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RED DEER CHAMBER OF COMMERCE FEATURE |
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Chambers encourage savings policy
12/03/08
As Albertans roar through the global economic crisis, they have one eye on their gas gauge, the other on the provincial treasury. That’s because the feel-good conversation at the gas pump generally means the price of crude remains below the level the finance minister uses to establish the provincial budget.
When the minister saw a significant surplus in the first quarter’s financial forecast, $3.1 billion was earmarked for savings. When the price of a barrel of oil - pardon the pun - tanked, $2 billion allocated to support public transit, $1 billion for infrastructure requirements and the $3.1 billion in proposed savings were stripped from budget projections.
The next day, the government released the Mintz Report, the culmination of work done by the Financial Investment and Planning Advisory Commission on Alberta’s savings practices. That report recommended accumulating $100 billion in the Alberta Heritage Savings Trust Fund by 2030; based on the current balance of approximately $16 billion, that figure would be achievable setting aside a fixed proportion of revenue from non-renewable resources each year.
When the Alberta Chamber of Commerce learned that only carbon capture and sequestration escaped the budget axe, it didn’t, pun intended this time, mince words.
The ACC’s president and CEO, Ken Kobly, in letters to the editors of most of the province’s newspapers, reminded the government of the prudent recommendations of the Mintz Report and of the ACC’s own Vision 2020. This study, released in 2006 in Partnership with the Certified General Accountants Association of Alberta, suggested dedicating 30-40% of non-renewable resource revenues to the Heritage Fund.
It mirrors the Mintz Report in the goal of creating a savings pool in the $100 billion range by 2030. As the past six weeks has demonstrated, the revenue stream produced by renewable resources is both volatile and uncertain. By weaning the province’s budget now, our leaders could be providing Alberta with more fiscal stability and establishing a firm financial foundation for the future.
The Mintz Report recommendations aren’t simply an arbitrary nest egg to mollify an over-protective parent; they are a collection of prudent directives that anticipate an economic climate that’s much leaner than today’s. They also presage the needs of a growth-dependent market. When markets don’t grow, we have negative growth or recession, today’s least popular nine-letter word.
In October, the Alberta Chamber shared its forethought with the government in a pre-budget submission. That document recommends an end to surplus budgeting in favour of spending and saving; a continuance of three year business plans; restriction of one-time spending initiatives to fiscal and environmental emergencies; limiting annual increases in operating spending to the combined effects of inflation and population growth; realizing the aforementioned savings plan and ensure municipalities can manage their infrastructure responsibilities.
The government’s easily abandoned savings strategy demonstrates more clearly than ever the need for a policy requiring it to put aside a portion of resource revenues. The ACC will continue to press the government to introduce a strong savings policy as it encourages its membership to share that view.
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UPCOMING CHAMBER EVENTS |
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The Red Deer Chamber of Commerce Business After Hours
is a mini tradeshow held the last Tuesday of each month from Fall to Spring.
Interested in Hosting a Business After Hours?
Business After Hours is a great way to enhance your visibility and reputation within the business community.
Contact the Red Deer Chamber of Commerce for more information:
www.reddeerchamber.com
Phone: 403-347-4491
Fax: 403-343-6188
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PARTICIPATING MERCHANTS |
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