Should Alberta have a PST?

[MichaelS]

Originally Posted by Doug

Yes and no. Alberta has a younger and more urbanized population than the Canadian average, which should keep costs such as health care down, yet Alberta has the second highest healthcare spending per capita after Newfoundland. The biggest question mark is around public service wages. Private sector wages in Alberta are the highest in the country, but that is only relevant in areas where the public sector has to compete for the same resources. In areas, where it doesn't then the only competition is with other provinces. For example, an IT person could easily move back and forth between the public and private sectors while a nurse cannot. Therefore, a government IT wage must be competitive with the private sector whereas a that for a nurse does not. In general Alberta pays public sector employees far higher than do other provinces. I would also argue that government could get away with paying less than private sector alternatives in cases where the skills are transferable as government offers security while the private sector does not.

While public servants may not be able to work in private industry depending on their skill set (nurses as an example), they do have to compete with private wage earners for things like housing. If cost of living is higher in Alberta, it justifies the higher wages for them (to a degree).

[Doug]

Originally Posted by MichaelS

While public servants may not be able to work in private industry depending on their skill set (nurses as an example), they do have to compete with private wage earners for things like housing. If cost of living is higher in Alberta, it justifies the higher wages for them (to a degree).

Irrelevant unless the higher cost of living drives them out of the province or out of the profession.

[MichaelS]

Originally Posted by Doug

Irrelevant unless the higher cost of living drives them out of the province or out of the profession.

True, but is that the case? I am not sure, but if it can be shown that we were in fact losing/not able to recruit due to a higher cost of living, it could justify the higher wages.

[lubicon]

Depending on who yuo believe, not only do public sector employees make more on average than private sector, they also get much better benefits.

http://www.edmontonjournal.com/busin...027/story.html

[DizzyEdge]

Originally Posted by Doug

Of course. Every one tries to bargain for higher wages. Alberta politicians have had the luxury of bullish oil price forecasts so they could get away with being lazy and giving them what they wanted. Now they don't.

Premier Redford specifically called out that doctors and teachers in Alberta earn 20-30% more than in the nxt highest paying province.

Yeah, that's excessive. We should be competitive, but that seems much more than competitive.

[DizzyEdge]

I'm wary about the argument about public sector having better benefits... I hate the whole "well they have something I don't so they shoudn't either" race to the bottom, unless the benefits are actually unreasonable. Otherwise I don't think it's outrageous for the govt to lead by example with good benefits.

[MalcolmTucker]

Originally Posted by Doug

For example, an IT person could easily move back and forth between the public and private sectors while a nurse cannot.

Except for all the nurses that work for private companies. Not every nurse works for AHS, or organizations funded by the taxpayer.

[Doug]

Originally Posted by MalcolmTucker

Except for all the nurses that work for private companies. Not every nurse works for AHS, or organizations funded by the taxpayer.

The ones that work for private companies do so for less than UNA scale. The same is generally true for teachers working for privates schools: the wages are lower.

[lubicon]

Originally Posted by DizzyEdge

Yeah, that's excessive. We should be competitive, but that seems much more than competitive.

That's because the cost of living and doing business is that much higher in Alberta.

Originally Posted by DizzyEdge

I'm wary about the argument about public sector having better benefits... I hate the whole "well they have something I don't so they shoudn't either" race to the bottom, unless the benefits are actually unreasonable. Otherwise I don't think it's outrageous for the govt to lead by example with good benefits.

Just remember who ultimately foots the bill for this. Not saying it's good or bad, just to keep that in mind.

[MalcolmTucker]

Originally Posted by Doug

The ones that work for private companies do so for less than UNA scale. The same is generally true for teachers working for privates schools: the wages are lower.

For nurses you have to take into account a lot of private nursing jobs are 9-5 are UNA jobs are shift work with 24 hour coverage. A lot of the study suffered from poor methods too, comparing police with private security, teachers with early childhood educators and other apples to oranges comparisons.

Just important to remember lowering wages is really hard. This is not the 1990s with a large recession and unemployment. Housing prices bottomed out in the mid 90s and cost of living I would bet was falling.

What was done in the mid 90s made sense for the economic conditions that existed then. For the amount services needed just to keep up with population growth holding the line will be hard enough.

If people think you could cut 10% off of government payrolls and not hurt front line services I guess you have a right to think that, but it doesn't make it true. It would not solve the deficit issue, coming in decidedly less than $2 billion. Even the Wildrose has protested the government's attempts to limit the increase in compensation to doctors saying it would limit recruitment.

There is little fat to cut. The government (the central services minus schools, hospitals (AHS), universities and colleges) has less employees this year than it had in 1996. AHS spent the least amount on administration compared to the systems in other provinces. Administration gets a bad rap, but it was a lack of administrative controls and over-site that has been implicated in recent controversies.

Cuts would be real and hard. Less services for more people. Even the government's no increase plan is going to be hard. The province is likely to top 3% population growth this year. Considering the growth of the economy, inflation, and population growth a freeze has a big impact on a real per capita basis.

If you want to check out a neat tool, the government has put together http://www.budgetchoice.ca/ where you can try your hand at adjusting the budget into balance. You can also suggest other budget measures on the site.

[Doug]

Originally Posted by MalcolmTucker

For nurses you have to take into account a lot of private nursing jobs are 9-5 are UNA jobs are shift work with 24 hour coverage. A lot of the study suffered from poor methods too, comparing police with private security, teachers with early childhood educators and other apples to oranges comparisons.

Just important to remember lowering wages is really hard. This is not the 1990s with a large recession and unemployment. Housing prices bottomed out in the mid 90s and cost of living I would bet was falling.

What was done in the mid 90s made sense for the economic conditions that existed then. For the amount services needed just to keep up with population growth holding the line will be hard enough.

If people think you could cut 10% off of government payrolls and not hurt front line services I guess you have a right to think that, but it doesn't make it true. It would not solve the deficit issue, coming in decidedly less than $2 billion. Even the Wildrose has protested the government's attempts to limit the increase in compensation to doctors saying it would limit recruitment.

There is little fat to cut. The government (the central services minus schools, hospitals (AHS), universities and colleges) has less employees this year than it had in 1996. AHS spent the least amount on administration compared to the systems in other provinces. Administration gets a bad rap, but it was a lack of administrative controls and over-site that has been implicated in recent controversies.

Cuts would be real and hard. Less services for more people. Even the government's no increase plan is going to be hard. The province is likely to top 3% population growth this year. Considering the growth of the economy, inflation, and population growth a freeze has a big impact on a real per capita basis.

If you want to check out a neat tool, the government has put together http://www.budgetchoice.ca/ where you can try your hand at adjusting the budget into balance. You can also suggest other budget measures on the site.

I worked in the public sector in the 90s during the cutbacks. You are correct that the labor market was weak and cost of living was stagnant to falling, but incorrect that it impacted front line services. If anything, ending the country club atmosphere shocked the public sector out of complacency. Perhaps a better solution today would be right to work type legislation that would allow market forces to determine compensation and finally introduced merit based compensation rather than stupid union driven policies like seniority. If public sector employees are truly being paid what they are worth, they would have nothing to fear.

[MalcolmTucker]

but incorrect that it impacted front line services

I am pretty sure that is not the common perception. In any case, hard to keep going back to the same stone for more and more. There is little way the government could close the line solely by wage role backs - would you stay in your current job for long if you had your salary cut by a third?

As for pensions, they are a 50/50 split contribution employee/employer. Pretty similar to programs at various employers I have worked or interview with. Believe me, the off the top contribution makes quite the dent on the paycheck. It isn't the free sweet ride commentators try to make it seem with beggar thy neighbour pronouncements (10% up to cpp max I believe between 50 and 55k, either 14 or 16% above it). The bond market is hurting them right now making them hard to be actuarially sound if you assume low interest rates forever. The contribution rates have been increased twice in the last two years and it will take a few years to reflect the changes but there is no public sector pension crisis.

[Doug]

Most private sector jobs have no pension. Some have RRSP matching, but rarely past about 6%. The other big difference is that government pensions are defined benefit.

People may not like having wages cut, but that is only relevant if they choose to exit the job as a consequence. Alberta overpays its public sector to such an extent, I'd be willing to take the chance that won't happen in signficant numbers.

The 90s cut backs were a public relations exercise. Nobody is ever happy with public services so it is very easy to blame lack of funding. The unions and professional associations did a better job at shaping public opinion than did the government. Maybe right to work would throw such a curve ball at them they would be less successful this time around.

Wages are the only way to constrain government. Debt servicing is outside government control and capital expenditure in theory only happens when it provides a positive return. In hindsight, Alberta would have been far better off bargaining harder with its employees over the last decade.

Maybe the Redford government should look to the Harper government for inspiration in how to rip off the bandaid: an omnibus bill combining a budget with no enforcement of union dues, end of mandatory collective bargaining, eliminating the public sector's right to strike, eliminating tax deductibility of union and professional dues.

[Tropics]

This province does not need a PST, what it needs is you finally get a clue and realize that selling off discounted bitumen which is upgraded outside of Canada, has value added to the product as well as employing tens of thousands of people (who pay taxes) and is then sold at a premuim has to stop.

Alberta has HUGE reserves of bitumen not only in the Athabasca Oil Sands but also in the Grosmont Formation and many other sections of the carbonate traingle.

We are looking at 50+ years of heavy oil production and spending those next 50 years selling off our dicounted natural reserves so that companies in the USA can make money refining them and then selling them off to China is beyond idiotic.

We should be actively working with companies to get refineries built here in Alberta, we should be getting those refineries employed with Albertans who then pay taxes on their incomes. We should be getting royalties on the selling price of the final value added products that are ready for the consumer, not selling off the raw bitumen to be shipped eleswhere and have other countries make the money on the upgrading.

If Alberta is stupid enough to be sitting on such a huge and valuable resourse and cannot figure out how to actual prosper from it then perhaps the people in charge need to change to people that can actually figure it out.

CALGARY – The so-called "bitumen bubble" is actually an opportunity for the province to add value and create jobs, says the Alberta Federation of Labour. R

In a new report, the AFL shows that the difference in price between bitumen and crude makes it economically viable to invest in the infrastructure needed to upgrade Alberta’s oil resources here.

“The price of bitumen is low right now because we’re flooding the market with bitumen,” Alberta Federation of Labour president Gil McGowan said. “And the solution they’re proposing is building more pipelines to flood the market even further. That’s just not how markets work. We need to refine the bitumen here, so that we’re selling what the international markets want: synthetic crude.”

Using the government’s own estimates, the report shows that Alberta can build on the Lougheed legacy and create more than 12,000 long-term stable jobs through upgrading.

“The Conservatives have promised to make sure that 65 per cent of Alberta’s bitumen is upgraded here, but have repeatedly broken that promise because they say that the price of bitumen is too high,” McGowan said. “The price isn’t high anymore, but they’re still not listening to the markets. The differential should be seen as an opportunity, not a threat."

In light of Alberta’s projected $3-billion deficit, getting a fair value for the province’s natural resources is of paramount importance. According to the report, if Alberta were selling synthetic crude oil instead of raw bitumen, producers would be earning $38 more per barrel.

“By not requiring upgrading in Alberta, we’re pumping out more of the wrong thing,” McGowan said. “We’re shipping good oil sands jobs elsewhere, when the economics of upgrading make a lot more sense.”

from http://www.afl.org/index.php/Press-R...g-release.html

[MalcolmTucker]

People may not like having wages cut, but that is only relevant if they choose to exit the job as a consequence. Alberta overlays its public sector to such an extent, I'd be willing to take the chance that won't happen in sit indicate numbers.

I think your experience may be coloured a bit more by living through a much tougher economy for more of your adult life, but you really think we could have recruited from across Canada and the world to staff the South Calgary Hospital while paying significantly less than other provinces? And that is the key, we are growing a lot, so how do you reduce costs by 30% while adding staff (or adding contracted services)? I don't think you can.

The wage/benefits cuts would be so drastic - we aren't talking about merely a freeze or a 5% roll back.

So you cut programs that aren't needed anymore, aren't meeting their objectives, or haven't realized as much efficiencies as they could have through technological change.

The only problem is when the government tries to do such things, even the Wildrose who claims to want to balance the budget complains about cuts!

Also, you may want to know the Wildrose is opposed to even modest growth in the total amount of physcian compensation (they want spending to grow more than the government does). Having growth of ~$3 billion of spending on doctors while cutting others means even deeper cuts elsewhere.

[Doug]

Originally Posted by MalcolmTucker

I think your experience may be coloured a bit more by living through a much tougher economy for more of your adult life, but you really think we could have recruited from across Canada and the world to staff the South Calgary Hospital while paying significantly less than other provinces? And that is the key, we are growing a lot, so how do you reduce costs by 30% while adding staff (or adding contracted services)? I don't think you can.

The wage/benefits cuts would be so drastic - we aren't talking about merely a freeze or a 5% roll back.

So you cut programs that aren't needed anymore, aren't meeting their objectives, or haven't realized as much efficiencies as they could have through technological change.

The only problem is when the government tries to do such things, even the Wildrose who claims to want to balance the budget complains about cuts!

Also, you may want to know the Wildrose is opposed to even modest growth in the total amount of physcian compensation (they want spending to grow more than the government does). Having growth of ~$3 billion of spending on doctors while cutting others means even deeper cuts elsewhere.

I'm not suggesting paying lower than other provinces, more like a bit more than other provinces, instead of 30% more. Wage rates aren't the only way to save money. Do government employees really need 2-3 sick days per month, the ability to retire in their 50's, 6 plus vacation weeks per year? The biggest savings would likely come from reducing management layers and eliminating dead weight employees. Again, the only way to really find out the right mix would be to reduce the barriers between the private and public sector labor markets.

[Doug]

Originally Posted by MalcolmTucker

For nurses you have to take into account a lot of private nursing jobs are 9-5 are UNA jobs are shift work with 24 hour coverage. A lot of the study suffered from poor methods too, comparing police with private security, teachers with early childhood educators and other apples to oranges comparisons.

Just important to remember lowering wages is really hard. This is not the 1990s with a large recession and unemployment. Housing prices bottomed out in the mid 90s and cost of living I would bet was falling.

What was done in the mid 90s made sense for the economic conditions that existed then. For the amount services needed just to keep up with population growth holding the line will be hard enough.

If people think you could cut 10% off of government payrolls and not hurt front line services I guess you have a right to think that, but it doesn't make it true. It would not solve the deficit issue, coming in decidedly less than $2 billion. Even the Wildrose has protested the government's attempts to limit the increase in compensation to doctors saying it would limit recruitment.

There is little fat to cut. The government (the central services minus schools, hospitals (AHS), universities and colleges) has less employees this year than it had in 1996. AHS spent the least amount on administration compared to the systems in other provinces. Administration gets a bad rap, but it was a lack of administrative controls and over-site that has been implicated in recent controversies.

Cuts would be real and hard. Less services for more people. Even the government's no increase plan is going to be hard. The province is likely to top 3% population growth this year. Considering the growth of the economy, inflation, and population growth a freeze has a big impact on a real per capita basis.

If you want to check out a neat tool, the government has put together http://www.budgetchoice.ca/ where you can try your hand at adjusting the budget into balance. You can also suggest other budget measures on the site.

Best I could do was a $3.9B deficit (http://www.budgetchoice.ca/2012/shar...ARE=8636623723). If the options were available I would have added an even higher gas tax increase, per use health care fees, a cross the board 10% wage cut for all government employees followed by no more than 2% increases for the next 4 years, 15% head count reduction through collapsing departments, eliminating management positions and whacking low performing employees and 10% savings on all government procurement through more aggressive negotiation. More aggressive terms beyond that be converting all defined benefit pension plans to defined contribution and only covering half of any shortfalls. I've worked for several massive companies that went through purges after years of binge. Any large organization that hasn't cleaned house in several years is carrying lots of fat. I workd for Alberta Health in 1993, which got hit with a 40% head count reduction. We didn't miss any of those employees. In fact productivity increased with fewer useless manager requests and morale sucking coworkers shown the door.

Other provinces would probably benefit huge from Alberta austerity as Alberta has set the benchmarks against which they've been forced to attempt to compete.

The question I always ask is how did the province run big surpluses from the mid 90s through mid 2000s with substantially less resource revenue than today? nat gas was higher for part of that period but oil was much lower and bitumen was close to zero in terms of royalty take. The only tax cuts were the 10% flat personal rate introduced in 2000 and end of health care premiums in around 2007. I don't have the reference but I saw one showing that the public sector payroll doubled between 2000 and 2008 even though provincial GDP only grew by around 50 some %.

[kw5150]

I think this deficit is all because we built the ring roads for both cities and several new hospitals (along with complete renos of other hosptials) The projects decided to go forward as "make work" projects when the recession hit.

I dont think we will see spending of this calibre for another 20 years so we probably dont need a provincial sales tax. We can find other solutions to make up some of this infrastructure debt. If not, a 1 or 2% sales tax is alright by me. Whatever, every other province has one......

[kw5150]

I agree. Whack all of the useless employees or at least threaten. I know someone who works in the health industry and bad workers cannot be fired....ever. She hates it. She has been in the biz 35 years.

Originally Posted by Doug

Best I could do was a $3.9B deficit (http://www.budgetchoice.ca/2012/shar...ARE=8636623723). If the options were available I would have added an even higher gas tax increase, per use health care fees, a cross the board 10% wage cut for all government employees followed by no more than 2% increases for the next 4 years, 15% head count reduction through collapsing departments, eliminating management positions and whacking low performing employees and 10% savings on all government procurement through more aggressive negotiation. More aggressive terms beyond that be converting all defined benefit pension plans to defined contribution and only covering half of any shortfalls. I've worked for several massive companies that went through purges after years of binge. Any large organization that hasn't cleaned house in several years is carrying lots of fat. I workd for Alberta Health in 1993, which got hit with a 40% head count reduction. We didn't miss any of those employees. In fact productivity increased with fewer useless manager requests and morale sucking coworkers shown the door.

Other provinces would probably benefit huge from Alberta austerity as Alberta has set the benchmarks against which they've been forced to attempt to compete.

The question I always ask is how did the province run big surpluses from the mid 90s through mid 2000s with substantially less resource revenue than today? nat gas was higher for part of that period but oil was much lower and bitumen was close to zero in terms of royalty take. The only tax cuts were the 10% flat personal rate introduced in 2000 and end of health care premiums in around 2007. I don't have the reference but I saw one showing that the public sector payroll doubled between 2000 and 2008 even though provincial GDP only grew by around 50 some %.

[240glt]

I think this deficit is all because we built the ring roads for both cities and several new hospitals (along with complete renos of other hosptials) The projects decided to go forward as "make work" projects when the recession hit.

I can tell you, as someone deeply involved in major upgrades to Grey Nuns' in Edmonton, and Foothills & PLC in Calgary that the condition of those facilities were allowed to degrade to was almost criminal. Deferred maintenance (what we in the industry call "breakdown maintenance") and capital upgrades can only go on for so long.

The condition that many buildings were allowed to degrade to over the Klein years is almost criminal in nature, and has ended up costing Albertans much more than the money saved by not doing anything at the time. Coming from BC, you never saw schools, hopsitals & other civic infrastructure in such bad shape.

Remember, as a general rule, 55% of the cost of a building over it's lifecycle is operations, maintenance and repairs. Think about how long a car would last if you never changed the oil, relined the brakes or gave it a tune-up.