Friday, January 9, 2015

PROTECTING OUR NON-RENEWABLE RESOURCE REVENUES FROM THE WHIMS OF POLITICIANS

A former Alberta Finance Minister has weighed in on the fiscal situation facing the province of Alberta resulting from the sharp decline in the price of oil. 

Ted Morton is a senior fellow at the School of Public Policy at the University of Calgary and the Manning Foundation for Building Democracy. 

He says a  return to either Getty-era deficits, Klein-era budget cuts or some equally unpleasant combination of both is impossible to escape in the short term. Morton advises the government to get back to the Lougheed policy of legally mandating that a set percentage of non-renewable natural resources  must be deposited in the Heritage Fund each year. That policy required the Government to deposit 30 per cent of NRRR into the Heritage Fund, and only use the interest earned by the fund to help pay for annual budgets.

He argues that the short-term political self-interest of the government of the day has trumped the longer-term public interest, suggesting that the rules surrounding the mandatory NRRR deposits be made politician proof.

He suggests following the lead of Norway and Alaska, to ensure that politicians looking for short term fixes can not raid the fund or divert NRRR funds from going to the Heritage Fund.

I have always liked the idea of a Newfoundland and Labrador NRRR based Heritage Fund that would lock a percentage of NRRR away for the future. Instead, we have allowed politicians with short term agendas to squander resource revenue with out an eye to the future.

Having burned through the lion's share of the revenue that we will receive from existing projects with little to show,  perhaps we could at least commit to live within our means and follow the Norway and Lougheed model in the future.

Sure the needs are great now but they will be greater in the future when these finite resources are depleted.

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