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ECONOMY: Think tank warns Alberta headed for “serious economic bust” under current government policy
          (AlbertaIndex, May 11, Friday) --- Alberta’s economy is headed for a “serious bust”, and current government policy is only serving to aggravate the problem, says a new report released by the University of Alberta’s Parkland Institute.

          “Taming the Tempest: An Alternate Development Strategy for Alberta” accuses the Alberta government’s “disregard” for planning infrastructure and investment, maximizing oil and gas revenues, prioritizing value-added jobs, and saving for the future. It says that current government policy is not only exacerbating the negative impacts of the boom, but will also result in a much harsher bust than we would have otherwise.
         

“The Alberta government’s mishandling of this boom has resulted in growing homelessness, skyrocketing inflation, and an economy that is entirely vulnerable to the whims of international energy markets,” says Diana Gibson, the report’s author and Research Director for the Institute.
          But she says a crash landing is avoidable.
          “In order to lessen the negative impacts of this boom, and pre-empt the looming bust, the provincial government must show some vision and leadership, and implement a new economic strategy,” she says.
          The report explores a variety of different options, and then goes on to make a series of concrete recommendations for a new direction. Some of the key suggestions in the report include:
          - pacing private sector developments through a competitive bid process for fossil fuel royalties, and internalization of environmental and infrastructure costs;
          - using some of the space created by private sector pacing to eliminate the public infrastructure deficit through public investment;
          - maximizing the return from fossil fuels through the competitive bid system , and by instituting a windfall profits tax of 90% for profits above a 10% rate of return;
          - an immediate moratorium on new pipelines for bitumen and other raw fossil fuels exports, and prioritization of natural gas for value-added industries rather than for export;
          - limiting to 10% the amount of natural resource revenues transferred to general revenues in any given year; and
          - investing 50% of resource revenues into the Heritage Trust Fund, and the remaining 40% into a new Renewable Energies Fund.

          “Such strategies would mitigate the boom-bust cycle, and create longer-term sustainability and prosperity for all Albertans. The goal of this report is not to provide a definitive or comprehensive set of solutions,” says Ms. Gibson, “but rather to highlight the urgency of the issue, and to provide a starting point for discussion and dialogue between Albertans and their government.”

 



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