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Since 1965, Alberta government treated windfall resource revenue increases as permanent by increasing spending nearly half the time

CNW Group

Tue, February 24, 2026 at 7:00 PM GMT+9 2 min read

CALGARY, AB, Feb. 24, 2026 /CNW/ - Over the past 60 years, nearly half—45 per cent—of Alberta’s windfall resource revenue periods (when resource revenues exceeded government forecasts) were accompanied by permanent increases in government spending, meaning the provincial government treated the temporary revenue increases as if they were permanent, which has been a major contributor to debt accumulation, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

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“Over the past 60 years, successive provincial governments in Alberta have too often succumbed to the temptation to treat temporary or periodic windfall resource revenues as a permanent source of revenue, even though history tells us they aren’t, and this policy choice has significantly contributed to Alberta’s debt accumulation,” said Ronald D. Kneebone, professor emeritus of economics at the University of Calgary and co-author of Evaluating Alberta’s Fiscal Policy Choices, 1965–2025.

The study finds that over the 60-year period from 1965 to 2025, there were 16 years when natural resource revenues exceeded their trend by more than 15 per cent. In seven of those years, the government increased spending by 15 per cent or more.

In other words, in nearly 45 per cent of cases, the government succumbed to the temptation to treat temporary increases in resource revenues as permanent increases and raised program spending as if the revenue increases were permanent.

Crucially, when the resource boom ended, the government was left with higher spending but lower revenues, and thus created a situation for significant borrowing to close the gap, which has led to an accumulation of debt over time.

“Policymakers in Alberta need to focus on ensuring provincial finances are sustainable,” Kneebone said.

“A renewed effort by the current government to restrict its use of natural resource revenues is an important step in ensuring it will contribute, rather than detract, from the resilience of the economy to future external shocks by having sound provincial finances and stable taxes.”

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, Halifax and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

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