Huge Revenue growth shows little benefit for working Albertans.
Workers have been demanding better from the UCP government Staffing shortages and cuts are impacting workplaces. Inflation and price gouging has driven household costs out of control. Economic instability threatens jobs.
The budget that was released by the UCP this week could have addressed these issues. It included one of the biggest budget surpluses in Alberta history.
At the same time, the government’s revenue projection hasn’t looked this good in decades. This is thanks to high oil prices caused by the Russian attack on Ukraine and oil companies entering into elevated post-payment royalty rates being paid to the Alberta government and oil prices sitting at moderate rates.
Currently, five Alberta-operating oil companies are paying the “post-payment” level of royalties, elevating their rate to 20%-40% per barrel in most cases, depending on oil prices. As of this writing, a barrel of Western Canadian Select has had a stable and moderate value between $50 to $60 for all of 2023. Natural gas has risen too, from $2.06 per gigajoule in January of 2020 to $5.12 in November of 2022.
Just to get a sense of how much oil royalties have increased, the UCP collected $28.1 billion dollars in the last fiscal year. By comparison, the famously cash-strapped 2015-2019 NDP government collected $18.9 billion over their entire four-year term.
So, Albertans have a windfall of oil revenue to rebuild the province. More importantly, this level of revenue is likely to be maintained for some time to come. There is simply no excuse for continued austerity from the provincial government. Sadly, that’s what we got with this budget.
The numbers are alarming: Alberta will be short 9,300 nursing professionals in seven years. There’s an endless stream of paramedic shortages in the news. We all hear stories of overrun emergency rooms.
In spite of that, the UCP says that everything is solved. They even brought out the AHS head to claim this (shortly before being found to have run up a $1,462.50 car bill). They’re telling the media that they’ve made a huge investment in health care.
Their own numbers don’t back this up. Their 2023-24 estimate says that operating expenditure is only set to go up 3.7% from the previous forecasted year, well behind inflation and population growth. This is even after securing additional funds from the federal government.
One hidden surprise cut is that cancer research and development is decreased. It will fall from $11 million to $10 million.
So, were all the ailments of the Alberta’s health system fixed by this tiny increase? Given the reported scale of the problems, they’re not.
In the budget aftermath, The Health Sciences Association of Alberta made the point that it’s not just nurses and doctors that work in health care. They were looking for investments in their professions and, according to their President’s statement, found very little.
AUPE say that the budget is $307 million short to keep up with population growth and inflation. They also suspect much of the new funding will wind up in the pockets of privatized health care profiteers.
Alberta is very far behind other provinces when it comes to investing in our children’s education. In fact, Alberta is dead last in per-pupil funding and has the worst teacher-to-pupil ratio of any province in Canada.
To catch up, we’d need to invest $1.2 billion in our children, an amount easily attainable with the new royalty revenue. The UCP couldn’t even be bothered to go halfway in this budget. $433 million was all they could muster.
With almost every industry crying out for skilled labour and with the health care system barely able to staff itself, the lack of investment from this budget in post-secondary education is tragic. Alberta’s contribution to PSE Funding will increase by a paltry 0.6%. This does virtually nothing to address the UCP cuts from the system over the past four years.
AUPE responded to the PSE portion of the budget as well. They point out that there’s still a 40% reduction in the support staff they represent.
There is talk about targeted investments in health care education, but it falls short by thousands, when Alberta’s nursing professional needs will be 9,300 new professionals, as mentioned earlier.
And then there’s tuition: apart from a brief pause during the NDP government, tuition has been skyrocketing for a generation. And yet, the Alberta government provides another obstacle to building our skilled workforce by green-lighting a 2% tuition increase, but refers to it a “cap” on increases in Orwellian fashion.
We’ve all been to a grocery store and seen the skyrocketing prices. We’ve seen the changes in our household bills. Did workers get substantive help to keep the bills paid and food in the refrigerator?
Not really. It would even be generous to call this budget’s measures “piecemeal”.
When it comes to gasoline prices, it’s just a rehashed plan to not charge gas tax, instead of action to stop gouging at the pumps. And that gas tax comes back on July 1, 2023.
When it comes to household energy bills, this budget announces little of anything new, and nothing beyond this current winter. The threshold to qualify for a Natural Gas Rebate is set so high, that even the budget’s authors admit that no one will likely qualify for it.
There’s an absurdly short freeze on already-high insurance premiums that will end on December 31, 2023. Insurance companies are required to offer payment plans instead of just annual fees, but most of them do so already.
And then there’s the affordability payments. Seniors, AISH recipients and parents still qualify for the same funds, but it still hasn’t occurred to the government that an unmarried person might be subject to the impacts of inflation as well.
It’s also worth noting that the Alberta government is still falling short of the federal government’s mandate of $10-a-day child care. They won’t make that goal for three more years.
There’s a much-touted raise for 20,000 workers who assist Albertans with disabilities and the number sounds impressive: $356 million. However, it’s split over fours years, and it’s for “operating expenses”. There’s no guarantee what percentage will help provide inflation relief for these workers.
That’s about it for workers getting raises to retain, recruit new workers, or get inflation relief. Granted, many of these workers are members of public sector unions that will negotiate wages through collective bargaining.
Nonetheless, the government doesn’t seem inclined to do much more to support the people working for the betterment of Albertans. And they trot out the MacKinnon Report from 2019 to prove it themselves.
In the middle of an inflation crises and staffing shortage, the budget goes on at length about how the Alberta government has followed the MacKinnon Report’s bizarre assertion that compensation for Alberta’s public workers had increased too much from 2008 to 2017.
Specifically, they cite agreements with AUPE, the ATA, and UNA as having achieved the MacKinnon reports aims with “reasonable” wage increases. Nonetheless, these workers can tell you that these “increases” fall well below inflation.
For example, Alberta’s Consumer Price Index has gone up 24.3% over the last nine years. However, UNA’s collective agreement during that time show that their wages have increased by less than half that: 12%. As a whole, the Budget’s own numbers show a miniscule increase for overall public sector compensation funding increasing by only 3.7% (and that number includes out-of-scope managers) in the upcoming fiscal year.
The question has to be asked: how can the Government of Alberta hope to fix the staff shortages in health care and in almost every other corner of the public sector without addressing the gap between wages and the cost of living?
One of the first lessons economics teaches is that when a resource is scarce, you have to expect to pay more for it. Once again, it’s true that wages are negotiated in collective bargaining agreements. That still wouldn’t have prevented a positive message and matching allocation. Instead, the UCP chose to practically brag that they refuse to face this reality.
It’s a strange paradox that an UCP MLA must live in. They denounce “just transitions” and “green energy job plans”, yet are still touting their attempts to “diversify” Alberta’s economy. If this budget picked a side, it’s to ignore new energy jobs entirely.
Tourism and Agriculture are crucial private-sector industries. No one disputes that. However, it’s worrying that it’s pretty much the only private-sector industries that this budget text focuses on.
Energy journalist Markham Hislop reports that the Alberta government’s investment in energy jobs are basically “tidbits”. Their bizarre plan to hand back Albertans’ royalty money to get oil companies to clean up their own mess may “be on hold”. In its place, there’s funding for carbon capture, but that primarily comes from the federal government.
There’s not much to fill the void for new energy jobs, as Hislop notes there is nothing for exploring Alberta’s other energy industry opportunities. A subsequent press release from the provincial government talks about previous funding for research, but apart from adding helium to the critical minerals list, nothing new was announced.
A Missed Opportunity
With a rapidly growing and sustainable source of revenue that hasn’t been seen in decades, Alberta could have begun repairing their province after years of austerity. They could have started rebuilding a health care system still reeling from the pandemic. They could have provided real help for Albertans in the face of inflation and price gouging. They could have started stabilizing the economy and the job outlook for the province.
None of these opportunities were met. In some cases, the situation will worsen rather than improve at all.
There is a sliver of hope for the workers demanding better from their government. While they will have to wait for these necessary fixes, the door is not closed. But it is starting to slowly swing shut.
As stated earlier, the growth in oil and gas royalties is not slowing in the near term. But demand will falter in the decades to come as new energy opportunities replace high-carbon fossil fuels, and the royalty money will slow as well.
A government that takes the growing crises in health care, affordability, and economic instability can still use these royalty funds. They can choose in invest in Alberta’s workers and families instead of throwing it away to the corporate sector.
That opportunity to choose that government comes very soon. Election Day is set for May 29th.