According to Bennett Jones’ Winter 2015 Economic Outlook (February 18, 2015, by David A. Dodge O.C., Richard Dion and Michael Horgan):
"The fall in the oil price in 2015 to around US$50 from its 2014 average of US$93 will likely erode the federal fiscal balance in 2015 by about $5 billion …Alberta faces a sharp drop in government revenues that would bring its operational budget into considerable deficit in 2015 and 2016 barring any major budgetary adjustment … Very rough calculations suggest that with WTI at US$50 and the Canadian dollar at US$0.80 in 2015, total government revenues in that year could fall by between $7 billion and $9 billion."
Alberta Premier Jim Prentice has outlined his government’s plan and budget, which reportedly “represents one of the most ambitious savings strategies to be attempted in generations” and includes changes to the province’s flat 10 per cent personal income tax, a health care levy, and a reduction in public sector salary costs. Meanwhile, we read about the governments in Norway, and in Texas, having done a better job at saving up reserves in anticipation that someday, oil prices would decline.
The governments of Alberta, and Canada, are, of necessity, responding with measures that will affect citizens across the spectrum. But does anyone in the course of a private legal practice think there is a lesson to be learned here? As service providers to cyclical industries, should law firms being setting aside reserves in a manner not usually contemplated by partnership compensation plans?