The province’s willingness to bury the latest report urging it to stop frittering away its resource revenue is indicative of a government feeding its addiction to a gift that will not keep giving. It must get its head out of the proverbial oilsands, and recognize–with actions –that our natural resources are not there for the exclusive benefit of today’s generation.
And yet, our leaders continue to roll over and shut out the wake-up calls, such as the Mintz report, which the province released only last week.
A few days ago, we explored the recommendations put forward by University of Calgary professor Jack Mintz, and questioned why the report sat on a government shelf for close to a year.
Today, we look at the ethical and philosophical questions of who owns our non-renewable natural resources, and what are the moral obligations that come with being the generation to take the oil and gas out of the ground and convert it to cash.
Most will agree in theory with the goal of turning non-renewable resources into wealth assets that can be transferred from one generation to the next. In reality, however, things have devolved so that little more than lip service is paid to this theory.
Since oil was discovered in Leduc 61 years ago, Alberta’s reliance on royalties to pay for everyday expenses such as teachers, doctors and nurses has steadily grown. Sometimes, the fluctuations in resource prices caused serious embarrassment: after the government was caught out overestimating natural gas revenues and had to cut back on commitments already announced, it established a sustainability fund to hedge against the volatility of commodity prices. But this, too, has quickly become little more than a chequing account, into which government can dip whenever it wants.
The warnings contained in the Mintz report are not new ones. They echo the concerns raised two years ago in a report prepared by the Atlantic Institute for Market Studies.
“Today’s people are merely stewards of those (nonrenewable) resources, and must manage them in the interests of all present and future citizens of the jurisdictions that own them,” says the AIMS report. (Follow this link to that report) “We therefore have both a financial responsibility and a moral obligation not to treat this money like a lottery windfall, or to sell the house to finance a splurge on fancy cars and new clothes.”
Indeed, the fable of the thrifty ant and the live-for-today grass-hopper left with no savings pre-dates all such contemporary warnings.
Ethical spending would ideally involve using non-renewable resource revenues either to pay down the debt–this was done –or to invest in a heritage-type fund: this has yet to be attempted on a scale commensurate with Alberta’s vast revenues.
The fund should be built up to ensure long-term fiscal stability, never winding down, and inflation should not be allowed to erode its value–a problem with Alberta’s Heritage Fund.
Instead of being the lottery winner who spends everything in a few, short years by living big, with no thought for the future, the Alberta government should use the province’s onetime winnings to create wealth. It should be among that class of smart lottery winners who build estates, and leave behind assets that keep producing a revenue stream long after they’re gone.
That’s a legacy worth establishing.
© The Calgary Herald 2008