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Debt and Deficit Repayment
When
Ralph Klein won the leadership
of the Alberta Progressive Conservative Party and became
Premier in 1992, Alberta’s economy was suffering from
the numerous recessions of the late 80s and early 90s.
With an approximately $3 billion annual budget deficit,
Alberta’s gross debt had reached $22.7 billion in
1993-94.
Klein’s government set out to eliminate the deficit and
begin paying off the debt. In 1993,
the
government passed the Deficit Elimination Act, which
involved reducing the budgets of every provincial
department and privatizing several Crown corporations.
Government workers received a five percent pay cut, and
many lost their jobs.
Controversy arose over spending cuts to education
departments. Alberta Education received a $239 million
cut in spending over three years, with the most severe
cutbacks in 1994, and Advanced Education received $186
million in cuts over three years. Also highly
controversial were the health spending cuts, which
resulted in the closure of several hospitals,
significantly reducing the number of available hospital
beds.
Legislation passed in 1995-96 made it the law to have
balanced budgets in Alberta. By 1997, the provincial
government had eliminated the province's deficit.
Between
1999 and 2001, with higher than expected revenues and
surpluses, the government accelerated the debt repayment
and restored funding to the departments that had faced
cuts in the recent past.
In 2004, Alberta became the first debt-free province in
Canada. Alberta’s economy was inarguably strong,
although privatization and funding issues, particularly
in the health and education sectors, continued to
generate controversy.
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