Alberta’s Financial Management Commission has issued its final report and recommendations for a new fiscal framework for that province.

Commission chair David Tuer said that the Alberta government has done an outstanding job of managing the province’s finances since the mid 1990s, but notes that the economy is changing, expectations have grown, and there are new challenges to address.

“Our objective has been to retain the strong elements of the fiscal framework that have served Alberta well, and also to look to the future and to enhance the framework so it meets today’s priorities and helps prepare for the future,” he said.

The report notes that the current framework created fiscal challenges that were illustrated in the past year when the province was forced to respond quickly to a slumping world economy, weaker equity markets, a downturn in the price of oil and gas, and uncertainties in world markets in the aftermath of September 11.

“On the one hand, the strength of the current fiscal framework is that it forced the government to take actions to prevent a deficit. On the other hand, the impact of those decisions was felt across the public sector where government was forced to change funding commitments, delay or defer projects, and withdraw plans mid-year,” it says.

It says that the commission also recognizes the increasingly important need to reduce the province’s reliance on non-renewable resource revenues.

“A new fiscal framework should provide for a gradual but sustained reduction in our reliance on natural resource revenues and a focused attempt to build financial and other strategic assets to maintain and improve the Alberta Advantage.”

It also suggests that Alberta should take a longer term perspective – make fiscal decisions that support a sustainable economic vision for the province, separate spending decisions from the highs and lows of resource prices, and plan for the day when traditional revenues from oil and gas will decline.

“If there is one message the commission consistently heard it was the need for more stable, predictable funding tied to better long term planning,” it notes.

It also says that Alberta needs to: find a better way of addressing capital needs as well as clarify its responsibilities and improve efficiencies. The fiscal framework should be tied to a long-term sustainable economic vision, it should enable long term planning and its debt should be paid down. The province needs a better way of managing and funding capital, the framework should promote ongoing efficiencies in government and government funded programs and services, and that the planning and budgeting process should be more open.