Study
| EST. READ TIME 1 MIN.Alberta's 2012 Fiscal Time Bomb: A higher deficit and a steep decline in financial assets
In its February pre-election budget, Alberta relied on unrealistic economic assumptions, ignoring private sector forecasts that were more realistic than its own. It appears to have been overly optimistic about oil and gas forecasts, among others. As a consequence, Alberta?s provincial government is unlikely to hit its deficit forecast this year of $886 million?it will be higher?and the already substantial decline in Alberta?s net financial assets will continue unabated.
Alberta?s net financial assets have already dropped by 52% since 2008, mimicking a previous decline in Alberta?s financial condition that began in the mid-1980s and lasted until 1994. Given the province?s optimism on oil and gas prices?and its projections on estimates of growth for the economy, corporate prof its, and personal income that are significantly above those from private sector forecasters, the province?s deficit in 2012/13 is certain to be higher than expected. The result will be a further decline in Alberta?s net financial assets unless the province reforms and reduces its historically high per capita program spending. Clearly, Alberta?s politicians must acknowledge that the province is currently spending beyond its means. They must restrain and pare per capita program spending sooner rather than later.
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Mark Milke
Mark Milke was a senior fellow of the Fraser Institute between 2010 and 2015. Mr. Milke led the Institute’s workon Alberta-related issues as well as contributing to a broad host of national and regional studies. Mr. Milke is currently an independent analyst and consultant in Calgary.Mr. Milke has authored four books on Canadian politics and policy and dozens of studies on topics such as property rights, public sector pensions, corporate welfare, competition policy, aboriginal matters and taxes. Prior to joining the Fraser Institute, Mr. Milke was the research director for the Frontier Centre for Public Policy and former B.C. and Alberta director with the Canadian Taxpayers’ Federation. His work has been published widely in Canada since 1997 and in addition to the Fraser Institute, his papers have also been published in the United States by the American Enterprise Institute, the Competitive Enterprise Institute and the Heritage Foundation and in Europe by the Brussels-based Centre for European Studies.Mr. Milke’s opinion columns appear regularly in the Calgary Herald and Globe and Mail, as well as in the National Post, Edmonton Journal, Montreal Gazette, Vancouver Sun, Vancouver Province, and Victoria Times Colonist. Mr. Milke has a Master’s degree from the University of Alberta where his M.A. thesis analyzed human rights in East Asia; he also has a Ph.D. in Political Science from the University of Calgary where his doctoral dissertation analyzed the rhetoric of Canadian-American relations. Mr. Milke is president of Civitas, and a past lecturer in Political Philosophy and International Relations at the University of Calgary.… Read more -
Gerry Angevine
Senior Fellow, Fraser Institute