Ralph Klein was first elected as premier of Alberta in early 1993. At that time, the provincial government’s deficit was $3.4 billion.

That deficit was the eighth straight. Over the previous eight years, the province had added in excess of $16 billion to its debt.

In May 1993, the first budget under Klein’s leadership was tabled. The budget proclaimed that Alberta had a spending problem, not a revenue problem. For that reason, the budget introduced a plan to slash spending and in that way eliminate the deficit within three years. This was the beginning of the Klein revolution.

It is now eight years since that budget and Ralph Klein is looking for a new mandate. What I would like to do in this article is present some evidence relevant for evaluating what Ralph Klein has done over the past eight years.



My discussion will revolve around calculations summarized in the accompanying graph. Once we see the facts, we can evaluate what kind of job the premier has done and see just how revolutionary the Klein revolution has been.

Governments and the media like to throw around budget numbers, but rarely do they put them into a sensible context.

For example, the government can correctly claim that spending on health, budgeted to be $5.5 billion in 2001, represents a 26-per-cent increase from what it was in 1993 ($4.3 billion). Similarly, spending on basic and advanced education is 25 per cent higher than it was in 1993.

If these numbers are accurate (and they are) why are there complaints about inadequate funding of health and education? The answer is that the numbers are misleading because they fail to account for two things: inflation and the fact there are now more Albertans than there were in 1993, who all require their fair share of health care and education.

To get around these problems, I have calculated government spending in real per-capita terms. This means that I have taken budget figures contained in the 2000 Alberta Budget (which includes projections to fiscal year 2003) and removed the effects of inflation and the effects of population growth.

The purple line in the graph shows how much the government has spent on health care since 1984.

The line was fairly flat prior to 1993. From 1984 to 1993, the province spent about $1,600 per person on health. Klein’s first budget in 1993 brought about a 20-per-cent decrease in health spending, from $1,600 per person in 1993 to $1,300 per person in 1996. Since 1996, health-care spending has increased by about $250 per person. It is now just a little below what it was before 1993.

The black line shows spending on education. Unlike health spending, spending on education was on a downward trend before Klein was elected.

As a result, it is less clear how much of the reduction in spending per capita is due to Klein and how much is due to that downward trend. The 1994 budget introduced a 10-per-cent cut in education spending so that the combined effects of the downward trend and the budget cuts reduced spending on education from about $1,500 in 1994 to about $1,200 per person in 1997.

Since that time, spending on education has increased by about $150. While spending on education remains below what it was in 1993, whether one thinks spending is less than what it would have been in the absence of Klein depends on the reason for the downward trend line on education spending.

The red line shows how much the government has spent, per person, on making interest payments on its debt. It shows that this spending was quickly rising between 1986, the year the government began to run large deficits and to accumulate debt, and 1995. Over that period, spending on interest payments increased from $100 to $650 per person. Since 1995, spending on interest payments has fallen by $400 per person.

What these calculations show is that the amount by which spending on health and education has increased from their lows to where it is today matches the amount by which spending on interest payments has fallen. In other words, the increase in health and education spending has been paid for by decreases in interest payments.

So, what do we make of the Klein revolution eight years later?

Remember that in 1993, the Klein government asserted Alberta had a spending problem. That assertion was the justification for large cuts to spending. Eight years later spending in the key areas of health and education is arguably back to where it was in 1993.

One might argue, then, that if this much spending was a problem in 1993, it is again and the Klein revolution has fizzled.

On the other hand, if the reference to a spending problem was a reference to total spending rather than spending in any one area, then what the Klein revolution has done is replace spending on interest payments with spending on health and education.

From this perspective, the Klein revolution has fizzed rather than fizzled. On March 12, you have an opportunity to express your opinion on this.

(Ron Kneebone is a professor in the Department of Economics, University of Calgary.)