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Budget numbers always have asterisks

Posted on March 7, 2014 by Vauxhall Advance

It is a cycle which has happened over and over again in Alberta.

After the provincial government announces its quarterly fiscal figures, opposition parties pounce and poke holes in the numbers.

That has been the order of things ever since Premier Ralph Klein slayed the province’s debt and in its place, left a backlog of infrastructure projects.

Belt tightening meant a number of buildings, roads and municipal systems faded into various states of disrepair, and it is a situation the current government is still struggling to cope with.

So it came as no surprise when Finance Minister Doug Horner stated Alberta was on track to post a record $1.4 billion surplus in terms of operational spending, the topic of the province’s $8.5 billion capital-spending deficit quickly reared its head.

That deficit is due to borrowing for roads and new schools, which the government has attracted a lot of press for recently through its Building Alberta announcements, which included a stop locally.

Fiscal numbers can be a bit of a shell game at the best of times for governments, but in this case, good news is certainly part of the picture.

Operational revenue being up $2.7 billion in the first nine months from budget is positive. Total resource revenue rising $1.4 billion is positive. Total consolidated debt falling to $355 million, from a forecast of $2 billion for 2013-14 is positive. Those numbers, however, have only been made possible by forces out of the control of the Alberta government.

Strong oil and natural gas prices, coupled with the falling Canadian dollar, have provided the Progressive Conservatives with the perfect tonic to solve the province’s fiscal dilemma.

It raises important questions about how the province will approach the budget announcement, and the direction Horner and company will lay out for Alberta.

That future should include more investment in Alberta’s Contingency Fund, which will be increased to $4.6 billion with this year’s projected surplus, but is a far cry from what it once was.

In a province greatly dependent on resource revenue to balance the books and pay for a wide variety of operational and capital items, the ebbs and flows of commodity prices and the value of the Canadian dollar hit us particularly hard.

Boom-and-bust cycles witnessed as oil skyrocketed to $147 a barrel in 2008, before they eventually plummeted to $34, make it impossible to accurately predict revenues from one quarter to the next, let alone on a year-to-year basis.

Successive premiers and finance ministers have struggled to find ways to deal with the revenue dilemma, protect the province and its citizens from the fallout and at the same time, build Alberta’s rainy-day fund.

As more and more oilsands operations reach the stage where they begin to pay higher royalties to the province, and oil exports by rail continue to grow, hope is on the horizon. Such developments, and a provincial approach to help balance our economy, in much the same way the Vauxhall region has achieved to a degree over the year, would also go a long way to finally break the cycle.

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