Wednesday, February 10, 2010

Alberta's Budget

Alberta's government tabled its second deficit budget yesterday.

Several things struck me as being of interest in it.

First of all, was the deep delve into the 'Sustainability Fund'. I don't actually object to that per se - rainy day savings are something that are always a good idea. That said, I think it is highly questionable that we have not one, but two such funds - the one Ralph Klein created and the Heritage Savings Trust Fund created by Peter Lougheed. If we are to be looking for economic efficiencies in such times as today, should we not be consolidating such funds to reduce administrative duplication?

The second piece is a 'what's missing' moment. We have a government staring down the business end of a $4 Billion deficit, even after raiding the sustainability fund cookie jar. Basically, the Alberta government is basing it's entire 'get out of deficit' plan on rising resource prices. This is a really poor plan when you think about it, as it is entirely based on revenue streams that the government has little or no ability to influence. Resource prices move on the open market - which may or may not go up in the next few years.

This is solely because the Alberta government under Ed Stelmach is unwilling or afraid to levy taxes. While I don't necessarily like taxes, it strikes me that relying on resource revenues (a diminishing income source in the long run) to balance our budgets is missing the point that both the Sustainability Fund and the Heritage Savings Trust Fund were created to address - namely that we cannot afford to be shackled for all time to finite resources - and doing so is fiscally myopic.

The last piece I will pick on in the budget is the lack of meaningful effort put into moving Alberta's economy out of being resource-centric. If there is one thing that governments in this province have missed the boat on repeatedly in this province it is the very notion of getting our focus out of being purely resource centric. In fact, their "plan" for getting out of what is clearly a systemic deficit position itself shows us that the Stelmach PCs have absolutely no clue how vital this is to Alberta's long term viability.

So...to paraphrase Brian Mason after the Throne Speech last week, I think the Stelmach government has successfully delivered the greenest budget in decades - mostly by recycling old budgets from the Ralph years. Sadly, they haven't realized that those budgets didn't work so well either.

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