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Alberta's Long-Term Fiscal Future

Author

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  • Trevor Tombe

    (The University of Calgary)

Abstract

Alberta’s short-term fiscal challenges are well known, but its long-term ones are more significant. An aging population, a high reliance on non-renewable resource revenue, and rising debt levels will increasingly widen the current gap between spending and revenue. This paper estimates how large this gap is and where it is headed in the coming decades. Combining detailed data and projections for macroeconomic and demographic variables with a rich model of Alberta’s budget, this report quantifies the scale of the province’s fiscal challenge and explores potential ways to address it. Overall, I find the present value of the difference between spending and non-resource revenues is 4.2 per cent of GDP between 2018 and 2100. By 2040, the fiscal gap that year will be roughly 44 per cent of controllable government revenue, 29 per cent of program spending, and the equivalent of over 4 per cent of GDP. In present value terms, the fiscal gap between now and 2040 is equivalent to over $250 billion today. I further find that debt levels are not on a sustainable path, as the long-run debt obligations exceed the government’s future ability to service that debt without significant policy changes. Meaningful action on both spending and revenue can address the province’s financial challenges. I explore various potential options. Without sustained, disciplined, and transparent action today, Alberta faces a precarious fiscal future.

Suggested Citation

  • Trevor Tombe, 2018. "Alberta's Long-Term Fiscal Future," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 11(31), November.
  • Handle: RePEc:clh:resear:v:11:y:2018:i:31
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    References listed on IDEAS

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    1. Ronald Kneebone & Margarita Wilkins, 2016. "Canadian Provincial Government Budget Data, 1980/81 to 2013/14," Canadian Public Policy, University of Toronto Press, vol. 42(1), pages 1-19, March.
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    Cited by:

    1. Cameron, Anna & Tedds, Lindsay M., 2021. "Gender-Based Violence, Economic Security, and the Potential of Basic Income: A Discussion Paper," MPRA Paper 107478, University Library of Munich, Germany.
    2. Kenneth McKenzie, 2019. "Altering the Tax Mix in Alberta," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 12(25), September.

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