How to Smooth Alberta's Wild Revenue Swings — A Revamped Resource
Revenue Stabilization Fund: C.D. Howe Institute

TORONTO, Nov. 4 /CNW/ - The Alberta government needs a revamped resource revenue stabilization fund to overcome the effects of wild swings in resource revenue and spending, according to a study released today by the C.D. Howe Institute. In Energy Prices and Alberta Government Revenue Volatility, University of Alberta economists Dr. Stuart Landon and Dr. Constance Smith analyze Alberta's revenue volatility and explain how to deal with this volatility.

Energy prices change substantially and unpredictably, causing revenue planning trouble for the Alberta government. Adjusting to these movements typically involves economic, social, and political costs that need to be factored into the government's fiscal outlook. The best option for handling this, according to Landon and Smith, is a resource revenue stabilization fund that collects a fixed proportion of resource revenue each year, and funds the provincial budget each year with a fixed share of the fund's assets.

A stabilization fund would also reduce revenue uncertainty, because current revenue would depend on known past contributions to the fund.

For the study go to LINK http://www.cdhowe.org/pdf/Commentary_313.pdf

For further information:

Dr. Stuart Landon,
Dr. Constance Smith,
Colin Busby,
Policy Analyst, C.D. Howe Institute.
416-865-1904