Alberta's Fiscal Situation
Speaker: Dr. Ron Kneebone, Prof. of Economics and a Director of the School of Public Policy at the University of Calgary
Public Policy Speakers Series: Alberta’s Fiscal Policy – January 28th, 2019
-Submitted by Mary Ndlovu, CPR Committee.
Those of us who sought to understand more about government budgeting processes were richly rewarded on Monday January 28 when we attended another in the CALL series of Public Policy Lectures. In a brief one hour, Dr. Ron Kneebone, an economist at the University of Calgary’s School of Policy Studies, presented a most informative overview of the fundamentals of government budgeting.
Historically, Alberta governments have allowed expenditure to far outrun tax revenue, plugging the gap with energy royalties when oil prices were high and deficits when prices were low. Since Ralph Klein in 1994 no government has achieved a balanced budget, and we currently only manage to sustain a deficit because interest rates are uncharacteristically low.
As the political temperature rises in this critical election year, promises are flying from left, right and centre, but Dr. Kneebone encouraged us to ask the question which politicians don’t like to answer – what will the budget implications be if such promises were in fact to become policy and be implemented? Lower taxes will certainly require spending cuts; increased sending implies higher taxes. If we spend more without increasing tax revenue, the deficit will balloon and will become difficult to service if interest rates increase. We know that we can’t rely going forward on oil and gas royalties. What choices should we make? A graph showing increasing costs, particularly in health care, was quite chilling, signaling that any government in power will need to make some very difficult decisions.
More than 100 CALL members filled the meeting room at Varsity Presbyterian for this instructive and enjoyable presentation. It followed several other excellent lectures in the fall – one on NAFTA, and another on globalization. We are fortunate that some of the best minds of our academic institutions in Calgary are prepared to share with us their knowledge and insight.
Thanks to Audrey Doerr who co-ordinates this speakers series.