EDMONTON, April 7 /CNW/ - CGA Alberta is calling on the Alberta
Government to commit to developing a new savings infrastructure to prepare the
province for the next economic up-swing.
"We have argued for many years that economies run in cycles and that
governments need to prepare themselves by accumulating resources on the up
side for the inevitable declines," said John Carpenter, MBA, FCGA and CEO of
CGA Alberta. "While Alberta has created a sustainability fund for short term
revenue variations and a capital fund to respond to some project needs, the
tremendous hydro-carbon driven resources from the latest boom have largely
been consumed in the political processes and are gone. Remember this moment!"
Carpenter said the development of a defined savings infrastructure,
enshrined in legislation, will ensure the money is "off the table" when
provincial revenue next booms. The current economic climate, when the province
is forced to run a deficit to maintain program spending levels, is the perfect
time to enact this type of plan.
"Ironically the best time to talk about savings is during periods such as
this, when there are no "surplus" resources," Carpenter said. "Now the
political, legal and accounting structures necessary to capture surplus
resources for the future have no cost. They can be established now and
utilized in the future to control the political competition for surpluses in
the next up-turn."
"It should work like an automatic withdrawal system on a pay cheque," he
added. "That way, the money is not even on the table as surplus."
But there are some key considerations to be addressed in the development
of this savings structure. The transparency of the capital account and how
projects are moved into the funding queue, as well as the sustainability of
our extensive and valued social programs in light of the upcoming demographic
bubble, as outlined in our Vision 2020 research, are just two.
"If it is our priority to sustain our programs, we must get this money
off the table and tucked away in reserve accounts," Carpenter added. "This is
really not savings, it is deferred spending."
And, in light of today's provincial budget, which outlines a return to
deficit financing to fund provincial infrastructure programs, there also must
be a plan to deal with the longer-term consequences.
"The Premier, quite logically, sees the opportunity to undertake
infrastructure projects at dramatically reduced costs in the absence of
competing demand from the private sector," Carpenter said. "This is also smart
as it creates an opportunity for Alberta to forestall the otherwise inevitable
loss of talent and labor we worked so hard to attract during more prosperous
"But Alberta has retained insufficient resources from our latest boom to
fund these projects without resorting to new government debt. We did not have
to be in this position," he added. "And now that the debt genie is out of the
bottle, how do we control it?"
The new savings structure Carpenter envisions would incorporate these
issues and ensure sufficient resources are in place to keep Alberta debt-free
for the next economic cycle.
To highlight the trade-offs involved in the budget process and the impact
of spending on long-term sustainability, CGA Alberta has developed an
interactive budget analysis tool. The tool allows the user to alter key
spending and revenue parameters and observe the effect of their choices on the
province's fiscal health. The tool, as well as links to the Vision 2020
project, can be found at cga-alberta.org/budget.
The Certified General Accountants' Association is responsible for the
education, regulation and promotion of CGAs in Alberta. There are more than
71,000 CGA members and students working across the country and around the
world, at every level and in every sector. CGA is the fastest growing
accounting designation in Canada and is the designation of choice for students
pursuing an accounting career in Alberta. For more information about CGA
Alberta, please visit the web-site at www.cga-alberta.org
For further information on John Carpenter, go to www.cga-alberta.org -
News and Media/CEO bio.
For more information on Vision 2020, go to www.albertavision2020.ca.
For further information:
For further information: or to arrange an interview, please contact:
Janice Harrington, Director of Communications, Phone: (403) 614-7941, Email: