Dr. Richard Mueller preparing for his speech at the SACPA luncheon. (Lethbridge News Now)

By David Opinko

U of L Professor: large-scale cuts to public sector not the best way to manage Alberta’s economy

Dec 19, 2019 | 1:41 PM

LETHBRIDGE, AB – In its first budget since forming the United Conservative Party (UCP), the Government of Alberta announced that it will reduce the size of the public sector by 7.7 percent, which will happen through attrition, moving some services to the private or non-profit sectors, and by re-evaluating employee compensation levels across the board.

Dr. Richard Mueller was the guest speaker at the Southern Alberta Council on Public Affairs’ (SACPA) luncheon on Thursday. He is a professor of economics at the University of Lethbridge with a Ph.D. from the University of Texas and is part of numerous research institutions.

His talk focused on whether public sector workers are better off in Alberta than in other provinces and whether the wide-scale job cuts were warranted.

“I think there’s probably a few cuts to be made in the public sector, but again, I think that should be done sort of surgically rather than just sort of across the board and always sort of keeping your eye on the bottom line, which is the front-end workers, the ones that are the nurses and the teachers and the things like that that are taking care of people. We don’t want those services cut.”

At around the same time as the Blue Ribbon Panel on Alberta’s Finances (the MacKinnon Report) came out, Mueller released his own report on the Parkland Institute’s website on the size and compensation of the public sector compared to other jurisdictions.

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The MacKinnon Report shows that per-capita employment in the public sector was similar to B.C., higher than in Ontario, but much lower than in Quebec.

When it comes to total wage and salary expenses per capita in 2018, Alberta ($918) was significantly higher than B.C. ($698) and Ontario ($609), but much smaller than Quebec ($1,211).

Physicians and nurses did make more money on average than their counterparts in the other three provinces that were analyzed, as did teachers who were at the top of the pay scale.

Mueller, however, noted that the consumer price index has traditionally been higher in Alberta.

“In contrast to the MacKinnon report, we conclude that Alberta does not really stand out in any way relative to the other three large provinces, both in terms of the size of its public sector size and its compensation,” reads the conclusion of Mueller’s report. “If anything, Alberta has tended to have a smaller public sector compared to other jurisdictions using certain measures.”

In the past, when the provincial government has had to make steep spending cutbacks during poor economic times, Mueller says they tend to rely the oil and gas sector to balance things out.

This time, however, he does not think the UCP will be able to do the same and will need people working in the public sector.

“Our economy’s not going to go back to the way it was. Oil is sort of not what it used to be and it never will be again. The investment stage in the oilsands even is gone and that kind of construction and activity is not going to come back again, so we’re in production mode which has less people involved, especially with automation and things like that.”

LNN asked Mueller about the potential for bias when he is talking about public sector cuts when he himself works in the public sector.

“Most economics, including myself, try to be objective about things and we run the numbers and we sort of see – I didn’t start this research with any preconceived notions of what would happen and what the results would be. I’m here to sort of present the accurate results, or as accurate as I can make them, and if I have to take my lumps with that then I’ll take my lumps.”