From the Fraser Institute

By Tegan Hill

This year, program spending will reach a projected $14,334 per Albertan, which is $1,603 more per person (inflation-adjusted) than the Smith government originally planned to spend this year as outlined in the 2022 mid-year budget update.

Despite recording a $4.3 billion surplus last year, Premier Danielle Smith remains committed to a new approach to Alberta finances that relies less heavily on resource revenue, which includes restraining spending levels below the rate of inflation and population growth. That’s a big step forward, but is it enough to stabilize Alberta’s boom and bust rollercoaster?

First, some background.

After nearly a decade and a half of routine budget deficits, Alberta swung to a budget surplus when resource revenue (which includes includes oil and gas royalties) skyrocketed from $3.1 billion in 2020/21 to $16.2 billion in 2021/22. In 2022/23, the government enjoyed the highest level of resource revenue on record and relatively high levels have continued in recent years. Correspondingly, Alberta’s surpluses have continued.

Alberta governments have a habit of increasing spending during times of high resource revenue, such as the province is currently experiencing, to levels that are unsustainable without incurring deficits when resource revenue inevitably declines. That’s why the Smith government’s commitment to spending restraint is an important one.

Unfortunately, however, due to the Smith government’s spending increases in previous years, this restraint won’t go as far in stabilizing provincial finances. Moreover, there are a number of limitations and exceptions to these new spending rules that may impede their effectiveness.

Consider that this year, program spending will reach a projected $14,334 per Albertan, which is $1,603 more per person (inflation-adjusted) than the Smith government originally planned to spend this year as outlined in the 2022 mid-year budget update.

As shown above, program spending (inflation-adjusted) will reach a projected $14,041 per person in 2025/26 and a projected $13,750 per person in 2026/27, which is equivalent to per-person increases of $1,571 and $1,538, respectively, compared to the original plan in 2022.

So while per-person (inflation-adjusted) spending is set to decline, which aligns with the Smith government’s commitment, this restraint is starting from a higher base level due to spending decisions thus far. That means more work needs to be done to rein in spending.

Indeed, for perspective, if the Smith government had simply stuck to its original plan, spending would be closely aligned with stable, more predictable sources of revenue. And ultimately, that’s the way to avoid deficits.

There’s also several limitations and exceptions for the government’s new spending rule. For example, the spending limit applies only to “operating expense,” which does not include longer-term spending, disaster and emergency assistance, spending related to dedicated revenue, or contingencies. As a result of various limits and exceptions, total program spending growth in 2023/24 exceeds inflation and population growth by 1.8 percentage points. Put simply, these limitations and exceptions add to the risk of budget deficits.

Sustainable finances have been impeded by increases in per person spending since 2022. So while the Smith government deserves credit for its commitment to restrain spending moving forward, Alberta’s fiscal challenges aren’t over.

From the Fraser Institute

By Mackenzie Moir

Not only does Canada pay the most for health care (as a share of its economy) among high-income countries with universal health care (after adjusting for differences in the age structure of the population), it also has some of the fewest medical resources and the worst access to timely medical care.

We hear a lot about how much money we must spend to simply maintain the status quo in health care, with billions of new dollars from Ottawa just to keep the same system afloat.

The irony, of course, is that maintaining the status quo imposes some of the harshest costs on Canadians. Last year, Canadians could expect to wait an average of 13.1 weeks to receive treatment after receiving a specialist consultation. Not only was this wait more than two times longer than in 1993, it resulted in an estimated 1.2 million procedures being waited for across the country.

And at one month longer than the wait doctors consider reasonable, these delays are not benign. In fact, they can produce devastating physical and psychological consequences.

While it may be tempting to blame our current predicament on the aftereffects of the pandemic, in reality, long waits were the norm long before COVID. In fact, in 2019 the wait between a specialist consultation and receiving care was nearly two and a half weeks less than today, and the number of procedures being waited for (1.1 million) was slightly less than the number today (1.2 million).

In addition to the physical and psychological costs of waiting, there are also serious economic costs. According to a new study, wait times for non-emergency treatment in 2023 cost Canadians $3.5 billion in lost wages and productivity, or $2,871 per person waiting for a procedure. For perspective, this is more than double the cost in 2004 (inflation-adjusted). After we account for patient leisure time outside of work, the estimate for 2023 increases to $10.6 billion or $8,730 per person waiting.

Some advocates of the status quo suggest these costs are necessary to maintain our universal health-care system but international evidence indicates the opposite. In fact, not only does Canada pay the most for health care (as a share of its economy) among high-income countries with universal health care (after adjusting for differences in the age structure of the population), it also has some of the fewest medical resources and the worst access to timely medical care.

What do other higher-performing universal health-care systems do differently?

To varying degrees, they embrace the private sector as a partner. For example, Australia now delivers the majority of non-emergency surgeries and care through private hospitals, while frequently outperforming Canada and spending less than we do (as a share of the economy).

Here at home, we’ve seen what real reform, which embraces the private sector, can do. In Saskatchewan between 2010 and 2014, the government contracted out publicly-financed procedures to private clinics, which helped lower the province’s wait times from some of the longest in the country (26.5 weeks in 2010) to some of the shortest (14.2 weeks in 2014). Quebec, which has consistently “low” wait times, in recent years has contracted out one in six day-surgeries to private clinics.

Despite objections from defenders of today’s unworkable status quo, there’s in fact a way to improve Canada’s health-care system while preserving its universality. However, until we’re willing to pursue that path, wait times and their associated costs will continue to burden Canadian patients and their loved ones.