Think-tank knocks Alberta’s finances

Province trails energ y peers, report says

Alberta’s finances are in worse shape than other energy-producing provinces and states, says a report released Thursday by the Fraser Institute, but the province says many of the issues raised in the study have already been addressed.

The 66-page report from the right-wing think-tank compared Alberta’s finances to nine other North American jurisdictions, including Saskatchewan, Newfoundland and Labrador, Alaska, North Dakota and Texas, concluding that the province has struggled to balance its books in the years following the 2008 recession.

The study found Alberta was among three of the 10 jurisdictions analyzed to post a deficit in 2011-2012 — the most recent comparable data available. The report noted the two other Canadian provinces included in the study posted surpluses in the same year.

The study noted Alberta has relied on savings for operations in the past and found that the province’s program spending since 2005-2006 has increased by more than $22 billion. “Increased government spending — not a dearth of revenues — has saddled Alberta with budget deficits at a time when most other energy-producing jurisdictions in North America enjoy surpluses,” said Livio Di Matteo, one of the study’s authors.

While Alberta’s spending did exceed population growth and inflation in the years before the 2013 budget was tabled, that has since been addressed, said Jessica Jacobs-Mino, press secretary for Finance Minister Doug Horner.

“One of our key priorities was bringing our operating spending into check,” she said. “The concerns that they raise (in the report) are concerns that we’ve addressed.”

She noted the fact Horner recently announced the province had turned a $1.97 billion deficit projected in the 2013 budget into a $755 million surplus.

The report compared Alberta’s tax regime to several U.S. states included in the study, but Jacobs-Mino said the comparison isn’t a fair one.

“Across the country, Alberta is the lowest tax jurisdiction by far,” she said, noting that the U.S. states included in the study typically have much larger populations than Alberta’s and don’t have to deliver universal health care.

The Alberta Federation of Labour said the problems affecting Alberta’s finances stem from its revenue challenges — and trying to make comparisons was “shoddy.”

“You can’t do an apples to oranges comparison between jurisdictions that have different taxation and royalty revenue structures,” said Siobhan Vipond, secretary-treasurer for the AFL.

“It’s shoddy research, and it doesn’t get to the heart of the matter, which is Alberta’s overreliance on volatile resources and flat taxes for revenue.”