Alberta's government budget too reliant on volatile oil, economist says

If the Alberta government really wants to do something about diversification, it should focus on its own coffers,and not on trying to create jobs, says one economist.

Alberta's workforce is already "very diverse" compared to other provinces, whereasgovernment revenues lean heavily on afew specific industries, said University of Calgary economist Trevor Tombe.

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Just 6.8per cent ofworkers in the province are involved in mining, oil and gas industries, according to Statistics Canada. Even when you account for the related jobs and support activities in other sectors, that only amounts to 14 per cent, said Tombe.

In comparison, roughly 25 per cent of household and business income in the provincecomesfrom oil and gas, he said.

"[The government is]not really addressing what I think the biggest diversification challenge is, and that's ...volatile government revenue sources."

Picking winners doesn't work, Tombe says

Tombe said the government's diversification efforts have beenfocused ontrying to subsidize particular industries and even companies, and somewhat fruitlessly.

At the beginning of February, the government announced a new $500-million royalty credit program to build petrochemical plants over the next 10 years.

Considering that Alberta's economy is worth $350 billion per year,Tombe said that initiative would hardly make a dent.

"The government's ability to affect the structure of the economy is very limited, but their ability to control their own budget, the sources of governmentrevenue, whether or not we're exposing government coffers to income risk, that's something they can directly control," he said.

Rather than pick winners and losers, the government should be lowering corporate income taxes to attract new investment of every kind, Tombe said.

He also wants to see the government tackle its growing deficit by generating revenue from more stable sources, though Premier Notley has been adamant that she will not introduce a provincial sales tax.

"The bigger risk is that when and if oil prices return, we'll simply have a large amount of royalties that the government will be dependent on, and we won't be off the royalty rollercoaster," Tombe said.

with files from CBC's Alberta at Noon