Freedom of Information Update
Total Page:16
File Type:pdf, Size:1020Kb
LESSONS FOR NEWFOUNDLAND AND LABRADOR FROM ALBERTA’S EXPERIENCE ? BEV DAHLBY DISTINGUISH FELLOW AND RESEARCH DIRECTOR SCHOOL OF PUBLIC POLICY UNIVERSITY OF CALGARY 11-FEB-20 www.policyschool.ca OUTLINE OF THE PRESENTATION • Political and Fiscal History of Alberta • The Alberta’s Fiscal Future Project • The Economic Context • The NDP’s Path to Balance Plan • The UCP’s Blue Ribbon Panel • The UCP’s October 24 Provincial Budget • EY Alberta Health Services Review 3-Feb-20 • Lessons for Newfoundland and Labrador? www.policyschool.ca GOVERNING PARTIES IN ALBERTA Term in Party Premiers Office 1905 to 1921 Liberal Rutherford, Sifton, Stewart 1921 to 1935 United Farmers Greenfield, Brownlee, Reid 1935 to 1971 Social Credit Aberhart, Manning, Strom 1971 to 2015 Progressive Lougheed, Getty, Klein, Conservative Stelmach, Redford, Hancock, Prentice 2015 to 2019 New Democratic Notley 2019 to ??? United Conservative Kenney www.policyschool.ca REAL PER CAPITA REVENUES AND EXPENDITURES In Thousands of 2017 $ 15 10 5 0 1971-72 1981-82 1991-92 2001-02 2011-12 1976-77 1986-87 1996-97 2006-07 2016-17 Real Per Capita Program Expenditure Per Capita Real Per Capita Resource Revenue Other Real Per Capita Revenue www.policyschool.ca REAL PER CAPITA SURPLUSES AND DEFICITS In Thousands of 2017 $ 6 4 2 0 -2 -4 Lougheed Getty Klein Stelmach Redford* Notley -6 1971-72 1979-80 1987-88 1995-96 2003-04 2011-12 1975-76 1983-84 1991-92 1999-00 2007-08 2015-16 www.policyschool.ca ALBERTA, WE HAVE A PROBLEM • How to convince the public that Alberta has a fiscal problem that needs to be addressed sooner rather than later? • How to provide politicians with a framework for the key issues on spending and taxation? www.policyschool.ca THE SCHOOL OF PUBLIC POLICY’S ALBERTA’S FISCAL FUTURE PROJECT, 2017 TO 2019 • Three Events: • “How Did Roy and Ralph Tackle Provincial Deficits in the 90s?” Edmonton, Sept. 20, 2018. • “The Challenges and Opportunities for Fiscal Reform in Alberta” Edmonton, Feb. 7, 2019 • The UCP’s First Budget”, Calgary, Nov. 5, 2019 • 10 Research Papers • 8 Policy Briefs • https://www.policyschool.ca/albertas-fiscal- future/ www.policyschool.ca Putting the Alberta Budget on a Janice MacKinnon and Jack New Trajectory Mintz Why Alberta Needs a Fiscal Ted Morton Constitution Alberta’s Fiscal Responses to Fluctuations in Non-Renewable Ergete Ferede Resource Revenue Ron Kneebone and Margarita 50 Years of Alberta Budgeting Wilkins Alberta’s Long Term Fiscal Trevor Tombe Future. www.policyschool.ca Provincial Public Infrastructure Spending And Financing In Melville McMillan Alberta: Searching For A Better Course Reforming the Federal Fiscal Bev Dahlby Stabilization Program The Effect of Corporate Income Tax on the Economic Growth Bev Dahlby and Ergete Ferede Rates of the Canadian Provinces Altering the Tax Mix in Alberta Ken McKenzie Public Sector Wages in Alberta: How Do These Compare to Richard Mueller Other Provinces and to the Private Sector? www.policyschool.ca THE ECONOMIC CONTEXT • With the decline in oil prices, Alberta’s real GDP per capita fell by 9.5 percent between 2014 and 2016 because of a sharp reduction in private sector investment. • Private sector investment is not expected to return to the pre-2014 levels in the next four years. • The Alberta economy is “stuck in low gear while we wait for the new pipeline capacity that is needed to move more Alberta oil to market.”1 1ATB Alberta Economic Outlook of September 10, 2019 www.policyschool.ca LABOUR MARKETS • The unemployment rate in Alberta rose and peaked at 9.1 percent in November 2016. • In 2019, the average monthly unemployment rate in Alberta has been 6.9 percent compared to 5.6 percent in Ontario and 4.7 percent in British Columbia. • Since 2014, there has been a 2.5 percentage point reduction in the employment rate, which 88 thousand fewer people are working in Alberta in 2019 www.policyschool.ca WESTERN CANADA SELECT (WCS) AND NATURAL GAS PRICES IN ALBERTA $US per barrel $CDN/GJ 140 12 120 10 100 8 80 6 60 4 40 20 2 0 0 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 WCS (LHS) NG (RHS) www.policyschool.ca OIL AND GAS INVESTMENT Billions of $ 70 60 50 40 30 20 10 0 2010 2012 2014 2016 2018e 2020f 2022f 2011 2013 2015 2017 2019f 2021f 2023f Oil Sands Investment Conventional Oil and Gas Investment Notes: 2018 is an estimate; 2019 to 2023 are forecasts. Source: Budget 2019 Economic Outlook Chart 13 www.policyschool.ca EMPLOYMENT IN THE MINING AND OIL AND GAS SECTOR Thousands 140 130 120 110 100 90 Jan-14 Oct-14 Jul-15 Apr-16 Jan-17 Oct-17 Jul-18 Apr-19 www.policyschool.ca Thousands 2,400 2,350 SEASONALLY ADJUSTED MONTHLY 2,300 TOTAL EMPLOYMENT IN ALBERTA 2,250 2,200 Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19 Source: Statistics Canada. Table 14-10-0355-01. www.policyschool.ca REAL AVERAGE WEEKLY EARNINGS $1,300 $1,250 $1,200 $1,150 $1,100 Jan-13 Nov-13 Sep-14 Jul-15 May-16 Mar-17 Jan-18 Nov-18 Sep-19 Jun-13 Apr-14 Feb-15 Dec-15 Oct-16 Aug-17 Jun-18 Apr-19 Source: Statistics Canada Tables 14-10-0203-01 and 18-10-0004-01 Notes: Real Average Weekly Earnings in September 2019 dollars www.policyschool.ca UNEMPLOYMENT RATES IN ALBERTA AND ONTARIO Percent 10 9 8 7 6 5 4 3 2 1 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Ontario Alberta Source: Statistics Canada Table 14-10-0287-01 www.policyschool.ca 10% 5% 0% ANNUAL PERCENTAGE CHANGE IN REAL PER CAPITA PRIMARY HOUSEHOLD INCOME -5% -10% -15% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20182019f2020f2021f2022f2023f Source: Statistics Canada Tables 36-10-0224-01, 17-10-0005-01, and 18-10-0005-01. Forecasts for 2019 to 2023 are based on author's calculations. See text. www.policyschool.ca RECENT ELECTION RESULTS New Wild Rose Progressive United Democratic Party Conservative Conservative Party Party Party May 5, 2015 Election Seats Won 54 21 9 --- % of Pop. Vote 40.6 24.2 27.9 --- April 16, 2019 Election Seat Won 24 --- --- 63 % of Pop. Vote 32.7 --- --- 54.9 www.policyschool.ca THE NDP’S PATH TO BALANCE PLAN IN 2018 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 $ Billions Forecast Estimate Targets Targets Projection Projection Projection Revenue 46.9 47.9 50.6 53.8 57.8 62.3 66.3 Operating Expenditures 47.7 49.8 51.6 53.3 53.7 55.7 57.5 Capital Expenditures 9.2 6.4 5.9 6.0 6.4 5.2 4.8 Interest on Debt 1.4 1.9 2.4 2.9 3.4 3.7 3.8 Total Expenditures 58.3 58.1 59.9 62.2 63.5 64.6 66.1 Cash Surplus (Deficit) -11.4 -10.2 -9.3 -8.4 -5.7 -2.3 0.2 Net Financial Debt 20.3 30.5 39.8 48.2 53.9 56.2 56.0 www.policyschool.ca THE UNITED CONSERVATIVE PARTY • A merger of the Progressive Conservative Party and the Wild Rose Party under Jason Kenney. • In 2019 election, the UCP campaigned on a promise of eliminating the provincial deficit, without increasing taxes, by 2023. • Promised to appoint a Blue Ribbon Panel “to report on the province’s financial situation and to provide advice on balancing the provincial budget.” • Promised an independent review of Alberta Health Services. www.policyschool.ca THE BLUE RIBBON PANEL WITH PREMIER KENNEY AND FINANCE MINISTER TOEWS www.policyschool.ca THE BLUE RIBBON PANEL • On May 7, 2019 the Government of Alberta announced the establishment of the Blue Ribbon Panel to: • “provide advice to the government on plans to balance the provincial budget by 2022/23, without raising taxes, based on the fiscal outlook.” • The Panel delivered its report (the MacKinnon Report) on Alberta’s finances on September 3, 2019. • https://open.alberta.ca/dataset/081ba74d-95c8-43ab- 9097-cef17a9fb59c/resource/257f040a-2645-49e7- b40b-462e4b5c059c/download/blue-ribbon-panel- report.pdf www.policyschool.ca THE PANEL’S CONCLUSIONS • “there is an ongoing structural imbalance between revenues and expenses in the Alberta government that represents a serious threat to the financial health of the province” • “Alberta’s annual expenditures would be $10.4 billion less if its per capita spending simply matched the average of spending in Canada’s three largest provinces: British Columbia, Ontario and Quebec – and we would not have a deficit.” www.policyschool.ca PUBLIC SECTOR COMPENSATION • Panel found that compensation rates physicians, teachers and nurses are generally higher than in British Columbia and Ontario. • The average fee-for-service for physicians was $107,000 or 35% higher than the average in comparator provinces. • The maximum teacher compensation in Alberta was 10.8 percent higher than in British Columbia, although 2.6 percent lower than in Ontario. • The maximum hourly rate for registered nurses was 5.8 percent higher than in British Columbia and 3.5 percent higher than in Ontario in 2019. www.policyschool.ca PUBLIC SECTOR COMPENSATION www.policyschool.ca PER CAPITA SPENDING www.policyschool.ca HEALTH CARE SPENDING www.policyschool.ca ADVANCED EDUCATION SPENDING www.policyschool.ca EDUCATION SPENDING www.policyschool.ca CAPITAL EXPENDITURES www.policyschool.ca A BALANCED BUDGET SCENARIO (IN $ MILLIONS) 2018-19 2019-20 2020-21 2021-22 2022-23 (actual) Revenues 49,600 49,600 49,700 53,200 57,100 Operating 48,400 48,500 48,300 48,000 47,800 Expense Capital Grants 2,000 2,100 2,200 2,300 2,000 Capital 4,200 4,300 4,600 3,800 3,200 Investment Debt Service 2,000 2,300 2,600 2,800 3,200 Surplus/ (7,500) (7,800) (8,500) (4,200) 500 (Deficit) www.policyschool.ca THE UCP’S PROVINCIAL BUDGET OCTOBER 24, 2019 • This Budget that contained the most significant changes in the province’s fiscal policies since the Klein-Dinning budgets in the mid-1990s.