Calgary Herald
Sunday, July 14, 2002


Will the Tuer Commission's Report move Alberta "from Good to Great" as its title suggests? It's the government's latest look at fiscal planning for the future and its called "Moving from Good to Great, Enhancing Alberta's Fiscal Framework." Some recommendations in the Tuer Report are excellent:

• provide predictable, stable funding for roads, buildings, bridges and other infrastructure (stop "roller coaster" budgeting);
• set three-year and five-year plans for capital projects, and allow funds to be carried over into the next fiscal year;
• consider alternative funding for capital projects, like private-public partnerships (P3s);
• open up the budget planning process to more public input to give stakeholders a better understanding of the rationale behind budget decisions;
• undertake a regular review and cost-benefit analysis of all government programs and policies;
• provide incentives to government ministries and agencies to manage their budgets and assets more efficiently;
• keep the provincial government out of salary negotiations for teachers and other public sector workers, unless the government itself is a signatory to the collective agreement;
• keep budgets balanced, and prohibit mid-year changes in budgets;
• protect the Heritage Fund from erosion by inflation, as is done with Alaska's Permanent Fund and Norway's Petroleum Fund.

The Alberta government collected $2.4 billion in oil and gas revenues in 1998 and $10.6 billion in 2000, and should collect $3.7 billion this fiscal year - but don't hold your breath. These ups and downs have contributed to Alberta's "roller coaster" budgeting. As a result, cities have found it difficult to make prudent plans about building roads and other infrastructure. Construction companies, after hiring workers and investing in equipment, have had the rug pulled out from under them by sudden spending cuts which defer projects indefinitely. Taxpayers have been on the hook for higher costs, because government was not able to take advantage of lower prices for goods and services during economic downturns.

The Tuer Report recommends putting all oil and gas revenues into the Heritage Fund, and allowing the Alberta government to spend $3.5 billion of this money each year (or less if average annual resource revenues in the past three years are lower than $3.5 billion). Stable, predictable funding for infrastructure (and other government programs) would be an improvement over the status quo.

The Report also recommends using a portion of the Heritage Fund's $12 billion in assets to pay for deferred capital projects. This would be a mistake! Spending on government programs has gone up 45% in the past six years (compared to 12% population growth and 13% inflation), so there is no excuse for dipping into the Heritage Fund, which should be built up for the benefit of future generations. If a set portion of oil and gas revenues was saved rather than spent, the Heritage Fund could, by 2015, generate enough income to replace what the government takes from Albertans in personal income tax.

Missing from this Report are recommendations to control spending and to protect taxpayers. As the highest-spending (per person) province in Canada, Alberta desperately needs spending control legislation like the state of Washington, where government spending grows only to keep pace with inflation and population growth. In force since 1995, Washington's law has saved taxpayers billions of dollars.

Further, Alberta needs a law like Manitoba and other jurisdictions, requiring a referendum on any tax increases. The onus should be on politicians to justify why they want to take more of our money. But until Alberta has taxpayer protection legislation, the onus will remain with Albertans to explain to politicians why we should be able to keep more of the money we earn.

Fortunately, the door is open for the Alberta government to legislate both spending control and taxpayer protection. If these two elements are added to the positive recommendations in the Tuer Report, Alberta really will move "from Good to Great."