AV: Alberta collects some $8.7-billion less in tax revenue than we would if we had the rates of the next-lowest-taxing province [BC]. Your press releases say Albertans “benefit” from low taxes. Do you believe the benefit from low taxes outweighs the downsides of deficits?
Dodge’s advice was you could cut your budgets drastically, but you’d stunt any recovery and hurt people in the meantime. Or you could, taking a long-term view, invest and carry a debt, and then, as you’re coming out of recovery, start to retrench a bit on your spending because the private sector is starting to spend more. So I think we’re on the right track. We’ll balance in 2023, 2024, and then we’ll start to work on our debt. That will be in Budget 2018. Many people are interested in it—“Show us the numbers out five years; show us your path to balance”—and we’re going to do that. It’s not the right approach to take money out of the economy; that would hurt people. That’s what a sales tax would do, and Albertans don’t want a PST. So, we’re going to take a long-term view of getting back to balance and addressing our debt.
AV: Under what conditions would you introduce a sales tax?
None. There are no conditions. As I said, taking money out of the economy is not the thing to do. We’re restraining spending. We’re looking at efficiencies—things the government didn’t do previously because they were often in a position of $90 oil.… though they still ran deficits!
AV: Can you expand on what you’ve called “compassionate belt tightening”?
Some of it is consolidation of the work left to us by [the previous] government. For instance, in communications and public engagement, instead of people attached only to ministries, they’re going to be flexible and nimble. Corey Hogan [managing director of Communications and Public Engagement] said he’s going to deliver a 15 per cent reduction to the overall cost. We’re looking at agencies, boards and commissions [ABCs]. There were 301 when we took over. We’re down to 263 or 264 now. The next phase is post-secondary institutions. We’re not going to cut or amalgamate there, but we are looking at ratcheting down executives’ income. We’ve reduced perks and benefits that were, frankly, out of step with what Albertans expect. Those are compassionate in the sense that you can’t do them right away, but you can say “The new benchmark is this, and you have two years to adjust and for it to ripple in your organization down.” They’re compassionate in the sense that we’re not breaking contracts, we’re just saying [compensation] can’t be the same, because of the new fiscal reality. For management in Alberta’s public service, we’ve frozen salaries and we’re extending that freeze. We’ve had hiring restraint and we’re extending that. This is compassionate, because people continue to have employment through one of the worse recessions we’ve ever had. We didn’t lay people off. We didn’t extend the unemployment line.
AV: A large part of the government’s expenses is public sector wages. Is that something you’re prepared to look at or are expecting to create some savings?
Well, yes, but let me just qualify that a bit. The Alberta Medical Association [physicians] came back to the table two years early with us, and we were able to reduce their contract by $190-million. They didn’t have to come back to the table, frankly, but they knew this would set them up better, not only with the public but with the government. We have a new teachers’ agreement, which is really positive. Additional services came into the agreement and we kept fully funding education, which means we’re not adding to class sizes by not hiring teachers. We’re hiring teachers—and many, many schools are now built and opened. I’m not going to go beyond that. I respectfully believe that both sides at the negotiating table are working in the interest of the services they deliver, and that the fiscal reality we’re in will be acknowledged.
AV: Does the teachers’ “me-too” clause bias negotiations with other groups because they know that settlement is conditional on other groups’?
I’m not an expert in this stuff, but it’s something that was done. I just know the fiscal reality I’m under as Treasurer. Our books are open and transparent. You can see we’re at a $10.3-billion deficit. At the end of this fiscal term it will be one-third less, in the $6-billion, $7-billion amount, and by 2023 it will be balanced. But I don’t have capacity to look at big wage settlements; that’s not possible at this time.
AV: What about the public revenue implications of legal marijuana; do you have a sense of that yet?
The Solicitor General and Justice Minister says we won’t see any money coming out of this because we have to set up a whole system, a framework of public education, public security. People have to know that children aren’t going to be able to use recreational cannabis. So, frankly, I’m not looking at it as a revenue opportunity. I’m looking at it in the short term as potentially a net loss.
Interviewed by Evan Osenton. Evan is the editor of Alberta Views.
Find the full article in the March issue of Alberta Views, on newsstands now.