary to what the current government claims, these objectives can be achieved without During the Notley government’s term in office, annual debt significant service disruptions. What we need is for the gov- servicing costs are expected to increase from $0.8 billion to ernment to make some prudent, difficult decisions to get this $2.3 billion. That means an extra $1.5 billion in tax dollars will great province back on track. flow to bondholders in Toronto and New York each year instead of being used to provide health care and other services to Albertans. Ironically, while the premier has spoken repeatedly about “protecting” health care, her government’s rapid accumulation of debt, and ballooning interest costs, have hurt the long-term sustainability of the health care system as our nation con- tinues to grow older. This enormous demographic change is expected to have a significant impact on health care costs and government revenues as we move forward. Tax increases over the past two years, along with unfriendly regulatory measures (eg. royalty review, 20% general business income tax hike, etc.), have eroded Alberta’s competitiveness. These changes have had a negative impact on private sector investment, job growth and even long-term tax revenue. 1. October 30 interview with Danielle Smith on 770AM (Calgary) - 4 - SUMMARY OF RECOMMENDATIONS 1. Develop a strategic communications plan to educate the 11. Downsize the civil service by 10% and reduce government public and government employees so that they under- employee compensation by 10% stand the importance of reining in spending 12. Reform government employee pensions to address their 2. Lead by example by reducing the size of cabinet, reduce unsustainable nature cabinet and top-up pay by 40% and MLA pay by 5% until the budget is balanced 13. Establish a committee to investigate opportunities for streamlining government activities and potential partner- 3. Reform MLA vehicle expense rules and curb unnecessary ships between governments travel 14. Push for equalization reform using whatever tools neces- 4. Work to restore investor confidence by immediately eliminat- sary (eg. referendum, constitutional reference case, etc.) ing the carbon tax, expand the Alberta Taxpayer Protection Act and send other positive signals to global markets 15. Reverse the beer tax hikes and eliminate the subsidy to breweries 5. Announce, very publicly, two goals for the government: a 10% general business income tax rate and single-rate 16. Avoid new revenue-sharing agreements with Calgary and 10% personal income tax by 2024 Edmonton and continue to reject new taxing powers for cities (without first holding citywide referenda) 6. Develop a list of all government services, categorize each as “core” or “non-core,” “in-house,” “third party” or 17. Do not introduce new sugar/fat/soda taxes “mixed” and discontinue non-essential services 18. Do not fund a new NHL arena in Calgary 7. Stretch the province’s four-year capital plan over five years. 19. Legislate a spending cap so that annual program spending cannot increase by more than the combined growth 8. Pursue managed competition and contracting out to deliv- rates of Alberta’s population and inflation er savings for taxpayers 9. Introduce a gainsharing program in Alberta to incent employees to suggest cost-saving ideas 10. Conduct an exhaustive review of government operations, locate corporate welfare programs and eliminate them - 5 - Sustainable Government, Prosperous Future PART I BIG PICTURE GOAL – BALANCE THE BUDGET BY 2021-22 The Alberta government’s current fiscal situation is not sus- It’s true the Notley government only assumed power in 2015 tainable, nor is it fair for young Albertans who will inherit the and her party inherited a government that was already on an province’s ballooning debt. unsustainable spending trajectory. However, the new government exacerbated the problem by continuing to increase In our July 2017 survey of CTF supporters, 73.2% of spending – in essence, stepping on the gas pedal of a car respondents indicated that balancing the budget by 2021- headed towards a cliff. 22 (without raising taxes) should be a “high priority” for the government while another 20.9% indicated it was a Instead of restraining spending, the Alberta government is on “somewhat high” priority. pace to increase expenditures by 18.6% by 2019-20 (since their 2015-16 budget). Had it merely frozen spending for just This section discusses the province’s recent spending history, three years, beginning in 2016-17, the 2019-20 operating a major fiscal pressure on the horizon and two scenarios to budget would be in a surplus position (according to the gov- return to balance. ernment’s estimates)3: Wild spending, wild deficits: Table 1: The Notley Government’s 2017 Budget Plan World oil prices have dropped significantly in the last few years 2016-17 2017-18 2018-19 2019-20 and that development has had a significant impact on the Revenues $41,435 $45,015 $47,643 $51,782 Alberta government’s finances. However, the root cause of the Expenses $51,097 $54,859 $56,652 $58,009 province’s budgetary problems actually lies on the expendi- Source: 2017 Alberta budget ture side of the ledger. According to a 2017 report by the Fraser Institute, provin- This approach ignores large increases to the province’s debt cial government spending increased by an average of 7.1% that are driven by capital spending (which need to be account- between 2004-05 and 2015-16 – nearly double the combined ed for to truly balance the budget), but it shows the govern- rate of inflation plus population growth.2 ment could have made great strides towards a balanced budget had it controlled spending earlier in its mandate.

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