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Subject: ECONOMIC NEWS/TRENDS/ANALYSIS

Fraser Institute News Release: Don't squander Alberta's surpluses by spending them?instead, lower taxes, pay off the debt and/or re-establish rainy-day fund


CALGARY, Alberta, Feb. 09, 2023 (GLOBE NEWSWIRE) -- Alberta is projected to run multi-billion-dollar surpluses in the next few years largely due to higher resource revenues. Rather than spend these temporary windfall revenues, which history has shown will only lead back to deficits when resource revenues inevitably decline, the province should use them to strengthen Alberta's finances and economy for the long-term, finds a new essay series published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

"This is an extraordinary opportunity for Alberta to improve long-term prosperity, but only if the government breaks from tradition and doesn't squander this windfall at budget time," said Tegan Hill, senior economist with the Fraser Institute's Alberta Prosperity Initiative and editor of the essay series Don't Spend Away the Windfall?Better Options for Alberta's Unexpected Revenues.

Crucially, when resource revenues have increased in the past, previous governments have increased spending, which led to sizeable deficits when resource revenues declined. For example, after adjusting for inflation, as resource revenue increased from $4.2 billion in 1998/99 to $15.6 billion in 2008/09, real per-person program spending grew from $7,393 to $13,114--an increase of 77.4 per cent.

When resource revenue inevitably declined, the province experienced deficits from 2008/2009 to 2020/2021, in all but one fiscal year.

If the provincial government can instead avoid the temptation to increase spending, it can pursue meaningful reforms to benefit Albertans, the essays offer three options:

"To achieve any of these reforms, the first step for the provincial government is to avoid the temptation to spend the higher-than-expected resource revenues today and focus on improving the province for the longer-term," Hill said.

"Debt relief, lower taxes and/or re-establishing the Alberta Sustainability Fund are all concrete ways the provincial government can build a solid fiscal foundation to benefit Albertans today and, in the future."

MEDIA CONTACT:
Tegan Hill, Senior Economist
Fraser Institute

To arrange media interviews or for more information, please contact:
Drue MacPherson, Fraser Institute
(604) 688-0221 Ext. 721
[email protected]

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org




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