Modest cuts or tough road ahead? Analysts project what to expect with Alberta budget

Will Premier Jason Kenney’s first budget be a tough-but-fair plan that Albertans voted for in April? Or will it be significantly more painful than he is letting us believe?

The answer might be a little of both, according to panellists and guests speaking Thursday morning to CBC Radio’s Edmonton AM

In a televised address on Wednesday night, Kenney foreshadowed a challenging budget to be delivered Thursday afternoon. Program spending will be reduced by 2.8 per cent, infrastructure projects may be delayed or cancelled, so-called ineffective programs will be eliminated and there will be an impact — he called it modest — on public service jobs.

Katherine O’Neill, a former journalist and Alberta Party political candidate who now works for a public relations agency, said Kenney’s address came down to three specific messages: Alberta is broke and here is the plan; he has the mandate to proceed; and he’s “not going to blink.”

“And I think that was probably the most important thing in that message last night,” she said. “No matter how crazy things get after the budget comes out, we’re proceeding as needed.

“People voted them in and so he’s got the mandate to do this.”

The fact that Alberta Finance Minister Travis Toews plans to wear his old cowboy boots — eschewing the odd Canadian tradition of new shoes on budget day — is a sign that the government plan will be prudent and fair, said Shayne Saskiw, a former Wildrose MLA and a partner in a lobbying firm.

“I know that most Albertans believe that you can’t continue to have deficit spending year after year after year. And he’s looking at using a scalpel rather than a sledgehammer,” said Saskiw.

But several guests on the morning radio show said Kenney’s address to Albertans, with its focus on a 2.8 per cent cut, was soft-pedalling the bad news yet to come.

Repeat of the Klein years?

“This notion that the cuts aren’t going to be that deep is something that I actually take issue with,” said Ricardo Acuno, executive director of the Parkland Institute at the University of Alberta.

During the spring election campaign, Kenney had promised not to increase spending to account for population growth or inflation, which Acuna said equals a “virtual cut” of about 3.5 per cent a year.

“So in four years, you’re looking at about a 14 per cent virtual cut, plus the 2.8 per cent. Now you’re pushing 17 per cent in cuts, which is not far off from what we saw during the Klein years.”

That sense that the other shoe — or cowboy boot, if you will — is yet to fall is shared by Paul McLoughlin, a political analyst and regular commentator for Edmonton AM who said that Kenney’s broadcast on Wednesday night was an intentional strategy to set the narrative for the budget in advance of its delivery at 3:15 pm MT today.

A 2.8-per-cent cut to programs is a very small factor in the government’s goal of balancing the budget in four years, he said.

McLoughlin anticipates big cuts to infrastructure, which will impact municipalities and rural areas alike. As well, he noted, the government will begin negotiation in 2020 with Alberta’s physicians, teachers and public sector unions. Cuts to their compensation are likely, he said.

“At the heart of all this is that they’re $6.7 billion short. They spend $6.7 billion more than they take in,” he said.

“There’s not usually a premier’s address in front of a budget. It’s a signal. It’s going to be significant and that’s what he said. But he wants to set the narrative that it’s a small amount and I think, in fact, it’ll be much larger than that.”

Where’s the hope?

The government is already being criticized by the NDP opposition about its plan to cap benefits under  AISH (Assured Income for the Severely Handicapped), which provides health and financial supports to people with physical, mental and cognitive disabilities.   

Several panellists noted that Kenney’s government will have to tread carefully to make sure it isn’t looking mean-spirited.

“The premier is going to have to make sure that he announces other items that make things more affordable for people,” said Saskiw.

Acuna and O’Neill both noted that the government also needs to step up with its vision for an economic future outside of oil and gas, pointing to this week’s layoff of hundreds of Husky Energy employees.

“What do the next 20 years look like in Alberta and what kind of jobs will Albertans have, because that will give people a lot more hope instead of just waiting around for the next oil boom to happen,” O’Neill said. 

“It was a really grim message last night. And if you’re going to give grim, you do need to give hope.”

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