Savings Policy Recommendations

Robert Bhatia

Savings Fundamentals • The government should maintain a mechanism to save for the

purpose of cushioning year-to-year fluctuations in revenues. • The Government should articulate clearly the fundamental

reasons to save for the longer term. The risks inherent in Alberta’s revenue structure should be analyzed in more depth and communicated better to Albertans.

• The government should re-examine the extent to which it uses

the benefits of resource revenues for spending and to keep taxes low and make adjustments to reinforce and increase its commitment to long term saving.

Communicating the Case for Savings

• The government should articulate the benefits to Albertans of savings including:

– A responsible savings strategy improves the long term stability of the

Alberta public sector and therefore contributes to business and personal confidence in the province.

– Responsible use of resource revenues can be an important part of

managing and enhancing Alberta’s reputation as a prudent steward of its resources and related wealth.

– Savings today reduce the risk of tax increases or service cuts in the future.

In all likelihood this will benefit many of today’s Albertans as well as their children.

Purposes for Savings

• The primary purpose of long-term savings should be to provide a long-term supplementary source of revenue to fund future priorities.

• If the government chooses to dedicate a portion of savings to

fund specific purposes, the rationale for the linkage should be strong and clear. Moreover, care should be taken to ensure that the impact on spending levels and priorities is considered carefully.

• Consider a dividend to Albertans as long-term savings increase.