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Opinion: Alberta should target its bureaucracy to find savings and reduce red ink

Government employment is up by 40,000 since 2022 and that's not all new doctors and teachers. General public administration has risen most

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The Alberta government’s 2026 budget, released Thursday, includes deficits of $9.4 billion, $7.6 billion and $6.9 billion over the next three years. The government says “global economic uncertainty, lower oil prices and rapid population growth are placing real pressure on Alberta’s finances and public services.” It’s true, many factors contribute to this deficit, but the government can and should do more to avoid red ink.

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Deficits fuel debt accumulation. Total provincial debt will rise from $102.5 billion in 2024-25 to a projected $158.9 billion by 2028-29. Interest costs on that debt will increase from $3.2 billion to $4.9 billion over the same period. That’s $933 per Albertan that in 2028-29 will no longer available for health care, education, or to create fiscal room for tax relief.

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Alberta does face population pressures and oil prices have declined, so government coffers have been hit on both the revenue and spending side. But spending has been too high for years. In the past 18 years, the provincial government has run a deficit in all but five — and these few years of surpluses were mainly when it got lucky with a windfall in resource revenue (e.g., oil and gas royalties).

Premier Danielle Smith’s government clearly needs to rein in its spending. But where should it start?

According to the budget, in inflation-adjusted dollars, total employee compensation in Alberta’s government sector has risen from $31.1 billion in 2022-23 to a projected $38 billion in 2026-27. That’s a real increase of 22.0 per cent over four years.

And it’s not due to hiring more doctors and teachers. In percentage terms, compensation increases were highest in other areas. The public service, which is basically government administration and bureaucracy, saw a 29.8 per cent increase, while Alberta Innovates was up 36.1 per cent. Growth in health-care spending (24.3 per cent) did exceed the government-wide average of 22 per cent, but education was up only 20 per cent and post-secondary education 14.6 per cent — all of which includes administrative roles. As for physician compensation and development, it grew only 19.7 per cent.

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The jump in government compensation costs likely reflects the growing number of government jobs. According to Statistics Canada, from 2022 to 2024 (the latest year for which data are available), Alberta provincial government employment increased by 40,215 (or 12 per cent). Again, this doesn’t simply reflect more doctors and teachers: the number of jobs increased across the board, including in government administration and bureaucracy.

External forces are always important but the Smith government should focus on what it can control. That means reviewing government jobs and compensation to find meaningful savings to reduce Alberta’s budget deficits and debt accumulation.

Tegan Hill and Milagros Palacios are economists with the Fraser Institute.

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