TEGAN HILL: Here\u0027s how Smith government can fix Alberta\u0027s long\u002Dstanding fiscal problem
Here’s how it would work.
The provincial government would first determine a stable amount of resource revenue to be included in the budget annually, which limits the amount of money available for spending. Any resource revenue above that stable amount would be automatically deposited in the rainy-day account to be withdrawn in years when resource revenue falls below that stable amount. The idea is simple — save during good times to help avoid deficits during bad times.
This wouldn’t be Alberta’s first rainy-day account. In fact, the Alberta Sustainability Fund , established in 2003, was intended to operate this way. A major problem with the original fund, however, was that it was based in statutory law, which means the Alberta legislature could unilaterally change rules governing the fund. Consequently, the stable amount was routinely increased and by 2007 nearly all resource revenue was used for annual spending.
Finally, reintroducing an ASF is more fiscally feasible than one may think. Last year’s surplus alone would have been sufficient to fund the reintroduced rainy-day account. And remember; unlike paying down debt or saving in the Heritage Fund, funds in the ASF will provide stability in the future by stabilizing resource revenues in the budget when actual resource revenues fall below the stable amount.
Alberta is enjoying surpluses, but it may not last long. To stabilize provincial finances for the future, the Smith government should reintroduce a rainy-day account.Share this article in your social network
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