Alberta’s Fiscal Responses to Fluctuations in Non-Renewable-Resource Revenue

Alberta’s provincial government has been heavily reliant on non-renewable-resource revenues coming from the energy sector. Over the past half-century, non-renewableresource revenue has accounted for about 30 per cent of the provincial government’s total revenue. This poses a fiscal challenge as resource revenue is volatile and uncertain. Consequently, the provincial budget is very exposed to the vagaries of global energy price shocks, pipeline disruptions and other events, such as the federal government’s previous National Energy Program. Often, the downside to excessive dependence on volatile resource revenue comes to the forefront of public policy discussions when global commodity prices related to the resource sector plummet and budget deficits ensue. Not surprisingly, the recent dramatic decline in resource revenue and the associated budget deficit have been a focus of hot debates in the province’s political and academic circles. When a government faces growing budget deficits, sooner or later it may be forced to raise taxes, reduce spending or both to achieve fiscal sustainability.However, the way the provincial government responds, and the timing of its responses, can have significant impacts on society. Thus, examining the dynamics of Alberta’s fiscal responses to changes in non-renewable-resource revenue is crucial to enhancing informed public discussions and policy-making in the province.