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

The report notes 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 says.

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

“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 also suggests Alberta take a longer term perspective – by making fiscal decisions that support a sustainable economic vision, separating spending decisions from volatile resource prices, and planning for the day when traditional revenues from oil and gas 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,” the report says.

The current framework created the fiscal challenges experienced in the past year when the province was forced to respond to a slumping world economy, weak equity markets, poor oil and gas prices, and world market uncertainties in the aftermath of Sept. 11, the document says.

“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 also says Alberta needs to find a better way of addressing capital needs, as well as clarify its responsibilities and improve efficiencies. Moreover, the fiscal framework should be tied to a long-term sustainable economic vision and it should allow for the provincial debt to be paid down.The report says the framework should promote ongoing efficiencies in government and government-funded services, and that the planning and budgeting process should be more open.