Shifting Priorities: From Deficit Spending to Paying down the Debt and Lowering Taxes - Evidence from the Alberta Advantage Surveys: 1995-2000

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The Klein-Dinning Budgets: 1993-1996

During the summer of 1993, the long-term plans for debt reduction were formulated. The first public indication of Government policy following the June election came on September 8, 1993, with the Lieutenant Governor’s Speech from the Throne. The speech echoed what Dinning had already said in his pre-election budget. The basic "philosophy of government" announced by his Honour was "that government should get out of rather than into the lives of Albertans. People in this province know that more government and more laws mean more expense, red tape, and confusion and less freedom" (Alberta Hansard, 31 August, 1993, 10).

The sheer size of the government’s cuts to the so-called MUSH sector (Municipalities, Universities, Schools, and Hospitals) left most Albertans both satisfied and astonished. Paul Boothe, at the time Professor of Economics at the University of Alberta, declared it was the boldest budget since the 1930s (AR, 20 December, 1993). On the basis of numbers alone it would be a claim difficult to dispute. The average budget cut among all departments was around 20%. This was chosen, evidently, "because it was the cut in expenditures required to eliminate the deficit without increasing tax rates" (Kneebone and McKenzie, 1997, 177).

The second budget, presented on 24 February 1994, reiterated the first; it provided further analyses of the significance of the entire exercise, and emphasized the need for speed and decisiveness. By the time of Budget ‘95 the Treasurer was in a position to provide a retrospective analysis and to offer advice.

For years, governments in Canada have been living beyond their means. Governments have put off paying bills until tomorrow in the mistaken belief that revenue will catch up to spending. Overspending, not lack of revenue, is the problem. And every delay in fixing this problem increases the amount of debt and makes the solution more painful (Dinning, 1995, 7).

In his 1996 budget speech, Dinning was understandably exuberant in presenting the first balanced budget in over a decade. In just three years, the Klein government had completed a remarkable record. They had also, however, aroused a large number of opponents, some of whom were big-spenders within the Conservative Party, others of whom had been external beneficiaries of big government.

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