Primer on Alberta budget shows government ignoring basic rules, arms citizens with hard questions

CALGARY, Jan. 22, 2013 /CNW/ - The Alberta government will release its 2013 budget on March 7^th. Unfortunately, budgets like this tend to be laced with financial jargon and political rhetoric, making it hard for the average citizen to understand the true state and direction of provincial finances. That is why Professor Ron Kneebone of The School of Public Policy has produced a "citizen primer" for Alberta's budget.

As Kneebone outlines the basics of how governments arrive at either a surplus or deficit in any given year, and what they do in response to either case, he begins to unveil some unnerving realities regarding Alberta's finances - some of which are the product of basic budgeting rules being broken.

One of these realities is the province's reliance on volatile non-renewable resource revenues to fund spending on health, education and social assistance. Kneebone contrasts Alberta's situation with that of an average family, which he argues would never rely on an unpredictable income source to pay for its necessities.

In Alberta, if royalty revenues are low in a given year, all of a sudden the government doesn't have enough money to fund programs or service its debt. As Kneebone points out, in recent years the government has decided to solve this problem by dipping into savings, specifically the Sustainability Fund.

"Between 2008 and 2012 the government reduced savings by $16.5 billion. The average annual rate of burn of the government's savings during this period — $4.1 billion per year — is eerily similar to that during the Getty years — $4.3 billion per year," he writes.

With provincial savings dwindling, this then raises the question as to whether future generations will be left paying higher taxes or facing cuts to programs because of today's financial practices.

Bearing these issues in mind, Kneebone recommends Albertans pose three questions to those in government and other political parties hoping to win our confidence and represent our interests:

1. How tolerant are they of annual deficits?
2. To what extent are they willing to trust payments for health, education and social assistance to energy royalties versus taxation?
3. How, exactly, do they define investments in social infrastructure and what limits would they put on funding these expenditures with borrowing or non-renewable resource royalties?

The report can be found at www.policyschool.ucalgary.ca/publications

SOURCE: The School of Public Policy - University of Calgary

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