Albertans reject austerity
Nurses, teachers, health sciences professionals, and public employees urge government to listen to majority of Albertans
Edmonton - Labour leaders are standing up for the majority of Albertans who do not want to see public services cut on March 7.
At a joint press conference on Monday, March 4, at the Crown Plaza Hotel in Edmonton, the presidents of the province's six largest public sector unions and associations urged Alison Redford to listen to Albertans, most of whom want their public services protected. The Alberta Federation of Labour, Alberta Teachers' Association, Alberta Union of Provincial Employees, Canadian Union of Public Employees-Alberta, Health Sciences Association of Alberta and United Nurses of Alberta have decided to join their voices together to send a clear message about the upcoming budget.
Polling, conducted by Environics from February 14-21, shows that more than 70 per cent of Albertans reject the idea of cuts to public services. More than three quarters of those polled agree that there should be an increase on taxes for the wealthy and corporations.
Far from thinking the government should cut public services, the majority of Albertans believe we should be investing more in health care, education, and other services. Albertans see a growing province, a booming economy, soaring corporate profits and low unemployment, and they're confused as to why health care, education, and community services still don't have the resources they need to do the job right.
Albertans were clear in their message that they support the need for some increased revenues, but that they reject the idea of a sales tax. Only 17 per cent of those polled were in support of a provincial sales tax, 72 per cent said they would be in favour of returning to a progressive income tax, and 77 per cent were in favour of increased taxes on corporations and those who make more than $200,000 per year.
When asked about spending, respondents identified several priorities: Creating a provincial strategy for long-term care for seniors was a high priority for 70 per cent of respondents, while protecting publicly-funded health care against for-profit health care was identified as a high priority by 57 per cent. Nearly half of respondents said that hiring more teachers and support staff for elementary and secondary schools was a high priority.
The government is trying to justify massive cuts to health care and education by saying oil prices have dipped. Albertans aren't buying it. Albertans know a growing economy needs adequate investment in public services.
Because labour leaders were concerned about the direction that budget discussions had been going, they commissioned a poll by Environics Research Group to find out what Alberta are looking for. The poll, which surveyed more than 1,000 Albertans, is considered to have a margin of error of +/- 3.1, with a 95% confidence level.
-30-
MEDIA CONTACT:
Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email [email protected].
Fact sheet–Revenue, spending & public sector wages (Revised March 2013)
Fact sheet–Oil companies' profits (March 2013)
Alberta Budget: Labour Leaders Don't Want Public Services Cut
EDMONTON - Labour leaders in Alberta have joined forces to say they don't want to see public services cuts in Thursday's provincial budget.
The group consists of the Alberta Federation of Labour, Alberta Teachers' Association, Alberta Union of Provincial Employees, Canadian Union of Public Employees-Alberta, Health Sciences Association of Alberta and United Nurses of Alberta.
They said in a joint release Monday that the majority of Albertans don't want public services cut and would rather see an increase in taxes for the wealthy and corporations.
The group says Albertans see a booming economy, soaring corporate profits and low unemployment.
So they're confused as to why health care, education, and community services still don't have the resources they need to do the job right.
The group says the Conservative government is trying to justify massive cuts to health care and education by saying oil prices have dipped, but the labour leaders say Albertans aren't buying it.
Huffpost Alberta, Monday, Mar. 04, 2013
Alberta’s largest unions warn of cuts to public service
Days ahead of the provincial budget, Alberta's largest unions are calling on Premier Alison Redford to avoid Ralph Klein-like cuts to the public service in a bid to balance the books.
Speaking jointly in Edmonton Monday, Alberta Federation of Labour (AFL) president Gil McGowan said Ms. Redford's warnings of "tough choices" in Thursday's budget – which is expected to cut some services, abandon other earlier promises of increases and still deliver a deficit – amounts to "something close to a betrayal" for a premier who campaigned on preserving services and social programs.
"There's absolutely no doubt we're disappointed with Alison Redford, and frankly we think most Albertans should be disappointed as well," Mr. McGowan said, adding the premier's "promises and reassurances are starting to ring hollow."
Mr. McGowan was joined Monday by leaders from the Alberta Union of Provincial Employees (AUPE), the Alberta Teachers' Association (ATA), the United Nurses of Alberta (UNA) and the Health Sciences Association of Alberta (HSAA). Altogether, they represent over 160,000 public employees in the province.
Under Mr. Klein, who famously slashed public services two decades ago to balance Alberta's budget, union uproar would hardly be surprising. But Ms. Redford has relied on union support in both her campaign for her party's leadership and last year's provincial election. She's since had to backtrack on funding promises and has been locked in bitter contract battles with doctors and teachers.
Debt-free Alberta is poised to table what's expected to be its sixth consecutive deficit budget on Thursday, despite a strong economy, steady growth and low unemployment. In explaining Alberta's inability to balance its budget during a boom, Ms. Redford has pointed to what she's called a "bitumen bubble," referring to the "differential" between global benchmark oil prices and the lower price Alberta's oil sands bitumen fetches. The differential customarily fluctuates, but has widened lately.
Ms. Redford has said the "bitumen bubble" crisis was unforeseen, though industry had warned about it for years and the province's past budget documents predicted the discount would be, in fact, larger than it is now. The labour leaders, as such, dismissed the "bubble" as a misnomer.
"I think that's part of the whole game, to create that sense of panic," said AUPE President Guy Smith, adding: "Those of us who were around in the Klein years, the early 90s, are beginning to smell it in the air again a little bit."
Even if funding for a program holds steady, it's a de facto cut in the fast-growing province, ATA vice-president Mark Ramsankar said. Without previously promised education increases of 2 per cent, which are now in doubt, "we'll see 12,000 students wedged into classrooms [next year] with no funding or services to support them," he said.
Ms. Redford has said Alberta needs to totally overhaul its fiscal formula, but has been vague in how she plans to do that. "I think we have the opportunity to change the parameters of the discussion about what the future of this province looks like," she said in a speech last week.
That means cuts, tax hikes, borrowing or some combination thereof. Ms. Redford already plans to take on billions in debt to pay for infrastructure, but has ruled out borrowing for operating expenses. The province has frozen salaries of its managers and said it will cut about 10 per cent of those positions over three years. Raising taxes in this particular budget, she has said, "is taking the easy way out."
But Albertans have little appetite for cuts, according to an Environics Research Group poll commissioned by the AFL and released Monday. Of 1,014 respondents, 73 per cent saw no need for public service cuts.
Instead, to make ends meet, 77 per cent favoured higher taxes for corporations and the rich, while 72 per cent feel Alberta should reintroduce a progressive income tax, where the rate increases for higher earners, and that the province should hike oil royalties.
Alberta is the only province without a provincial sales tax, and the poll shows little appetite for that to change: 82 per cent were somewhat or strongly oppose introducing a PST. The poll is considered accurate within 3.1 per cent, 19 times out of 20.
All told, it means voters aren't buying into the crisis the Redford government is trying to raise the alarm on, argued Elisabeth Ballermann, president of the HSAA, which represents a total of 23,000 health care workers. "Albertans aren't buying it. Albertans are saying we should be able to afford this," she said.
Ms. Redford won a majority in last year's spring election by steering her party to the centre and fending off the right-wing Wildrose Party, which she argued would hurt Alberta by cutting spending on social programs and infrastructure. Now she finds herself considering similar moves.
"Albertans who elected this government believed they were not electing a Wildrose policy government," UNA President Heather Smith said. "In fact, I've heard people say, if what we're going to get is Wildrose policy, maybe we should have just voted for them, right? [Ms. Redford's Progressive Conservatives] weren't elected to do the kinds of slash-and-burn to social programs," that labour leaders now fear.
The legislature is scheduled to resume its session on Tuesday, with the budget coming two days later. Ms. Redford's government has signalled it will split the budget into an operational plan, capital plan and spending plan. It will borrow for capital project to avoid what the premier calls a "social infrastructure deficit," or a shortage of schools and hospitals as new residents flock to her province.
The Globe and Mail, Monday, Mar. 04, 2013
Byline: Josh Wingrove
Update: Alberta unions denounce ‘Klein-style cuts’ coming in budget
EDMONTON - In a show of unity, nurses, teachers and labour groups joined Monday to condemn "Klein-style cuts" they say are coming to public services in Thursday's provincial budget.
Premier Alison Redford was elected for her "progressive" Conservative agenda, but she is betraying those promises with a "slash and burn" budget rather than moving ahead with tax reforms to cover the deficit, Gil McGowan, president of the Alberta Federation of Labour. told a news conference.
"The (budget) will be Klein light and this is not what Albertans thought they were getting when they voted for Alison Redford as opposed to the Wildrose party,'' McGowan said.
Five of the biggest public sector unions — the Alberta Teachers' Association, Alberta Union of Provincial Employees, United Nurses of Alberta, the Health Sciences Association and the Canadian Union of Public Employees — also released polling data showing that most people do not want to see public service cuts and instead favour some kind of tax reform — higher royalties or a return to progressive income tax — to reduce the red ink in the budget.
A deficit of $4 billion is expected at the end of this fiscal year as energy revenues plunged by an estimated $6 billion due to low bitumen prices.
The unions also took aim at the comments from conservative lobby groups like the Fraser Institute that Alberta has the highest per capita spending of all provinces and that spending is out of control.
Alberta is the middle of the pack, spending about $10,623 per person while Newfoundland is at the top with spending of $12,029 per person, and Ontario and Quebec are lowest at $9,359 and $8,800 respectively, McGowan said. The AFL research is based on provincial budget documents across the country.
Alberta also has the second lowest number of government workers per capita, he. Ontario has the lowest and Prince Edward Island has the highest number of civil servants per capita.
"So we are wealthy like Saudi Arabia and spending like New Brunswick," McGowan said.
Late last month, Redford announced a three-year wage freeze for managers in the civil service and plans to cut their ranks by 10 per cent — more than 400 jobs — as she struggles to rein in spending.
For education, even a freeze in funding would amount to a cut because 12,000 more students are expected to enter the school system this year and have to be accommodated, ATA vice-president Mark Ramsankar said.
"Redford promised stable, long-term funding and full day kindergarten, but it's not clear either of those promises will be delivered," Ramsankar said.
The union, which is currently in bargaining, also fears the province will axe the professional development fund.
Former premier Ralph Klein used a strategy of creating a climate of crisis around government deficits and unions vowed not to succumb to that again.
"My message to Redford is don't panic," said Heather Smith, president of UNA. "This is a revenue problem, not a spending problem, and you are prescribing the wrong treatment."
"Albertans believed they were not electing a Wildrose-policy government. If that's what they are going to get, I've heard many are wondering if should vote for them."
UNA's contract ends at the end of March. AUPE also begins bargaining this spring.
The poll done by Environics Research Group in February shows that 72 per cent of Albertans favour going back to progressive income tax, and 78 per cent supported increasing taxes paid by corporations and high income earners.
In the poll, 71 per cent agreed with the statement that Albertans are not getting their fair share of royalty revenue — though the number fell to 64 per cent in Calgary Calgary.
The poll of 1,014 people is accurate to plus or minus 3.1 percentage points.
McGowan said Redford is blaming the "bitumen bubble" though the real problem is the government does not raise enough revenue to pay for services.
"Redford should fix the revenue hole. That's what she was elected to do. If it is not betrayal (of promises), it is close to betrayal."
The Edmonton Journal, Monday, Mar. 04, 2013
Byline: Sheila Pratt
Redford accused of picking a fight with labour
Alberta Premier Alison Redford, desperate to cut costs amid a ballooning deficit, is angering the very labour groups she coveted for support during her leadership bid and last year's election.
The province's teachers on Tuesday joined a growing number of groups expressing frustration with Ms. Redford's Progressive Conservative government, dismissing the latest contract offer by the province as a "thinly veiled threat" to roll back salaries and reduce staff.
"Teachers do not respond well to ultimatums," said Carol Henderson, president of the Alberta Teachers' Association, which represents the province's 42,000 teachers.
She said the offer, which includes wage freezes, fails to address workloads adequately. She called it "unacceptable" and urged teachers to go back to the bargaining table with Alberta's 62 school boards to find labour peace at the local, rather than provincial, level.
The Tory government is scrutinizing teachers, doctors and civil servants as it prepares to release a very tight 2013-14 budget on March 7. Facing a deficit of $3.5-billion to $4-billion this fiscal year – about four times bigger than projected – the government is looking to pinch every penny it can.
In its third-quarter update last week, the province announced a three-year salary freeze for public-sector managers starting April 1 to save about $54-million. The government also said it would cut the number of managers by 10 per cent over the same period.
Alberta Health Services, which manages health care, told its staff to brace for austerity. The University of Calgary has said enrolment at its medical school would be limited to 155 spots, down from 170, because it expects the budget to slash funding. The fast-growing province already has a shortage of physicians and is stuck in long-running labour talks with doctors.
"It seems like the Redford government is preparing to pick an unnecessary fight," said Gil McGowan, president of the Alberta Federation of Labour. "If there's any province in Canada that can afford quality public services, it's Alberta. The sky is not falling."
Mr. McGowan said Ms. Redford appears to have forgotten the new constituency – teachers, nurses and public sector workers – that propelled her to a massive majority last April, and warned of labour strife if the province doesn't sort out its revenue problem.
"If they think they can return to Klein-style cuts or rollbacks, then they've got another thing coming," he said.
This month, Alberta Medical Association president Michael Giuffre, who represents about 10,000 physicians, issued a letter accusing Ms. Redford of making "inaccurate and misleading" public comments about the province's doctors. He highlighted a particularly touchy topic: pay.
Dr. Giuffre wrote that doctors are paid 14 per cent more than the national average – not 29 per cent, as the government suggested – and noted that salary also covers the costs of running an office in a province where space and staffing are expensive.
"The tenor of your comments vilifies Alberta's physicians and creates an environment that will poison efforts to recruit and retain doctors in the future," he wrote.
He also said funding cuts will have "serious and negative" impact on health care.
"Some medical practices in Alberta will no longer be viable; offices will close and patients will be without care," he added.
Negotiations with doctors are continuing with a facilitator after almost two years, but there's no deadline for a deal. Health Minister Fred Horne enraged doctors in November when he attempted to force a contract that included an overall raise, cost-of-living adjustments over three years, as well as a lump-sum payment of 2.5 per cent of the previous year's billings that would run through 2016. He revoked the offer to head back to the bargaining table.
"There was an end of February deadline, and then that was extended to as soon as possible once the budget comes out," said Bart Johnson, a spokesman from Mr. Horne's office.
Last week, Alberta Education Minister Jeff Johnson offered the teachers and school boards a four-year contract with a wage freeze for the first three years, followed by a 2 per cent hike in the final year. He also dangled cash incentives, including 1 per cent of their salary in each of last two years of the deal if an agreement is reached by the end of February.
Otherwise, he warned of the "possibility of salary rollbacks" and expressed his desire to "minimize as much as possible reductions in teaching staff."
The ATA had offered a four-year deal with salary increases at 0, 0, 1 and 3 per cent, and provisions around working conditions, but Mr. Johnson rejected it. On Tuesday, he said he was disappointed the teachers turned down his latest offer, which he said would ensure labour and cost stability.
Jacquie Hansen, president of the Alberta School Boards Association, said the minister's recent offer has "some merit" as well as "some concerns," but her organization recommended boards ratify it. The previous five-year deal with the teachers and boards ended last August.
The Globe and Mail, Tuesday, Feb. 26, 2013
Byline: Dawn Walton
Salary freeze an example of Tory mismanagement says AFL
Fiscal update shows province has revenue problem, not a spending problem
Edmonton – Alberta’s fiscal update shows a government disconnected from the economy it’s supposed to manage says the Alberta Federation of Labour.
With the population booming, the economy growing and Albertans working hard, there’s no excuse for the government being unable to balance its books. And it’s time for the government to stop playing the blame game.
“They’re spinning a doom-and-gloom story and putting the blame on markets and on public-sector workers, rather than their own bad planning.” Alberta Federation of Labour president Gil McGowan said. “Just a few weeks ago, the government singled out doctors as the cause of our budget woes. A few weeks before that, they went after teachers. There’s been talk of cutting nurses. Now they’re going after unionized government workers. They’re desperate to blame anyone but themselves.”
The update shows that province’s population grew by 2.5%, retail sales were up by 8.2%, and the province added 55,000 new jobs. Corporate profits and individual incomes were also up.
“This budget update shows that Alberta’s economy is growing, our population is booming, and they don’t have the courage to collect a fair share of revenues that will support the services needed for Alberta’s growing population,” McGowan said, noting that the B.C. government released a budget that increased corporate taxes and taxes on those who make more than $150,000.
The budget update, released Tuesday, shows strong economic growth, growing population but lower-than-projected resource revenues. Because of this shortfall, the government announced salary freezes for management and almost $600 million less for public services.
“Reading their fiscal update and press release, you get dizzy how quickly they spin and pull a U-turn and then spin again. It’s good times, but bad times, it’s great times, but they need to cut,” McGowan said.
-30-
MEDIA CONTACTS:
Gil McGowan, President, Alberta Federation of Labour at 780-218-9888 (cell)
Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email [email protected].
Alberta on pace for $3.5-$4 billion deficit: finance minister
A $2.4 billion drop in resource revenue has put Alberta on pace for a deficit of between $3.5- and $4 billion — one of the highest deficits in history, Finance Minister Doug Horner revealed Tuesday in the province's third quarter fiscal update.
The sea of red ink will be four times deeper than was forecast in the budget last February. The province initially predicted an $886 million deficit, but by the second quarter had increased its deficit forecast to $2.3 to $3 billion.
Now it's forecast to be $1 billion more, which will rival the $4 billion deficit the Don Getty government posted in 1986-87.
Horner blamed the ballooning deficit on the discounted price Alberta companies are getting for the heavy oil or bitumen from the oilsands, which has had a dramatic impact on royalties and taxes.
"We're seeing declining resource revenues in Alberta and that's, for the most part, a result of Alberta's market access problem," Horner told reporters at Calgary's McDougall Centre, "I know you have heard me talk a lot about the bitumen bubble. ... It is a bubble that is not going to pop any time soon and it is costing us a lot of money."
But he noted it is not just the differential between the price of Alberta heavy oil and West Texas Intermediate that is hurting the treasury, but also the higher exchange rate and lower land lease sales.
"It doesn't paint a pretty picture for the third quarter, and to be honest, it's not getting all that prettier," Horner said.
The new deficit projection doesn't include $1.1 billion the province is borrowing for the twinning of Highway 63 to Fort McMurray or the $4.1 billion already borrowed for various financial corporations and for lending to municipalities.
The sustainability fund which has covered four previous deficits has been reduced to $3.4 billion from a one-time high of $17 billion.
The flood of red ink prompted the government to simultaneously announce a three-year management salary freeze that it says will save taxpayers $54 million. Horner also announced plans to cut public sector managers by 10 per cent over the same three-year period.
While he said he didn't want to interfere in the ongoing collective bargaining, unions should take the management wage freeze as a sign of the times.
"We've been fairly consistent in saying that there is no new money," he said. "They should take that as a strong signal of what we have in mind."
The province froze MLA wages earlier this month, rejecting a one per cent cost of living increase to their $156,311 salaries.
Horner said his Conservative government has also found $600 million of in-year savings across all ministries.
Guy Smith, president of the Alberta Union of Provincial Employees, said he doesn't think the government should be blaming a $3.5 plus billion deficit on the discounted price of bitumen, which accounts for less than $1 billion of the shortfall.
"It seems rather strange that the minister of finance would tell Albertans that this is a long-term situation because it's probably not going to be," he said. "It seems to be very much a knee-jerk reaction to a situation that won't last."
Smith said Horner is obviously interfering in the collective bargaining process before it even begins and that rather than slash management jobs, he should be redeploying managers to the front lines to meet the province's rapidly growing population and its demand for more public services.
Alberta Federation of Labour President Gil McGowan said the finance minister appears to be more intent on finding scapegoats than solutions.
"It's clear they are desperate to blame anyone but themselves," he said. "It's time for the government to stop playing the blame game."
McGowan said the question Albertans should be asking is not where to cut, but why does the province have a deficit in a booming economy.
"The real cause of the problem has to do with years and years of cuts to taxes for high income earners and corporations, and years and years of royalty giveaways," he said. "It has nothing to do with how much we pay our public sector workers."
Wildrose Leader Danielle Smith said the fiscal update shows Premier Alison Redford's provincial budget is unravelling.
"We're seeing the budget was an absolute farce," she said.
She dismissed as "window-dressing" the government's plans to cut management by 10 per cent and to freeze their salaries.
Liberal critic Kent Hehr said it was folly to blame slumping oil and gas revenues for the financial problems, saying the government needs to budget more conservatively and change the tax structure.
"Everyone knows our revenue structure is broken," he said.
NDP critic David Eggen said Albertans are angry over the Tory government's bungling of the province's finances.
"They know our economy is growing," he said. "What's wrong with this government? Why did they miss the boat that's been sailing along in Alberta?"
The Calgary Herald, Tuesday, Feb. 19, 2013
Byline: Darcy Henton and Chris Varcoe
Alberta on pace for $3.5-$4 billion deficit: finance minister
A $2.4 billion drop in resource revenue has put Alberta on pace for a deficit of between $3.5- and $4 billion — one of the highest deficits in history, Finance Minister Doug Horner revealed Tuesday in the province's third quarter fiscal update.
The sea of red ink will be four times deeper than was forecast in the budget last February. The province initially predicted an $886 million deficit, but by the second quarter had increased its deficit forecast to $2.3 to $3 billion.
Now it's forecast to be $1 billion more, which will rival the $4 billion deficit the Don Getty government posted in 1986-87.
Horner blamed the ballooning deficit on the discounted price Alberta companies are getting for the heavy oil or bitumen from the oilsands, which has had a dramatic impact on royalties and taxes.
"We're seeing declining resource revenues in Alberta and that's, for the most part, a result of Alberta's market access problem," Horner told reporters at Calgary's McDougall Centre, "I know you have heard me talk a lot about the bitumen bubble. ... It is a bubble that is not going to pop any time soon and it is costing us a lot of money."
But he noted it is not just the differential between the price of Alberta heavy oil and West Texas Intermediate that is hurting the treasury, but also the higher exchange rate and lower land lease sales.
"It doesn't paint a pretty picture for the third quarter, and to be honest, it's not getting all that prettier," Horner said.
The new deficit projection doesn't include $1.1 billion the province is borrowing for the twinning of Highway 63 to Fort McMurray or the $4.1 billion already borrowed for various financial corporations and for lending to municipalities.
The sustainability fund which has covered four previous deficits has been reduced to $3.4 billion from a one-time high of $17 billion.
The flood of red ink prompted the government to simultaneously announce a three-year management salary freeze that it says will save taxpayers $54 million. Horner also announced plans to cut public sector managers by 10 per cent over the same three-year period.
While he said he didn't want to interfere in the ongoing collective bargaining, unions should take the management wage freeze as a sign of the times.
"We've been fairly consistent in saying that there is no new money," he said. "They should take that as a strong signal of what we have in mind."
The province froze MLA wages earlier this month, rejecting a one per cent cost of living increase to their $156,311 salaries.
Horner said his Conservative government has also found $600 million of in-year savings across all ministries.
Guy Smith, president of the Alberta Union of Provincial Employees, said he doesn't think the government should be blaming a $3.5 plus billion deficit on the discounted price of bitumen, which accounts for less than $1 billion of the shortfall.
"It seems rather strange that the minister of finance would tell Albertans that this is a long-term situation because it's probably not going to be," he said. "It seems to be very much a knee-jerk reaction to a situation that won't last."
Smith said Horner is obviously interfering in the collective bargaining process before it even begins and that rather than slash management jobs, he should be redeploying managers to the front lines to meet the province's rapidly growing population and its demand for more public services.
Alberta Federation of Labour President Gil McGowan said the finance minister appears to be more intent on finding scapegoats than solutions.
"It's clear they are desperate to blame anyone but themselves," he said. "It's time for the government to stop playing the blame game."
McGowan said the question Albertans should be asking is not where to cut, but why does the province have a deficit in a booming economy.
"The real cause of the problem has to do with years and years of cuts to taxes for high income earners and corporations, and years and years of royalty giveaways," he said. "It has nothing to do with how much we pay our public sector workers."
Wildrose Leader Danielle Smith said the fiscal update shows Premier Alison Redford's provincial budget is unravelling.
"We're seeing the budget was an absolute farce," she said.
She dismissed as "window-dressing" the government's plans to cut management by 10 per cent and to freeze their salaries.
Liberal critic Kent Hehr said it was folly to blame slumping oil and gas revenues for the financial problems, saying the government needs to budget more conservatively and change the tax structure.
"Everyone knows our revenue structure is broken," he said.
NDP critic David Eggen said Albertans are angry over the Tory government's bungling of the province's finances.
"They know our economy is growing," he said. "What's wrong with this government? Why did they miss the boat that's been sailing along in Alberta?"
The Calgary Herald, Tuesday, Feb. 19, 2013
Byline: Darcy Henton and Chris Varcoe
P3s, other alternative financing on Alberta government’s radar
The Redford government's promise to keep building Alberta despite budget woes and bitumen bubbles could lead the province to embrace alternative financing to pay for high-priority construction projects.
Premier Alison Redford and high-ranking cabinet ministers have said repeatedly since last fall they will borrow to bankroll critical infrastructure projects such as the twinning of Highway 63 to Fort McMurray.
Some of that debt could come in the form of public-private partnerships — an alternative method of building, maintaining and paying for major public works projects often referred to by the acronym P3.
"I think we've been pretty clear, we're not only going to be using P3s, but we're going to be using the capital markets for infrastructure and only when it makes financial sense to do so," Finance Minister and Treasury Board president Doug Horner said in an interview last week.
The 2013-14 budget to be delivered March 7 should add clarity. But if the province decides to use P3s to spread out construction costs, it will build on a decade of experience with the format.
Since 2003, the government has used the financing method to build large sections of Edmonton and Calgary's ring roads, as well as 41 schools and a water and sewer treatment plan in Kananaskis.
Under a P3, a government signs a contract with a private partner who agrees to design, build, maintain, and sometimes operate, the project over a period of time. That private company finances some or all of the project, and the government repays the company, with interest, over a set term of several years.
As an example, the northeast leg of Anthony Henday Drive, scheduled to open in 2016, is a $1.81-billion P3 project that will be repaid over 34 years.
Redford has made no secret of her interest in P3s. When she became honorary chairwoman of the Canadian Council for Public-Private Partnerships in November, she said in a statement she was pleased to work with the council to champion P3s across Canada.
After last week's Alberta Economic Summit, Redford described discussions related to P3s as "fundamental."
"There was much comment about the fact this isn't about incurring debt, this is about assuming risk," she said. "That these are still assets that continue to be publicly owned, but they allow us to build them in a more effective way."
Still, the subject of borrowing to pay for schools, roads or housing projects — always contentious in a province that wore its debt-free status like a badge of honour — becomes even more complicated when discussing P3s.
Advocates praise them as an efficient way of building and transferring risk from the public to the private sector. The P3 for the northeast leg of the Henday means the 27-kilometre stretch of road will be finished three years faster than through traditional channels and for $340 million less, according to the province.
Critics, however, pan P3s for their lack of flexibility and contractual secrecy.
NDP MLA David Eggen pointed to the complaints that surfaced in the first round of P3 schools that opened in Edmonton and Calgary in September 2010. Those schools, built on a standard design, faced many restrictions on how they could be used.
Alberta Education said last March they adjusted the contracts for the next round of P3 schools to allow outside groups to lease space for things like child care programs or community events.
Alberta Federation of Labour president Gil McGowan said he was disappointed to hear Redford focusing on P3s after the summit. He believes they do not provide better value for taxpayers.
"We now have more than three decades of (international) experience with P3s and what that experience shows us is that P3s are a shell game that almost never works for citizens and taxpayers," McGowan said.
"P3s are helpful to politicians in the short run because it allows them to move upfront costs for large infrastructure projects off the books in the short term, but over the long term we end up paying at least as much, if not more."
Wildrose leader Danielle Smith said P3s are simply another form of borrowing, which her party opposes in all forms. "We simply do not believe that once you start down the track of borrowing money that a government will ever stop," Smith said.
Anthony Boardman, Van Dusen professor of business administration at the University of British Columbia's Sauder School of Business, studies P3s. He said experience indicates that if a project is complicated, it may be better to keep it within government.
"Over time, what's happened is some governments are better at managing them, although there's still a fair amount of evidence we pay too much for them," Boardman said.
There are ways the government can make sure a P3 is a good fit, he said. One important step is to have an independent evaluation process looking not just at the financial impact of a P3, but also the social costs.
Governments often fail to take the social consequences of P3s into account, such as limits the arrangement might impose on community groups' use of a school building.
"That's a problem," Boardman said. "The reason why they don't is because it's not easy. But instead of doing the wrong thing because it's easy, on all projects we should devote the resources to getting it right."
The government also needs to be as transparent as possible, Boardman said.
In Alberta, the provincial government publishes more information today about new P3s than it did for the first P3s a decade earlier. Alberta Transportation's information about the northeast leg of the Henday includes a value for money report and contract information. (http://www.transportation.alberta.ca/3787.htm).
It also consults with the Advisory Committee on Alternative Financing, a panel of private-sector experts that examines the business cases for P3s and gives its opinions to Treasury Board.
Committee chairman Tim Melton, executive chairman of Melcor Development's board of directors, said P3s can be an excellent way for government to build but are not the best fit for every project.
Whether the government uses P3s, traditional bonds or cash to pay for construction, Alberta's finance minister said the province will take the advice Albertans have been giving to act more like a business when it comes to deciding how to pay for infrastructure.
"Money-in-the-mattress mentalities don't work," Horner said. "It certainly doesn't create value for future generations of Albertans.
"We have growth in this province and that makes us different than almost every jurisdiction in the country and we have to manage for that."
The Edmonton Journal, Monday, February 18, 2013
Byline: Sarah O'Donnell