The United Conservative government says its first provincial budget creates conditions to bring back jobs and grow Alberta’s economy but critics warn some of the spending cuts could undermine growth.
Thursday’s budget cuts 2,100 public service positions — a 7.7 per cent reduction — by 2023. It lifts a post-secondary tuition freeze and eliminates tax credits for students as part of the province’s plan to return to a balanced budget by 2023.
The plan also reduces annual grants to municipalities by $94 million in 2020-21 and $142 million in 2021-22 while the repeal of city charters means funding for Calgary and Edmonton will be reduced by $45 million a year.
“It will hit the city of Edmonton very quickly, very hard,” said Edmonton’s chief economist, John Rose, noting 27 per cent of the city’s employment is in education, healthcare and public administration.
“It’s not simply going to be because some people might lose their jobs. It’s going to undermine consumer confidence across the board. And that obviously won’t be good for the housing market, for the consumer side of the economy going forward.”
‘This will protect jobs’
In the first year alone, the equivalent of 764 full time public sector positions will be shed. Wage increases will be frozen for the next three years, said Finance Minister Travis Toews, noting almost every contract with the union will expire next year.
“As we approach a new agreement, we must keep in step with today’s fiscal reality, with other provincial remuneration levels and with other Albertans who saw their wages decrease or disappear altogether due to our province’s recent economic travails,” said Toews. “And so I speak directly to Alberta’s public service: to the nurses, to the teachers and to the committed professionals who deliver to Albertans every day, work with us to bring Alberta spending in line.
“This will protect jobs now and in the future and it will show fairness and respect for Albertans hard earned tax dollars.”
The budget document also notes “further savings may be necessary to accommodate awards through arbitration in 2019-20.”
‘Stretched to the limit’
Guy Smith, executive director of the Alberta Union of Provincial Employees, said he hopes the government will respect a free collective bargaining process as the union enters into contract negotiations next year.
He worries about the affect on remaining employees “when they’re already stretched to the limit.”
‘That’s massive,” said Smith, expressing concern about where cuts might occur. “A lot of it seems to be in justice, in the solicitor general and I don’t know how on earth you take sheriffs off the road or you take court clerks out of the court system that’s already stretched or take correctional officers out of the jails, which are already overcrowded.”
The province argues its strategy of attracting investment by eliminating red tape and cutting taxes will foster economic growth and add jobs.
Corporate tax is set to shrink from 12 to eight per cent by 2022 while economists estimate the job creation tax cut will add up to fifty five thousand jobs by 2023, Toews said.
Millions will be spent to support people who choose to take training in trades. $2.5 million will be spent on foreign qualification in a bid to get newcomers into jobs at their skill level faster.
In a press release, the the Business Council of Alberta praised the budget for putting the province largely on track towards competitiveness and long-term prosperity.
“The way to create prosperity for Albertans is through thriving business and growing jobs,” says Adam Legge, President of the Business Council of Alberta “This budget shows a plan firmly on this trajectory.”