Next week, the provincial budget will be released to the public – and it features some tough choices.
Due to a drop in oil and potash prices, the province is facing less resource revenues. On the other hand, previous budgets have shown some growth in tax revenues, due to population growth during the good times.
Does the government try to balance the budget? If so, does it do that by cutting services or raising taxes?
To me, this budget presents an opportunity to wean the province off of those non-renewable resource revenues. After all, resources are finite in nature and we can’t rely on them forever.
What we should be doing instead is moving those resource revenues into a fund. The fund would then generate interest and investment revenues that then could be spent by the province to improve services. If we committed to place resource revenues into the fund each year, then the interest and investment revenues will also grow.
Doing this will mean we have a long-lasting legacy from the resources long after they are exhausted.
It’s not a new idea. It, in fact, came from Alberta. It was Norway that stuck with it and today they have a fund worth $874 billion, with the government only able to spend about four per cent of that total – the amount that’s raised from interest and investment revenues.
Of course, this province can’t just one day stop spending resources revenues – there’s still too much reliance on that money. What it can do is make a commitment to start the process in a slow matter that won’t be a shock to the system – an easier process now than when resource prices are high.
