Alberta health care levy to address revenue shortfall

Prentice says deep cuts to programs and services are now off the table.

March 25, 2015   by CANADIAN PRESS

EDMONTON — Premier Jim Prentice says Albertans will face a new health-care levy to help fill a multibillion-dollar revenue hole in the provincial budget.

“We will be asking Albertans to begin to contribute directly to the costs of the health system,” Prentice said in a pre-taped address. “This revenue will start small but it will grow over three years.”

Prentice did not elaborate on the cost or what form the health contributions will take, leaving it to Finance Minister Robin Campbell to address in the budget.

However, last month, both Campbell and Prentice said they were looking at a “different model” from the old Alberta Health premiums.

Those premiums, cancelled in 2009, were direct, flat-rate levies on families ($1,056 a year) or individuals ($528 a year). They brought in about $1 billion to the treasury annually. Many Albertans had those fees covered by their employers.

Campbell and Prentice have said they were looking at adding the fee directly to income tax bills and perhaps making it progressive so that the more one earns the more one pays.
Alberta is on track to spend $18 billion this fiscal year on health, about 46% of the province’s $40-billion budget.

In his TV address, Prentice reiterated there will not be a sales tax and that overall taxes will be adjusted, but will remain the lowest in Canada.

“We will also ease the burden on working families,” said Prentice.

Prentice also said that previously signalled deep cuts to programs and services are now off the table.

Last month, he and Campbell said the budget would have a 5% reduction in spending across the board on top of no new spending to keep up with inflation plus population growth.

Since then, he has refused to confirm the 5% cut was still in the budget and in the TV address said it’s off the table altogether.

“One of the things you will see in the budget, in fact our projection for the next three budgets, is holding the line on government expenditures,” said Prentice. “Holding the line on spending in a growing province is truly a cut.”

Prentice said the province will make gradual spending, saving and administrative changes over the coming years, promising tough but respectful negotiations with public sector unions on future salaries and job descriptions.

The goal, he said, is that by 2019, the province can reduce by 25% the amount of energy resource money going to pay for program spending.

Those saved energy revenues will then be used to pay down debt and invest in long-term savings, he said. The ultimate goal, he said, is to get Alberta’s day-to-day spending off the roller-coaster of energy revenues.

Oil revenues have plunged from a peak of US$100 a barrel last summer to around US$40 a barrel now, costing the province an estimated $7 billion.

In the speech, Prentice criticized past Tory governments for reckless budgeting and for not socking enough money away in the $19-billion Heritage Savings Trust Fund.

“Fundamentally we’ve not always had realistic (budgeting) expectations, and our leaders must bear a considerable part of the responsibility for that,” he said.

NDP Leader Rachel Notley labelled the health fee regressive, saying it won’t fix a health system plagued by long wait times and facing cuts, given that spending won’t match population growth and inflation.

“(It’s) nothing more than a waiting room tax,” said Notley.

Wildrose Leader Heather Forsyth agreed, saying the levy is the wrong solution to a government that already has the best-paid provincial politicians in Canada.

“It’s a tax on Albertans when the economy is suffering,” said Forsyth.

Liberal Leader David Swann, in a TV address that followed Prentice, said the Tories can’t escape being defined by their deeds.

“The premier is eager for us to forget the mistakes of the past. However, we cannot simply turn a blind eye to them,” said Swann.

© 2015 The Canadian Press

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1 Comment » for Alberta health care levy to address revenue shortfall
  1. Reggie Gagnon says:

    Dear Mr. Prentice
    First of all , you are blaming all Albertans for the mess we are in. That is probably correct because we keep electing the PC. What we burns me is that you are blaming us for the PC mismanaging our money and now we will have to pay for it again and again. Enough already . You certainly have lost my VOTE and to tell you that i have been voting PC since i moved to the Province in 1989. Good luck

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