AB Today – Daily Report May 8, 2019

Quotation of the day

“The fiscal situation appears to have deteriorated since the NDP’s last quarterly update.”

Premier Jason Kenney warns his new “blue ribbon panel” may uncover some fiscal woes.

Today in AB

On the schedule The new UCP cabinet meets this afternoon in the legislature’s cabinet room.

The province’s NDP caucus will be sworn in next Monday, May 13, in the legislative chamber. Official Opposition Leader Rachel Notley is expected to announced her shadow cabinet by the end of the week.

The UCP MLA-elects who are not a part of cabinet will be sworn in on the first day of the upcoming session, May 21.

The Speaker election will take place on May 21; the government’s throne speech will be delivered on May 22.

Kenney appoints blue ribbon panel to dig into province’s finances, says fiscal situation has ‘deteriorated’ since NDP’s last economic update

Premier Jason Kenney has followed through on his promise to appoint a third-party committee to do a “deep dive” into Alberta’s finances.

The six-member “blue ribbon panel” will be chaired by former Saskatchewan NDP finance minister Janice MacKinnon and will have until August 15 to report back on “areas to eliminate waste, duplication and non-essential spending.”

Kenney and Treasury Board President Travis Toews announced the panel’s membership Tuesday morning.

“Alberta is in a very deep fiscal hole,” Kenney said. “This just cannot continue.”

Kenney told reporters the panel’s appointment is the first step towards eliminating the $6.9 billion deficit and “reversing the province’s dive into debt” — while making fiscal room to fund his new government’s priorities.

MacKinnon said she is the woman for the job.

“I know what it means to practice fiscal discipline,” MacKinnon said. “When I was minister of finance in Saskatchewan I actually faced the prospect of a province going into bankruptcy because for years governments ignored the warning signs of mounting debts and deficits, and failed to act.”

MacKinnon, who also serves as board chair for Investment Saskatchewan and for the Institute for Research on Public Policy, said Alberta doesn’t have to choose between “draconian cuts” and out-of-control spending, suggesting savings could be found by restructuring programs.

She pointed to the province’s $1.9 billion annual debt-financing costs, saying the province could free up more money for services by reducing spending on this line item. According to the NDP’s most recent fiscal update, published in February, the province’s debt sits at $58.8 billion and was projected to grow to $95 billion by 2024. The UCP disagrees with this projection; its platform’s third-party economist forecast debt would rise to $101 billion by 2023-24.

In the February fiscal update, then-finance minister Joe Ceci pegged the annual deficit at $6.9 billion — but Kenney said he received a briefing from the finance ministry during the transition period suggesting things aren’t that rosy.

“The fiscal situation appears to have deteriorated since the NDP’s last quarterly update,” Kenney said.

Along with finding efficiencies, the panel is also tasked with laying out a path to a balanced budget by 2022-23 that doesn’t include raising taxes; analyzing the business investment climate in Canada and its impact on Alberta’s economy; and providing advice on “department and

agency expenditure trends and cost drivers” and the province’s existing budgeting, fiscal planning and public reporting processes.

Ex-premier Jim Prentice shifted the province’s financial reporting standard to a consolidated financial reporting model in 2015, which caused the province’s deficit to leap from $6.4 billion to $7.2 billion.

Kenney has also promised to strike a panel to advise on the optimal tax structure for the province.

Everything old is new again Late former premier Ralph Klein famously established a similar financial review commission after coming into power in 1993. When Klein entered office the province was running a multi-billion deficit. The commission’s recommendations led to two years of massive austerity that included a 20 per cent cut to program spending. Klein’s government quickly eliminated the deficit, posting its first of many consecutive surplus budgets by 1994-95.

Kenney praised the Klein-era commission’s ability to inform government policy — but said its successes were ultimately reversed by future overspending governments.

“Once the budget had been balanced and debt had been paid down and there were some years of big revenues coming from non-renewable resources, there was no longer a strong incentive to maintain fiscal discipline,” Kenney said. “Sadly, sometimes these lessons have to be re-learned.”

Asked why the government does not use the taxpayer-funded auditor general’s office to conduct its fiscal deep dive, MacKinnon said the auditor general’s scope is very limited and that the panel can tackle things outside of his purview.

In appointing the panel, Kenney also seems to be, once again, taking inspiration from of Ontario Premier Doug Ford’s playbook. Less than two weeks after being sworn in last summer, Ford’s government appointed a so-called “Independent Financial Commission of Inquiry” and ordered an external line-by-line audit of all government spending. The commission ultimately determined the province was operating at a $15 billion deficit, up from the $11.7 billion the former Liberal government had outlined in its budget.

Critics say the UCP is ‘passing the buck’ on making tough choices NDP MLA Deron Bilous said Premier Kenney’s blue ribbon panel is an attempt to deflect the blame for impending cuts to services.

Public Interest Alberta executive director Joel French agreed, saying Toew’s mandate letter to the panel calls for no new tax hikes but fails to mention Kenney’s campaign pledge to protect frontline workers from cuts.

“It’s like saying to your doctor, ‘I need you to tell me how to improve my health, and I’m willing to listen to any solutions that don’t involve eating right or exercising,’” French said.

So, who else is on the panel… The panel’s vice-chair, Mike Percy, is a former Alberta Liberal MLA and the ex-chief of staff to former premier Jim Prentice. He was also dean of the University of Alberta’s Alberta School of Business.

The panel’s other members include Kim Henderson, who was formerly Britsh Columbia’s top public servant. She served as cabinet secretary, DM of finance and DM to former Liberal premier Christy Clark. She is currently a principal at Sproat Advising.

Bev Dahlby advised the UCP during the election campaign. The University of Calgary economist priced out the impact of the UCP’s proposed four per cent corporate tax cut. He also serves as the research director for the University of Calgary’s School of Public Policy and was a former member of the Fraser Institute.

Dave Mowat is a former president and CEO of ATB Financial.

Kenney described panel member Jay Ramotar as the “deputy minister of everything.” Ramotar previously served as DM for Service Alberta, justice, health, infrastructure and transportation, and treasury board.

Today’s events

May 8 at 11 a.m. — Edmonton The Freedom Conservative Party’s former leader Derek Fildebrandt will announce the party’s interim leader and new president on the steps of the legislature.

May 8 at 1 p.m. — Edmonton The newly sworn-in cabinet will meet for the second time, this time in the cabinet room of the legislature.

Topics of conversation

● Environment and Parks Minister Jason Nixon has confirmed he will scrap the former NDP government’s park management plan for Bighorn Country. ○ Nixon told CBC Tuesday the province will instead refocus on land use planning already underway as part of the North Saskatchewan Regional Planning process.

● Bloomberg reports Prime Minister Justin Trudeau is likely to give the Trans Mountain pipeline expansion the go ahead, per “officials familiar with the matter.” Trudeau’s cabinet has said it will deliver its final decision by June 18 — but the deadline could potentially be extended.

● Medicine Hat UCP MLA Drew Barnes penned a letter to Health Minister Tyler Shandro asking for a reallocation of funds set aside for a new safe consumption site in the city. ○ Barnes said constituents and stakeholders in his community want to see the money redirected to street counselling services and detox facilities and called for the safe consumption site to be put on hold until more consultations can be done. ○ “Drug usage is an epidemic that has sadly been growing in our community, but this is not the answer!” Barnes wrote in an accompanying Facebook post.

News briefs — Governmental

Agriculture and Forestry Minister declares forests week, says it’s an important part of the ‘fight back strategy’ With $4.1 billion in annual exports and 40,000 Albertans employed in the forestry sector, Agriculture and Forestry Minister Devin Dreeshen used an Alberta Forest Week announcement to tout his party’s “fight back strategy.”

“Forestry is a significant driver of the province’s economy, which is why it is part of the government’s ‘fight back strategy’ against foreign-funded attacks on Alberta’s resources,” Dreeshen said in a news release.

He said the new government would work to advance the interests of the province’s forest sector by “fighting for Alberta’s proper national share of trade-allocated export quotas and improving export opportunities, especially in Asia.”

Appointments and employments The new government has named the membership for two key committees, both of which meet for the first time Thursday.

Treasury Board Committee ● Finance Minister Travis Toews (Grande Prairie—Wapiti); ● Transportation Minister Ric McIver (Calgary—Hays); ● Associate Minister of Red Tape Reduction Grant Hunter (Taber—Warner); ● Associate Minister for Natural Gas Dale Nally (Morinville—St. Albert); ● Energy Minister Sonya Savage (Calgary—North West); ● Economic Development, Trade and Tourism Minister Tanya Fir (Calgary—Peigan); and ● UCP MLA Jason Stephan (Red Deer—South).

Legislative Review Committee ● Attorney General Doug Schweitzer (Calgary—Elbow); ● Environment and Parks Minister Jason Nixon (Rimbey—Rocky Mountain House—Sundre); ● Labour and Immigration Minister Jason Copping (Calgary—Varsity); ● Health Minister Tyler Shandro (Calgary—Acadia); ● Community and Social Services Minister Rajan Sawhney (Calgary—North East); ● Municipal Affairs Minister Kaycee Madu (Edmonton—South West); and ● UCP MLA Dan Williams (Peace River).

AB Today is written by Catherine Griwkowsky, reporting from Alberta's legislative press gallery.

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