Edmonton — What to do with all that money?
Given their political interests, those seeking to become Alberta’s next prime minister may see the temptation to take the economic plunge that their state enjoys and uncheck all residents. not.
After all, it won’t be the first time.
With the Alberta government announcing this week that its financial resources recorded a $ 3.9 billion surplus in the most recent fiscal year, state people are asking authorities what to do about it.
Trevor Tombe, an economist at the University of Calgary, said: “This budget change is an improvement of about $ 21 billion this year compared to the previous year.
“This is about $ 5,000 per Alberta, which is the biggest change in the government’s fiscal balance (state or federal) in Canadian history,” he said.
“This is truly unprecedented.”
As the war in Ukraine continued and oil prices soared, Alberta was able to collect even more money. Oil prices far exceeded 2021 expectations, reaching more than $ 110 per barrel for West Texas Intermediate, the North American crude oil benchmark.
In 2006, Alberta’s Premier Ralph Klein is famous for spending $ 400 on “Ralph Bucks” to residents of the state after a surge in resource income. With this gesture, about 3 million people received checks and an estimated $ 1.4 billion of the $ 6.8 billion surplus was paid to the state.
For some, it was seen as a political ploy, as it was showing signs of decline while his popularity and the popularity of his party were still high.
But given the effects of inflation, is a similar move justified now? There is also an endless list of infrastructure projects and healthcare needs.
So how do you spend a lot of money in Alberta?
The governing Conservative Party is involved in a leadership race ending October 6. So far, 10 contestants have announced their names and hope to be elected prime minister.
In the spring of 2023, local elections will take place in less than a year, and Lori Williams, a professor of policy research at Mount Royal University, says he may want to pre-distribute money to the people of Klein. ..
But “they have to be careful about promoting inflation,” she said.
Instead, she said, the state could invest in health care systems and education.
“It makes sense to invest in something that doesn’t increase inflation.”
Meanwhile, Tonbe, an economist at the University of Calgary, said inflation could be causing people, especially low-income households, to struggle and distribute money. A one-time payment “may help mitigate the blow there,” he said.
But “the history they want to avoid is Ralph Bucks,” said Moshe Lander, an economist at Concordia University.
It’s a short-term benefit that doesn’t bring much long-term benefit, and by saving it for the inevitable calm between the state’s resource-revenue roller coasters, the wind and rain money is probably better spent. prize.
Finance Minister Jason Nixon said Tuesday that the government plans to invest more in the state’s Heritage Savings Trust Fund, which was established in 1976 to save money for future generations.
Alberta has long talked about investing surplus funds in the Heritage Savings Trust Fund to support future infrastructure projects and programs. Currently worth about $ 20 billion.
“At this point, I think it is our duty to use these resources strategically to help Alberta solve these problems, especially with regard to inflation and affordability,” he said. I did.
“But when those oil and gas prices go down, do it in a way that doesn’t cause problems for future governments.”
Infrastructure and income tax
Lander, an economist at Concordia, also pointed out a number of infrastructure projects that could be funded. The story of connecting Edmonton and Calgary by high-speed train has been around for a long time. The state is full of roads and bridges that need repair, and both large cities in Alberta are trying to improve their transportation systems.
“They should be able to come up with a list of laundry things that can be done with that money that will bring long-term benefits,” he said.
The government also discussed introducing a uniform income tax rate. This is a “good move” and as a result people can move to the state, which can generate more income and create a wider tax base.
Due to this move, income tax rates could be uniform above the $ 20,000 threshold of 10 percent.
“They should be able to afford that tax cut,” he said.
Alberta Savings Account
Tombe, an economist at the University of Calgary, says Alberta’s next surplus could be even bigger. Trust fund.
“It’s absolutely appropriate to save unexpected income,” he said. “It will generate investment income and will bring benefits in the future.”
Lander needs to plan what to do with the money over the next five to ten years, and is concerned that UCP leadership contestants will make promises for campaigns tied to the money. Stated.
Quebec’s Prime Minister François Legor has already given $ 500 to the people of his state and has promised to give another $ 500 if he is reelected, Lander said. The state has a budget deficit of $ 7.4 billion, but felt the need to send payments to mitigate the effects of inflation.
“Unfortunately, when there is a leadership race that involves some quack that has dangerous ideas, the temptation is to start making pretty ridiculous promises,” he said.
Ultimately, the types of storms we are experiencing now are “government It won’t be available. “
“These pressures will increase over time,” she said.
“I think there is a lot of pressure on both economic diversification and investment in the Heritage Savings Trust Fund.”
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Ralph Bucks. Health care. Electric train.Here’s how Alberta can spend that huge amount of money:
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