Not any more

Booze, gambling revenues now worth more than gas royalties to Stelmach government

In Canada on August 27, 2010 at 08:40

CALGARY — It’s a seemingly bottomless well of riches the Alberta government continues to tap to fund its programs.

But instead of extracting it, you plug it, play it and drink it.

Indeed, booze and gambling are producing a windfall of riches for the provincial government at a rate that’s suddenly worth more than the individual takes from conventional oil and natural gas.

Combined, the vices are expected to generate about $2 billion in revenue for provincial coffers in the current 2010-11 budget year — roughly $1.3 billion from gaming and lottery revenue, and nearly $700 million from liquor.

Yet, royalties from conventional natural gas — for years the province’s primary source of energy income — are now forecast to hit only $1.9 billion this year.

Four years ago, the government reaped $6 billion in natural gas royalties.

The gaming and liquor income is also expected to outstrip estimated conventional crude oil revenue for the year, which is also projected to reach about $1.9 billion.

It was a similar story for the 2009-10 fiscal year and part of an intriguing but potentially alarming trend for the Tory government: Albertans’ bad habits are suddenly more valuable than some of the province’s geological wealth.

"It’s a reliable source (of revenue) and they depend on it. That’s the worrisome thing," Robert Williams, a co-ordinator with the Alberta Gaming Research Institute, said about the booze and gambling dollars.

Albertans are already near the top of per-capita gambling in Canada, spending an average $951 per person in 2009, he said — far more than almost every other province.

"It’s startling and it’s worrisome," Williams added.

For the Alberta government, however, the liquor and gaming cash is important for funding various social programs in several ministries.

Booze dollars are dumped back into general revenue for spending, while gambling dollars — cash from video lottery terminals, casino gaming and lottery tickets — are allocated to the Alberta Lottery Fund.

The money is then distributed among hundreds of groups and agencies in the province.

"You’ve got a real variety of where the money goes," explained Lynn Hutchings-Mah with the Alberta Gaming and Liquor Commission.

"The grants do go back to support a lot of volunteer and community projects and initiatives."

Observers believe the Alberta government — facing a record $4.8-billion deficit this year — should get accustomed to a reduced royalty take in the coming years from conventional oil and gas.

Bob Ascah, director of the University of Alberta’s Institute for Public Economics, said low natural gas revenues are part of a new reality in the province, at least for the next few years.

He noted that several reasons are driving the decline, including falling conventional gas production and growing shale gas activity south of the border, which has reduced American reliance on Canadian gas.

"Those factors have changed rather dramatically since the beginning of the (last) decade," Ascah said.

He expects Alberta will take a hard look at British Columbia’s and Ontario’s foray into online gambling as the province eyes potential new revenue sources that aren’t tied to volatile oil and gas.

But he said the morality of growing government revenues on the back of what some people consider a vice will have to be weighed.

Alberta isn’t yet willing to roll the dice on legal online gambling, preferring to wait and see how it plays out in other provinces before considering whether to allow it.

With lower energy income and increased spending, Ascah believes a provincial sales tax is another revenue source that should be considered as part of a debate on the sustainability of Alberta’s fiscal regime.

Alberta Finance Minister Ted Morton said Wednesday the government, in the medium to long term, must consider "all the options" — including a provincial sales tax — for generating additional income, but stressed it isn’t on the horizon anytime soon.

Premier Ed Stelmach, however, said a provincial sales tax will never be introduced under his watch.

"I can tell you as long as I’m premier, there won’t be a sales tax — period," Stelmach said.

"We’re working our way through a recession. I’ve seen other jurisdictions change tax schemes, change their tax policy, and all it’s done is hurt the recovery."

jfekete@theherald.canwest.com

© Copyright (c) The Calgary Herald

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  1. One of the too many false reasons too many patients die in Hospitals is that almost none of the medical staff feel any personal, real, negative repercussions themselves. That also includes the too many bad cops we seem to have now too, and bad civil and public servants too, bad politicians..

    One of the best way that I have discovered to get to know what a person is really like, is work with him just for one whole day,.. and what you now saw next.. lying, bullying, control freak.. especially in Alberta today

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