Jim Prentice tells Albertans to expect a health-care levy

Premier says funds will help fill multibillion-dollar revenue hole in the provincial budget

Blair Gable/Reuters

Blair Gable/Reuters

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.

Prentice made the announcement in a provincewide TV address just two days before Thursday’s budget.

“We will be asking Albertans to begin to contribute directly to the costs of the health system,” Prentice said in the 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 per cent 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 five per cent 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 five per cent 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 per cent 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.

Critics have already dismissed the TV address as an $80,000 taxpayer-funded political ad ahead of an election call expected to come soon.