Cut the public payroll through retirements
The provincial government is currently spending more than it is taking in each year – a lot more. Despite the new carbon tax, raising business taxes by 20 per cent and increasing some Albertans’ personal income tax bills by as much as 50 per cent, the government is on track to more than triple the debt this term.
For perspective, the government’s finances this year would be like your household having $45,000 in revenue but spending $57,000 this year. Now add six zeros.
Clearly, the situation is not sustainable and something has to give. That something is the number of government employees.
Despite the government boasting about Alberta’s recent job growth, most of the new jobs are in government. Since January 2015, according to Statistics Canada, there are about 52,100 new government jobs in Alberta (many of these would be provincially-funded) and about 74,500 fewer jobs in the private sector.
Why does Alberta need all these new government employees? We don’t.
In a “confidential” document the Canadian Taxpayers Federation recently obtained through a freedom of information request, are details that help explain how the Alberta government could get its finances back on track in a relatively pain-free manner.
The document we obtained shows the government can downsize and get its finances under control without causing much in the way of layoffs to government employees.
The government document indicates that the average age of retirement in the civil service is 62 years of age and, “…based on a retirement age of 62, 12% of all employees may retire in the next one to two years.”
This significant wave of retirements is important for two reasons.
First, the government could downsize by simply not replacing unnecessary positions. When a pencil pusher in government retires, and the role really isn’t that crucial for government, the position could be eliminated, saving a small fortune in salary, pension costs, benefits, office equipment, office space, etc.
Conversely, when a nurse or doctor retires, those necessary roles would continue to be refilled.
The other opportunity that a wave of retirements creates is the potential for scaling back the compensation for new hires. Numerous studies over the years have shown that government employees tend to earn more money, have richer pensions and take more sick time than everyone else.
This gap could be closed beginning with new hires. Instead of paying an administrative assistant, say $48,000 per year to start off, perhaps they could start off at $44,000 per year. Saskatchewan’s NDP government used a similar technique in the late 1970s when they started to put new hires in a far less costly pension plan.
To be clear, scaling back the number of government employees won’t balance the provincial budget on its own. Balancing the budget will require a number of decisions to restrain spending across government.
But one thing should be clear; the government has a report on its desk that shows one way to reduce spending in a pain-free manner. Now all the premier has to do is show an interest in doing just that.
Colin Craig is the Interim Alberta Director for the Canadian Taxpayers Federation
This column was published by the Calgary Sun on November 14, 2017