IT’S BACK TO THE FUTURE FOR ALBERTA. Premier Jason Kenney plans to cut his way to prosperity. Many thousands will feel the pain, but there will be little or no positive effect on the provincial economy. No more than there was in the past when conservative premiers like Ralph Klein, Alison Redford and Jim Prentice tried it.
Kenney’s October budget—his first—imposes $1.3 billion in cuts and the elimination of more than 2,000 public-sector jobs. It’s been 25 years since individual Albertans had to endure the pain of such spending cuts.
Corporations, on the other hand, will feel no pain. Kenney plans to press ahead with a scheme to reduce corporate taxes by a third over the next four years.
The Kenney cuts are not across the board. They range from the predictable (cuts to public sector jobs) to the inexplicable (cuts to support for the disabled). The budget damage includes:
- Cuts of 2000 public-sector jobs
- Income tax increases
- A rise in post-secondary tuitions
- Cuts to special needs programs
- Cuts to grants to municipalities by up to 50 per cent
- A nine per cent cut in agriculture spending
- A five per cent cut to post-secondary education spending
NDP leader Rachel Notley accused Kenney of lying about his motives for cutbacks. “It’s never been about the debt, it’s never been about the deficit … it is simply about making sure that the wealthy get more and the rest of us pay for it.”
Union set for a fight
The Kenney cuts will eliminate one in every 13 public-sector jobs—a 7.7% cut.
To make matters worse, the government warns it will make more layoffs if a pending arbitration ruling awards a pay raise to government workers.
Guy Smith, the president of the Alberta Union of Provincial Employees, said “If what Jason Kenney and his government want is a war with public-sector workers, it’s a war he’s going to get.”
“Our members are ready to take action,” said Smith. “We have 23,000 members in direct government services, if you take 800 of them away when they’re already stretched to the limit, that’s massive.”
“The government is not stumbling into a labour strife;” says CBC Edmonton columnist Graham Thomson, “ it’s purposefully striding in.”
Thomson says Kenney has ensured the government is facing something of a fiscal crisis by ending the carbon tax, scrapping contracts for oil-by-rail, and reducing the corporate tax rate. In total, this will cost the provincial treasury $21.5 billion in forfeited revenue.
“If Alberta didn’t have a revenue problem before, it does now.” he says.
Individual pain without major gain
The “de-indexing” of benefits in the “Assured Income for the Severely Handicapped” program (AISH) hits Albertans with permanent disabilities hard.
The move shrinks the purchasing power of disabled people already scrimping to get by. But the savings are minuscule; at first, only $10 million.
The Kenney budget also increases income taxes, but in a very subtle way. Like benefit payments, the government is “de-indexing” tax credits and tax brackets.
Effectively, the value of tax credits are frozen at their 2019 levels. The dollar value remains unchanged, but their real value to families was cut because they will no longer keep pace with the rising cost of living.
In addition, these changes make it easier to fall into higher tax brackets even if you and your family’s standard of living has not changed. So-called “bracket creep” is back in Alberta, costing taxpayers nearly $200 million per year.
“The government’s advertisements suggesting no taxes were raised are disingenuous at best and Orwellian at worst,” says Trevor Tombe,an associate professor of economics at the University of Calgary.
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