Big-Spending Alberta Irks Both Neighbours

Media Appearances, Public Sector, Frontier Centre

Behind the scenes at the recent premiers' conference, B.C. officials could be heard to grumble how the federal government's $1-billion boost in health funding to Alberta was a reward for bad behaviour.

Their point was that for all Alberta's reputation as a right-of-centre bastion, its provincial government is a flagrant over-spender, especially when it comes to compensating the public sector workforce.

Alberta government-approved wage rates, benefit packages and fee schedules are routinely cited by B.C. public sector workers in seeking catch-up increases in their contract bargaining.

Teachers have repeatedly made an issue of the Alberta advantage (or, as they see it, disadvantage) in their stalled talks in the public school sector. In the past, nurses, doctors and other health care professionals have done the same.

Doubtless the disparity will be highlighted again in the current round of public sector bar-gaining, with government negotiators trying to hold the line on compensation costs while workforce representatives point to the handsome pay packages available on the other side of the mountains.

As it happens, the full extent of Alberta's generosity was documented this week in a report from the school of public policy at the University of Calgary. The study reviewed public sector pay scales over the past decade and found that compensation had climbed at almost twice the rate of the country's other provinces and territories.

"On a per-employee basis, public sector wages in Alberta were broadly in line with public sector wages in the rest of the country in 2000, but are now higher, and in some cases significantly higher, across all categories," said the report.

"Overall, the public sector wage bill in Alberta has increased 119 per cent in the decade following the turn of the century, compared to 63 per cent in the rest of Canada."

With much of the cost of government programs being accounted for by compensation costs of one kind or another, those increases ate up virtually every dollar that the province plowed into program spending over the same decade.

Provincial revenues increased by $8.5 billion over the 10 years but the tab for public sector compensation went up $8.1 billion, leaving just five per cent of the new dollars for all other needs and purposes.

The report discounted the possibility that the increase was accounted for by hiring more staff to meet the service needs of a growing population. The workforce grew by 40 per cent in those years while the population increased 24 per cent.

Nor was it the case that public sector wages had to keep pace with a soaring private sector in the oil-rich province. Public sector wages increased by half again as much as those in the private sector, according to the report.

Looking at how things stood at the end of the decade, the study found wide disparities between the pay scale in Alberta and other provinces, notably a better than 50-percent gap for workers in health care and social services.

The latter finding helps explain the call from this week's meeting of the premiers for the provinces and territories to "explore more coordinated management of human resources to address com-petition across health systems."

Or as Saskatchewan's Brad Wall put it, "we need to stop competing against each other for human resources." He's fed up with the cost of fending off cross-border recruitment drives from cash-rich public sector entities. On a matter of specific interest to the current round of compensation talks in B.C., the report found that for the higher education sector, Alberta spent 18 per cent more on wages and salaries per employee than B.C. For general government, the gap was 37 per cent, and for health care, it was close to 50 per cent.

Armed with the latter figure, one can readily see why the B.C. government would be challenging the wisdom of the federal government's handover on the health care funding formula – i.e., another $1 billion for Alberta when most of those dollars will go to underwrite an already inflated pay scale.

Nor are the Liberals likely to overlook these findings, for one of the two authors of the study was Ken Boessenkool, recently appointed as chief of staff to Premier Christy Clark.

Boessenkool, a political consultant and former lobbyist, has been an executive fellow at the public policy school. He conducted the review with Ben Eisen of the Winnipeg-based Frontier Centre for Public Policy.

In an earlier study for the public policy school, Boessenkool found that when budget numbers were adjusted for inflation, Alberta was spending about 30 per cent more than B.C. to deliver the same services to its population.

Not surprising, given that much of the cost of government programs is somebody's pay cheque, benefit package or fee for service. In terms of remedies, his latest report concludes by recommending that if the Alberta government is looking for ways of reducing spending to eliminate its deficit, it could do much worse than setting an objective of bringing their (public sector) wages in line with those of other Canadian provinces."

Particularly B.C., he might well add, now that he's taken a senior staff position in a government with its own budget deficit and mounting pressure to play wage catch-up with its big-spending neighbour.