Searching for perspective on the 2019 budget cuts
The 2019 budget will most certainly bring sharp tuition increases and further financial burden for Alberta’s post-secondary students. However, the overall budget released by the United Conservative government on Oct. 24thappears to fall short of the severe cuts of the Klein era.
University of Calgary economist Trevor Tombe has been active on social media since the budget’s release. His assessment is this current budget is “not an austerity budget because spending reductions are modest.”
Beginning in 1994, then-Alberta premier Ralph Klein enacted deep cuts to spending in order to reign in the province’s budget. The cuts to overall budget spending accounted for 21 per cent of the budget over four years. According to Tombe’s estimate, the 2019 budget cuts appear to account for a 2.8 per cent cut in overall budgetary spending over four years.
For Alberta’s conservatives, the Klein era cuts of the 1990’s set the table for the prosperity of the 2000’s. The logic behind the UCP budget appears to be based on this blueprint.
“It’s almost become mythic here, that the Klein government saved us through those cuts,” said Dr. Trevor Harrison, a sociology professor at the University of Lethbridge, and the Director of the Parkland Institute.
Although cuts to spending were a factor, the rise of energy prices appear to be the key reason the Klein budget was a success.
Differing opinions on the cuts
Former NDP finance minister Joe Ceci has been critical of the government’s budget cuts. He believes the energy pricing environment today is unlikely to replicate the positive effects of the Klein years.
“Oil and gas went through the roof,” said Ceci.
“What we have now is a lower for longer oil environment and natural gas is worth nothing.”
“We were saved from the worst effects of austerity,” as the government returned money to sectors of the budget that were badly cut after oil and gas royalties began to rise, said Harrison.
A variety of challenges
Harrison also believes there challenges the UCP will have to face that the Klein government wasn’t subjected to during their time in office. The importance of climate change and indigenous rights are two key challenges the Kenney government will have to face.
“There’s just a lot of things working against the traditional oil-based economy that Alberta has,” said Harrison.
These issues will continue to plague oil and gas development as sentiment around the industry continues to darken.
“If you believe that pipelines are going to save you, and I frankly think that’s overstated, you still have to deal with some serious political and jurisdictional issues,” said Harrison.
Harrison believes the path forward will be a diverse economy in Alberta where oil and gas is important, but not central, to the province’s growth.
“It’s about time we started to really think seriously about how we’re going to use the resources we have left to actually do that,” said Harrison.