Despite bitumen bubble, Alberta is a steady star in turbulent waters, says Redford.

Premier Alison Redford
Premier Alison Redford

Short on specifics, Premier Alison Redford‘s much-hyped televised address may have ended up leaving more question unanswered.

1) Referring to a “bitumen bubble”, the Premier announced that the provincial government’s revenue shortfall is now projected to be six billion, up from the three billion budget deficit recently projected by Finance Minister Doug Horner. This is a result of lower than predicted oil prices, which historically cycle from high to low.

It is positive news that the Premier does not intend to “take an axe to government spending across the board,” but this reinforces the need for Albertans to talk about taxes.

2) During her address, the Premier praised the construction of new pipelines as a way to increase the price of Alberta’s oil, and government revenue. While this is be positive, it still does not solve the problem that our government relies heavily on an unstable stream of revenue determined by international markets. Another reason why Albertans need to talk about taxes.

3) At the conclusion of her address, the Premier announced that she will be holding an “Alberta Economic Summit.” The Premier explained that the Summit will bring together “industry experts, business and not-for-profit sector leaders and academics from our colleges and universities” to continue the “conversation” about Alberta’s finances.

Premier Redford will need to work hard to ensure that this will not be a government-sponsored public relations exercise designed to produce a pre-determined result.

18 thoughts on “Despite bitumen bubble, Alberta is a steady star in turbulent waters, says Redford.”

  1. Perhaps I am more cynical than you are Dave, but I have a hard time believing that this was totally unexpected when Premier Redford was making her lavish election promises last spring.
    Usually, after an election upset, an incoming new government claims to have found that the books are in much worse shape than they knew during the campaign because the old government hid the truth.
    In this case, the “new” government is essentially the same as the “old” government.
    But maybe the claim will be that the “old” government was the Stelmach government, and the ones finding all the unexpected mess is the “new” Redford government.
    That would be an interesting case of spin.

  2. She has a job in front of her, give her some time, E.D. drove a lot of our drilling to Sask listening to the useless media and “our fair share”. When it is on average 36 days to permit a conventional hole in Sask and 8.5 months for the same hole in Alberta, where do we think the drilling will go. Drilling and energy sales equals money people. Between Klein and E.D. they created a lot of little kingdoms for useless beuracrats, these useless clowns need to be, for the most part, given a job in the medical industry, stuffing the cotton in pill bottles. Take back the 8 billion we give to Quebec every year and “SHAZAM”, no deficit, but then the lazy Frenchie couldn’t have cheap daycare and cheap tuition, Oh ,Oui Oui Alberta you are such a good squeeze for da frenchie when it comes to money. Cue Danielle for Rutherfords bitchfest at 9;08 tomorrow, or at least the grand wizard Rob Anderson.

  3. Last night the Premier said that the population of Alberta has risen by 95,000. (which is about the population of Red Deer). She went on to say that this puts an increase strain on services the government provides. What am I missing? Are these 95,000 people not paying taxes, not buying homes, not spending money to merchants who are paying a percent based tax?

    Whatever money the government has, the government will spend . . . and more. Five dollars, ten dollars, 50 Billion dollars.
    Why is everybody so in love with raising taxes?

  4. Joe, it’s often not how MUCH is spent per capita, but how WELL it’s allocated. Alberta may indeed spend more per person, but it’s often inefficient spending, partly from mismanagement, and partly because our population is relatively spread out and we provide a high level of services to rural populations.

    Since it is obvious that the PC’s have been unable to properly manage “windfall” resource revenues since the days of Lougheed, we DO need to talk about taxes.

    A reasonable level of taxes will moderate the boom and bust cycles and allow for some responsible long-term planning based on stable revenues. The necessity of implementing taxes would have been avoided if we had left the Heritage Trust Fund alone; we would have been able to use the interest income alone to stabilize our provincial economy.

  5. The best way to get out of complicated mess is to have a coherent plan. As the speech last night clearly indicated, the Redford administration does not have a coherent plan yet. Instead, they are promising more “conversations”.
    As Preston Manning once said, if you want to get out a hole, first you have to stop digging. And the longer you let the hole get bigger and deeper, the harder it is to fill it back up again.

  6. We definitely need to talk about taxes. Bragging that our taxes are so low we could make $11 billion more in revenue and still have the lowest taxes is idiotic. Taxes should be raised at least by the $6 billion deficit via a combination of sales tax, progressive income tax and corporate taxes.

    Royalties should never ever be used to cover operating expenditures, they should be reserved for capital that can be used to sustain quality of life should our non renewable resources ever run out (economically speaking). If the price goes back up and there is a $6 billion surplus it should be saved in financial assets or other capital generating capital. They used to call this the Alberta Rule until we stopped following it. Now it’s effectively the Norway Rule (Actually Hartwick rule).

    When a Province has 4% unemployment (a better than natural level which drives inflation up) there is no way it should be running a deficit. Yes there are increased costs due to population growth but this level of deficit is not due to overspending it is due to a reliance on unreliable revenue.

  7. We should absolutely be bragging that taxes are $11 billion less than the next lowest province. Why? It brings businesses here, which bring people here, all of which pay more taxes.

    On top of that we’re not just competing in our own country but globally. I agree – let’s talk taxes – let’s LOWER them further and increase our advantage.

  8. Of course we need to talk about taxes. We are paying less than half what individuals in other provinces pay in provincial taxes and yet we wonder why our services are not as good in many areas as those that other provinces manage to provide themselves. There are deficiencies in services provided that go beyond homecare, daycare, and long-term care, all of which arguably were never well-funded in Alberta. At one time, under Lougheed, governments did take seriously the idea that they had to regulate closely in the area of occupational health and safety. Now they spend almost nothing on it. Environmental regulation was much more strict during the Lougheed period as well. Are we really so broke that we don’t care about polluters and that group of employers who ignore the laws regarding occupational health and safety?

    Yes, there are cuts that could be made without affecting services. Hugh MacDonald, in the last legislature, identified about $400 million worth of such expenditures. Those cuts should be made. But they won’t solve the long-term revenue problem. If “Joe” and others here are saying that we should be firing nurses, teachers, and others, they should make it very clear that they want to cut services and they should name the services and how many staff should be fired, and with what savings. Pretending that the system is filled with fat is unhelpful. Cutters, tell us clearly what it is you don’t want governments to provide anymore and which you would rather pay from your own pocket.

    And as Watson Smith suggests, money from oil and gas royalties should be kept for future generations in the Norwegian manner. Norway funds its generous “welfare state” through taxes, not through royalties. Alberta is capable of doing the same thing.

  9. Alvin, Norway is a soverign country, Alberta is a province. If Alberta had 500 billion in the bank, Quebec and Ontario would be on Harpers doorstep constantly whimpering to cover their 500 billion plus debts. I have lived in Norway, have lots of cousins still there, Norway is not this utopian wet dream of the welfarists, the taxes on the upper class were 81 percent, the young men drink themselves into horizontal because their only hope for a job is at Ikea or North Sea. You people seem to think Norway is the answer, well the women are beautiful, but the socialist government is like a giant thumb on the head of anyone starting a business or trying to get into the gaurded upper class, nice people but so liberal they ceased a personal thought process 60 years ago like all liberal/lemmings.

  10. Patrick T: Your low tax system is clearly not working. As for other provinces with eg. sales taxes – if this scares businesses away, how come there are so many businesses in those places? Why don’t ALL businesses come to Alberta if things are so great with our tax regime?

  11. Because, ScienceOfficerSpock, there’s no damn market here! 3.5-4.0 million isn’t enough domestic market incentive for businesses to relocate here. Even if we DID have a population increase of 95,000 people this year.

    Furthermore, many of the oil and gas extraction businesses are actually subsidiaries of larger(mostly non-Canadian) businesses that can get their supplies cheaper through economies of scale.

    Not to mention that there’s still a lot of people(especially in resouce extraction industries) who may WORK in Alberta, but LIVE elsewhere. This ranges from the “temporary” visiting workers who send a lot of money home, to oilfield workers who come from the Maritimes and elsewhere.

    The obvious solution is to encourage mass immigration into Albert (or Canada generally) to encourage the development of a domestic market for the things and services we can produce, but for “some” reason, many of the same people who extoll the virtues of the “free market” seem to be opposed to that. Go figger.

  12. There’s no such thing as a “bitumen bubble”. A “bubble” is created when the price of product skyrockets because speculators are convinced the price will rise even higher in the future. Their “irrational exuberance” has nothing to do with the intrinsic value of the product (tulips anyone?) Eventually sanity sets in, the bubble bursts and prices plummet. Yes there’s a disconnect between the WTI and Western Canadian Select price for oil, but it’s caused by oversupply in Alberta, lack of takeaway pipeline capacity to the US and Asia and competition from the Bakken producers. Redford’s scriptwriters came up with a nifty way to divert the public’s attention from the real problem, the Tories’ failure to restructure their financial model and stop betting 30% of the budget on volatile resource revenues. Surely it’s time to burst the Tory bubble and elect someone (anyone) with better fiscal sense.

  13. Apparently Alberta will be fine just so long as we place the onus of covering any budget shortfalls on the ever shrinking middle class, and nobody starts talking about reforming our laughingstock-of-the-oil-producing-world royalty structure.

    Apparently that’s taboo, or something. After all, we all know what happened last time Alberta tried to go there in late 2008…

  14. In effect, Alberta is asking other provinces like BC to allow pipelines to be built on their land so Albertans can avoid a provincial sales tax.

  15. Alberta does spend more per capita on just about everything. We have a spending problem! The government must go over everything and get rid of the fat. Maybe oil revenue should be increased. We DO NOT NEED A SALES TAX….. high incomes over $150,000 could be looked at. As far as pipelines they are needed. Any products from the rest of Canada on land come across Alberta soil to BC. Also BC oil/gas does go into our pipelines. Alberta gas already goes through BC to California. This is all about politics and environmental jargon. Sooner or later oil will move from Alberta to the gulf coast and to Asia as well.

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