What the Alberta 2019 Budget Means for You

Donovan Makus

On October 24, Alberta’s UCP government unveiled the new provincial budget. By far the most important aspect of being the ruling party, the government signalled priorities for the new budget in pre-budget consultation town halls and cross-province tours. While these were important to consult with Albertans, the province has also relied heavily on The McKinnon Report on Alberta’s Finances, commissioned by the government to outline how the budget could be balanced. The UCP ran on a platform of having a balanced budget in 4 years  through incredible economic growth or budget cuts. Facing an uncertain economic future, the new budget relies on cuts to spending, ~2.8% to the operations budget ($1.8 billion over 4 years), and delaying or cancelling capital projects to the tune of $2.8 billion over 4 years. The reaction to the budget was negative from the New Democratic Party (NDP), which pointedly noted that the UCP government’s reduction in corporate taxes, going from 12% to 8%, will cost $4.5 billion over 4 years. Despite this opposition, the UCP government is committed to seeing its budget through as The Minister of Finance states that “Alberta has a spending problem.” Furthermore, the government noted that it spent $2 billion on debt servicing last year–more than 17 out of 21 ministries which could instead have been spent on services and capital projects. Regardless of who is correct, the budget will pass the house and go into force for this year. 

While the big picture matters for the budget, the individual budget has consequences for each of us, particularly on our post-secondary journey. The Ministry of Advanced Education took the hardest hit, absorbing a 12% cut over 4 years to the operating budget. The largest change is addressing how institutions receive their operating grants. Previous grants were not performance-based; moving forward, the province will fund institutions by their “outcomes and need.” The Honourable Demetrios Nicolaides, Minister of Advanced Education, has stated that the performance metrics have not been chosen yet, but could include graduation rates. The other key aspect of the budget is shifting responsibility for funding towards post-secondary institutions by reducing their grants. To allow institutions to compensate for reduced revenue, the government is lifting the tuition freeze, effective for the 2020-2021 school year. Post-secondary institutions may now raise tuition at a maximum rate of 7% per year. The not-so-hidden subtext is that the government expects institutions to raise tuition to compensate for lower grant funding. The outcome isn’t only cuts, however; veterans will now be eligible for a whole new scholarship, while trades and apprentice programs see some new funding streams.  

The budget cuts and modifications will also affect programs on an individual level. For one, the Summer Temporary Employment Program (STEP) is gone, which means organizations will not receive subsidies for hiring young workers. Student loan interest payments will no longer be anchored to the prime interest rate; instead, students will pay prime+1% for an extra cost of $15/month for a $30,000 loan over 10 years. All students will lose their provincial tax credits for paying tuition and time spent in school. This amounts to approximately $602 for a full-time student and $182 for a part-time student, as well as 10% of total tuition costs (which could be ~$800 for a full-time student). For students seeking jobs in the Albertan public service, job prospects will suffer due to cuts to the size of the workforce–2,100 over four years. One positive aspect is that academic scholarship programs will remain unchanged, such as the Jason Lang and Louise McKinney awards. The government claims that these changes are necessary in order to balance Albertan post-secondary spending to that of other provinces. 

The Concordia-specific nature of these changes is yet to be fully realized. For one, the Minister has yet to send each institution a formal budget letter outlining their specific financial status. Because the provincial tuition freeze never applied to Concordia to begin with (we are an independent academic institution), our tuition increases will follow the pattern that was set in previous years, according to President Tim Loreman. Additionally, our smaller student body means we will not see any cuts to our operating grants–a bright side to the budget that other universities cannot share in. The U of A and U of C are seeing cuts of 6.9%, Bow Valley College 7.9%, with an overall 5.1% cut across the board. We’re lucky enough that our funding is remaining where it is, but because enrolment is surging, we will see a per-capita cut. 

It will take years to fully understand the impact of this budget. The UCP Government is hopeful that the changes will lead to economic growth and overall prosperity. The NDP response focuses on how the government’s cuts will lead to increased capital project waits, particularly for post-secondary students. Because the effects of any changes on the entire Albertan economy will take years to materialize, only time will tell who is right.

Leave a Reply