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Are we selling the family farm?

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Most addictions are destructive. Dependency on drugs, alcohol, gambling or compulsive spending usually ends badly. Consequences can range from loss of health, bankruptcy, family breakup, to prison time.
Governments can also become addicted to extraordinary income to cover ongoing operating costs. In B.C., the addiction that threatens us is to royalties from exploitation of our non-renewable resources. It's like selling off pieces of the family farm to pay your monthly bills.
Politicians love using royalties instead of tax revenues to meet the costs of government. They can avoid the difficult choice of reducing expenditures to fit revenue or telling voters that if they want something they have to pay for it by raising taxes.
By using royalties to finance current expenditures we are stealing from our future selves and our children and grandchildren. The very young and the unborn cannot protest this profligate behaviour and they don't vote. No wonder royalty income is beloved by politicians of every stripe.
Non-renewable resources are just that. Once they are exhausted, the royalties stop and then taxes must increase or government expenditures must shrink. The flow of funds that seemed to finance a free ride ceases and citizens have precious little to show for it.
Peter Lougheed, the late beloved premier of Alberta, understood that the sale of non-renewable resources had an impact upon future generations of Albertans. He put the royalties into a Heritage Fund and used the earnings from that fund, and only the earnings, to finance current operating costs.
Unfortunately, his successors did not follow suit. The current administration is probably the most profligate government in Canada. A simple seven per cent sales tax would more than balance the provincial government's annual budget but, in Alberta, such a tax is regarded as sacrilege. Much easier and less controversial to rob future generations.
B.C. is not much different. Christy Clark's government is salivating at the thought of royalties from natural gas. Concern about exhaustion of the resource has been brushed aside, especially given the announcement of the substantial new Montney find of more than 271 trillion cubic feet on the border with Alberta. It has raised the province's natural gas potential to 2,933 trillion cubic feet.
I expect our government reasons this will support drilling and LNG projects for more than 150 years, so why not just spend the royalties and avoid having to tell taxpayers there is no free lunch?
The premier should ask herself how her son and his children, if he has any and, in turn, their children, view her government's spending of LNG royalties when they look back?
It's time for the government and voters to make the difficult decision that royalties earned from all non-renewable resources be placed in a trust fund with the income to be used for operating expenses.
Virtue will be rewarded; in just over a decade the fund's income would be sufficient to permit a continuous reduction in taxes. All that's needed is willingness to defer gratification for future benefit.
Sadly, this is unlikely to happen, either with governments or individuals. For example, many Canadians fail to save enough to finance retirement, and the amount of unused capacity for tax-deductible contributions to RRSPs grows each year.
Will we continue to blithely sacrifice our own and future generation's tomorrows for today's gratification? What will we do when the family farm is gone?
David Bond is an author and retired bank economist.
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