Hicks on Biz: Does Alberta Premier Prentice have what it takes to stand up to unions? BY GRAHAM HICKS, EDMONTON SUN FIRST POSTED: FRIDAY, JANUARY 16, 2015
I made a pile of notes at two events this week, the Edmonton Economic Development annual lunch where Premier Jim Prentice talked turkey about the Alberta government’s over-reliance on oil/gas royalty revenue, the other a panel discussion at the U of A’s Institute for Public Economics, entitled “Does Alberta Need A Sales Tax?”
I should have just sat back and listened.
For it all boils down to one thing: To control government spending, Prentice must confront Alberta’s well-paid public sector – i.e. anybody funded from the provincial purse – with the same determination and tenacity as Ralph Klein did in the ‘90s.
Prentice is asking Albertans to accept new taxation to compensate for the $6 billion to $7 billion shortfall created by the loss of oil/gas royalty revenue due to the oil price crash.
Perhaps ... but only if he lives up to his side of this bargain.
As Klein did, Prentice has to walk the walk and talk the talk when it comes to controlling government expenses.
And I’m not sure he has the kahunas to do so.
Payrolls in Alberta’s publicly funded sectors – in the schools, in the civil service, especially in the medical system – have risen well above compensation levels in all other provinces, at a faster rate of increase than any justification can warrant. There’s sufficient evidence, mountains of it, that those working within Alberta’s public sectors have the best deals in the country.
Everybody knows the nurses have an excellent collective contract (from their point of view) with Alberta Health Services, as have our doctors for their contracted services. The Alberta Teachers Association isn’t complaining about salaries. The Alberta Federation of Labour concentrates on better pay in the contracted-out service sectors. Its members in the public sector know they’re doing just fine.
The sweet deals were the result of sweet times. Alberta had been rolling in cash and they got their share.
Well that cash has gone. Yet no self-respecting union will give ground without a massive fight. If Prentice stands up to the unions as did Klein, we will see mass protests, rotating strikes, teacher strikes, illegal walkouts, nurse and doctor slow-downs.
But until the Government of Alberta trims back its payroll by some 10%, we’ll never be serious about living within our means, sustainable funding, etc. etc.
We’ve seen Jim Prentice do many good things in the short time he has been premier. He has the potential to be as dynamic and visionary a leader as was Peter Lougheed.
But is he tough enough? Can he go 12 rounds in the ring against the nurses, teachers, doctors and civil service unions?
If Prentice has an Achilles’ heel, it’s questions about his personal toughness.
He does not like confrontation. His is a “let us reason together” style of leadership.
But if he’s to bring government spending back under control, if he’s determined to create an Alberta that can ride out the highs and lows of oil and gas prices, he’s got to contain public sector labour costs.
And if he’s successful, it will be after a long, ugly fight leaving all sides exhausted and embittered. It's the nature of the beast.
I admire Prentice’s communication skills, his succinct summary of the current government revenue shortfall. A $6 to $7 billion “revenue hole”, he says, is equal to the annual Alberta education budget, to the government's direct payroll.
Alberta has relied on $8 to $10 billion a year in oil revenues to balance its budget, “and that money has simply evaporated,” Prentice said. “We have been living beyond our means. We’ve been living on resource revenue that belongs to our kids and grandchildren. This can’t go on. ”
Prentice will emerge from his financial deliberations with a mixed bag of tax changes – be it re-introduction of a provincial sales tax (a 2% sales tax in 1936 was rescinded in 1937), re-introduction of medical premiums, re-introduction of progressive income taxes.
He might even do the impossible, coming up with a long-term fiscal plan that actually, down the line, could smooth out the lows and highs of energy royalty revenue streams.
But Albertans won’t accept any new taxes unless Prentice is clearly cutting expenditures.
Cutting expenditures means less money for salaries. Which means serious and prolonged confrontation with organized labour and contracted professionals.
Is Prentice tough enough?
Who’s earning what from the Alberta public purse – excluding benefits, overtime and shift differentials
(Sources: Alberta Health Services, United Nurses of Alberta, Alberta Teachers Association, Province of Alberta job postings.)
Doctors, annual gross average revenues 2012/13 (excluding overhead of $150,000) - $377,368, 28.6% higher than national average.
Registered nurse, starting salary 2006, about $58,000: Starting salary as per collective agreement in 2016 about $76,000.
Teacher with the Edmonton Public School Board, starting salary with four-year degree, $58,000. Salary after 10 years, $92,000.
Government of Alberta Senior Information Management Analyst, Edmonton, 2015, anticipated pay, $70,000 to $90,000 a year.
Government of Alberta Case Worker, Foster Care, Grande Prairie, 2015, anticipated pay, $62,000 to $80,000