- Joined
- Aug 22, 2008
- Messages
- 428
-If Alberta lacked sufficient incentive to squirrel away the bulk of its resource windfall before, a government document obtained by the National Post that calculates the province faces a $215-billion unfunded liability suggests that Premier Ed Stelmach`s government will have to work industriously to avoid a bigger, more imminent fiscal crunch than even pessimistic observers had imagined. -Since retiring Alberta`s debt in 2005, voices from economists to opposition parties to accounting associations to taxpayers groups had warned the PC government that the resource royalty gravy train would eventually end, and that a savings fund, generating annual returns, would be necessary to maintain the expensive public services to which Albertans had grown accustomed. -The latest entreaty, a report from the Alberta Financial Investment and Planning Advisory Commission, headed by respected University of Calgary economist Jack Mintz, and released in late November, calculates that if Alberta does not amass adequate funds soon, an inevitable decline in revenue would force the province to raise taxes by 40% within 20 years, erasing Alberta`s famous competitive advantage.
-But in a confidential letter to finance minister Iris Evans, the commission estimates the number at more than double the $100B savings by 2030 recommended in the report as a "reasonable and achievable" target. Contacted about the letter yesterday, Mintz explained that figure represents the gap between Alberta`s spending plans and its ability to fund them, as royalties diminish over time, due to shifts from dwindling high-paying light oil and natural gas deposits to an increasing reliance on less lucrative oilsands operations.
-At the same time, Alberta will face rising costs as an ageing population runs up larger health bills and other subsidies. Making up the difference means raising taxes, cutting spending or building an income fund that could generate enough return to make up the difference. He compared it to endowments that corporations set aside for pension plans. Currently, Alberta has saved just a fraction, with roughly $20B in its Heritage Savings Trust Fund and similar funds. Though Alberta enjoyed more than $20B in surplus revenues since retiring the provincial debt three years ago, it allocated only a third to savings, spending the remainder.
(National Post 081211)
-But in a confidential letter to finance minister Iris Evans, the commission estimates the number at more than double the $100B savings by 2030 recommended in the report as a "reasonable and achievable" target. Contacted about the letter yesterday, Mintz explained that figure represents the gap between Alberta`s spending plans and its ability to fund them, as royalties diminish over time, due to shifts from dwindling high-paying light oil and natural gas deposits to an increasing reliance on less lucrative oilsands operations.
-At the same time, Alberta will face rising costs as an ageing population runs up larger health bills and other subsidies. Making up the difference means raising taxes, cutting spending or building an income fund that could generate enough return to make up the difference. He compared it to endowments that corporations set aside for pension plans. Currently, Alberta has saved just a fraction, with roughly $20B in its Heritage Savings Trust Fund and similar funds. Though Alberta enjoyed more than $20B in surplus revenues since retiring the provincial debt three years ago, it allocated only a third to savings, spending the remainder.
(National Post 081211)