EDMONTON — Premier Ed Stelmach used a provincewide broadcast Wednesday to warn Albertans of coming budget cuts and belt-tightening measures, starting with a two-year wage freeze for 6,500 senior bureaucrats.
But the 20-minute paid address was short on specifics on how the premier will fulfil his promise to eliminate a record $7-billion deficit in three years without raising taxes.
“We’ll limit government spending and live within our means,” the premier said in the pre-taped message. “This plan will not increase taxes.
“You cannot tax your way out of recession. That would only hurt the fragile recovery that’s starting to emerge.”
Liberal Opposition Leader David Swann said the broadcast reflected a lacklustre premier who said little to justify the $134,000 cost for airtime and production.
“I was kind of struck by his lack of energy,” said Swann. “He seemed to be quite subdued and not very enthused about this whole effort to give Albertans a sense of confidence.”
“I think it was a very disappointing and a rather superficial public relations exercise.”
The wage freeze will save $22 million over two years and affects 4,400 managers in all government departments, plus 2,100 senior staff, including bureaucrats earning up to $400,000 a year.
“We will be asking the entire public sector to share in this effort,” said Stelmach. “For a short while, we must all share in the goal of putting jobs before raises.”
This does not mean the government plans to legislate wage rollbacks for teachers, nurses and other public-sector workers, said Tom Olsen, Stelmach’s spokesman.
The premier is simply sending a signal to their unions that any wage hikes in the short term could result in job cuts because of budget constraints, he said.
The 22,000 government employees represented by the Alberta Union of Provincial Employees got a 4.3 per cent raise on Sept. 1 and bargaining on a new contract won’t begin until August.
Union president Doug Knight said he’s leery about any talk of wage freezes after the bitter experiences that occurred in the 1990s when Ralph Klein was premier.
“The workers accepted the rollback and then the government privatized transportation and liquor stores and laid off health-care workers,” said Knight.
Economist Mike Percy said there are several factors working against Alberta as Stelmach’s Tory government tries to pull it finances out of a fiscal tailspin.
Natural gas prices are much lower than expected and the Canadian dollar is much higher than the government forecast, which means billions of dollars in lost revenues, said Percy.
“The province is between a rock and a hard place,” he said in an interview. “For every cent the dollar appreciates, that’s a loss of $242 million for the province.”
“So I think the forecast of being out of deficit within three years is going to require luck with regard to the exchange rate and gas prices.”
Percy said Alberta has plenty of room to cut spending and increase taxes, considering the province has some of the lowest tax rates in Canada.
But he rejected the idea of a wage freeze for Alberta’s highest paid civil servants, explaining that it could result in some of the best people leaving.
“The people that you lose are the most skilled because they have the most opportunities,” he said. “And you also create problems when it comes to recruiting.”
There were high expectations from Stelmach in his first televised address in two years.
Two recent polls suggest the premier’s popularity is in a nose-dive and an upstart right-wing party called the Wildrose Alliance is quickly gaining ground after winning a long-held Tory seat in a Calgary byelection last month.
Stelmach is also facing a mandatory leadership vote by 1,600 Tory party delegates who will gather Nov. 7 in Red Deer.
Some veteran Tories are grumbling about Stelmach’s leadership and a few have jumped to the Wildrose Alliance, which will pick a new leader on the weekend.
Stelmach has shown little reaction to the poll results or the divisions within his own Progressive Conservative Party.
But business leaders appear to be growing impatient with the premier’s reluctance to lay out details of where spending will be cut or what programs will be eliminated.
“The time is now to start rolling out detailed information about the way forward,” said Richard Truscott, Alberta director of the Canadian Federation of Independent Business.
“What are they going to do if the hard times linger and government finances don’t recover?” said Truscott.
Scott Hennig, with the Canadian Taxpayers Federation, said there has been plenty of planning going on behind closed doors, so its time to level with Albertans.
“A public service manager getting a wage freeze, in terms of dollars that’s not really going to do too much,” said Hennig. “I think it’s time to hear where the cuts are going to be happening.”
The premier repeated in his broadcast that the government will use $17 billion in savings to cover budget shortfalls.
Stelmach said there will be some difficult decisions in the coming months and people shouldn’t fear change — especially in health care.
“These are challenging times,” he said. “Businesses are hurting.”
“Albertans are concerned about their jobs, paying their bills, savings for their kids’ education and planning for their retirement and old age.”
The premier also revealed details of a capital bond program that will allow investors to know which specific school or hospital project their money is being used to build.
The bonds will go on sale this fall.