|Budget predictions becoming predictable|
|Local Content - Editorial|
|Written by production|
|Wednesday, 16 January 2013 16:29|
With the arrival of 2013, the PC government of Premier Alison Redford is becoming an increasingly beleaguered body, plagued by scandal real or alleged, and facing several investigations into the ethical conduct of the party and the premier herself.
It probably wasn’t where Redford had hoped to be by now, considering the vote of confidence given to herself and her party by Albertans in the spring of 2012.
Harsh critics of the PCs, such as those in the Wildrose Alliance Party, have been suggesting voters should have seen the writing on the wall with regard to Redford’s pre-election budget.
It is one criticism — despite any partisan bias on the part of the official opposition — which the facts suggest should ring true to most Albertans.
And the provincial government has already confirmed this assertion — Alberta will be awash in red ink in 2013.
For a province blessed with a vast abundance of resources like Alberta, this truth remains a sad commentary on the financial realities that exist in Edmonton.
Redford and her cabal seem content to blame many of the fiscal woes of the province on poor resource revenues, exempting themselves from adequate responsibility in foisting a 2012 budget on Albertans that may have been overly optimistic in the lead up to an election.
It seems a convenient excuse, if not entirely unreasonable.
Putting that allegation aside, large questions still remain. While Alberta may legitimately be suffering from reduced royalty revenue, this shouldn’t always mean an automatic shift to deficit spending on the part of the provincial government.
While a large proportion of Alberta’s revenue will always be derived from resource royalties, basing projected spending upon the estimated price of a notoriously volatile revenue source isn’t prudent planning on the part of the provincial government.
Increasingly diversifying the province’s revenue portfolio would not be an easy prospect, and there is little doubt resource revenue would still be a major driver of the economy.
But that doesn’t mean government couldn’t be more conservative in their approach to this revenue stream, in good times or bad.
However, that might precipitate raising taxes, a concept which seems to be anathema to governments in Alberta, governments that fear a move towards a tax hike would mean moving into the ranks of the opposition, while watching another party ascend to the commanding heights of the legislature.
While some Albertans might rather see deficit spending rather than moving to a tax hike, governments might be surprised how many citizens of the province might be amenable to a modest tax increase.
That is, in place of the alternative — continued fiscal uncertainty and wildly fluctuating revenues that lead to budgets that are often dismally off target.
And they will remain off target until the budgeting process is amended to discard too heavy a reliance on resource revenues that can evaporate depending on the fickle fluctuations of a highly volatile market demand.
Again, Alberta would be hard pressed to not factor in a large percentage of revenues based on resource extraction in any budget process.
That being said, the province must be ready to mitigate that reality as much as possible — either by raising taxes, enhancing existing revenue streams, or making spending cuts — or a combination of all three.
Until those possibilities are willing to be seriously considered by government, the days of deficit may become more common than any of us might wish to consider.
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