Tag Archives: Rob Breakenridge

Alberta is always in Tough Economic Times

“They don’t know what to do with tough economic times. It was easy enough to govern when the money was flowing in, when things were going well. They took all the credit for it at that time. It’s much harder to govern, and the mark of a good government is how they handle it, when times get difficult.” – Ray Martin, Leader of the Official Opposition (June 13, 1986)

Jim Prentice Premier Alberta

Jim Prentice

Despite Alberta’s prosperity, Premier Jim Prentice is warning we could be heading into tough economic times. The decline in the world price of oil has spooked the 43-year governing Progressive Conservative establishment and the corporate elites in downtown Calgary.

The perilous “price trough” has led Mr. Prentice to warn of a potential $7 billion revenue shortfall if oil prices remain at lower than expected levels for the entire 2015/2016 fiscal year. According to a government spokesperson, some of the missing $7 billion could come from revenue streams such as land leases, but at this point the number is largely based in speculation and politically spin.

Mr. Prentice’s prophetic $7 billion shortfall becomes more startling when learning the Alberta Government is projected to collect only $7.5 billion in crude oil and bitumen royalty revenue in the 2014/2015 budget year. This projected revenue is based on the price of Western Canada Select (WCS) oil remaining at $77.18 per barrel. Although the yearly average price is $84.02 per barrel the current price of WCS  has dropped to $48.44 per barrel.

Ray Martin NDP MLA School Trustee Edmonton Alberta

Ray Martin

If the “tough economics times” message sounds vaguely familiar, that is because it is. In oil-rich Alberta, we hear a lot from our political leaders about tough economic times, even when times are prosperous. In most cases, our politicians are managing voters’ expectations and positioning themselves to take credit as ‘prudent fiscal managers’ when the world-wide price of oil inevitably increases.

Meeting the Challenge of Tough Times” was the name of the three-year economic plan launched by Premier Ed Stelmach’s PC government in 2009.

Bitumen Bubble Alberta

Bitumen Bubble

The sharp decline of natural gas royalty revenue and that year’s world-wide recession, which felt more like a mild economic pause in Alberta, even convinced the Tories to amend the Klein-era Fiscal Responsibility Act to allow the government to pass deficit budgets.

And in January 2013, Premier Alison Redford used a televised address to warn Albertans that a $8 billion shortfall in the provincial budget was being caused by an ominous “bitumen bubble.” Ms. Redford’s bubble was then used as justification to slash funding to colleges and universities by 7% in that year’s budget.

Alberta Finance Minister Ron Liepert

Ron Liepert

But the PCs have not always predicted “tough economic times.” In 2012, then-finance minister Ron Liepert told the Calgary Chamber of Commerce to expect $16 billion in projected resource revenues by 2015. A huge jump in revenue would certainly increase the likelihood of Mr. Prentice calling a provincial election in early 2015.

Alberta’s government has heavily depended on revenue from cyclically priced resource commodities for decades. After years of unrestrained growth, no one should be surprised that Alberta’s economy could slow down.

The question is how we respond to actual tough economic times in Alberta. Was NDP Official Opposition Leader Ray Martin correct in 1986 when he said that “they don’t know what to do with tough economic times”?

While some right-wing think tanks call for a return to brutal slash and burn fiscal policies, the implementation of real long-term financial planning would probably be a more mature solution.

Alberta Norway Oil Fund Money Savings

Comparing Alberta’s Heritage Fund and Norway’s Petroleum Savings Fund.

Norway, a country with 5.1 million people, invests oil revenues into the Government Pension Fund Global and contains more than $857 billion. The fund was established in 1990 to smooth out the disruptive effects of highly fluctuating oil prices. Oil-rich jurisdictions like Norway prove that economies can be both economically prosperous and environmentally green.

Alberta Premier Peter Lougheed

Peter Lougheed

Alberta, a province of 3.6 million people, launched the Alberta Heritage Savings Trust Fund in 1976. Under the leadership of Peter Lougheed, the Heritage Fund initially received 30% of government resource revenues and was worth $12.7 billion in 1986. The Heritage Fund is now worth only $17.4 billion.

Facing tough economic times in 1987, the PC government of Don Getty halted all transfers to the Heritage Fund. Zero deposits were made between 1987 and 2004.

This week, PC MLAs passed Bill 11: Savings Management Repeal Act, which repealed the Savings Management Act, which was enthusiastically passed by the same group of PC MLAs in March 2014. The earlier bill would have diverted resource revenue to the newly created Alberta Future Fund, Social Innovation Endowment account and Agriculture and Food Innovation Endowment. The bill passed this week eliminates those new funds.

Kevin Taft Liberal Party MLA Alberta

Kevin Taft

Despite talk of revenue diversification, it is questionable whether the governing PCs would seriously consider increasing resource royalties, reinstating a progressive taxation system or introducing a provincial sales tax.

While many politicians view tax increases as politically unpalatable, a slight tax increase would not destroy the our province’s economy. “If Alberta increased its tax rates by $11 billion our province would still have the lowest tax rate in Canada,” Kevin Taft wrote in his 2012 book, Follow the Money.

Dr. Taft’s book breaks down government spending patterns over the past 30 years and details how corporate profits have skyrocketed in Alberta at the same time the PC Government has struggled with deficit budgets.

As a province with decades worth of dependence on revenues from natural resource royalties, it should not be a shock that we need to be smarter about how we plan and finance our government spending. Maybe our only problem is not our over reliance on cyclical natural resources revenues, but that the Progressive Conservatives are just bad fiscal managers.


Primetime Politics this week…
On this week’s Alberta Primetime politics panel, I joined Rob Breakenridge, Roberto Noce and host Michael Higgins to discuss the Gay-Straight Alliance debate, Moe Amery‘s texting-while-driving-demerits bill, and Bill 2: Alberta Accountability Act.

 

Jim Prentice tells Albertans to strap on their seat belts

Premier Jim Prentice Alberta Leadership Race Vote

Jim Prentice scrums with the media after his victory speech on September 6, 2014.

“After two weeks with me as the premier, there will be no doubts in anyone’s minds that this a time of renewal and a time of change. Put your seat belts on.” – Jim Prentice speaking with Roger Kingkade and Rob Breakenridge on September 9, 2014 on News Talk 770.

Wearing your seat belt while driving in a motor vehicle is always a good idea, but in this context, it may not cure the political whiplash endured by Albertans over the past two years.

The interview was a rough start to a mixed week for Jim Prentice, who is in the midst of transitioning into the Premier’s office and is expected to be sworn-in next week. He had positive first meetings with Edmonton mayor Don Iveson and Calgary mayor Naheed Nenshi. And his rounds of media interviews early in the week were an introduction to many Albertans who are unfamiliar with Mr. Prentice and a departure from his predecessor, who became notorious for avoiding the legislature press gallery.

If his first week of transitioning into the Premier’s Office is going smoothly, the same might not be the case for his first week as leader of the 43-year governing Progressive Conservative Party. Mr. Prentice is already having to deal with allegations about PC MLA Sohail Quadri’s role in accessing voting PIN numbers in last week’s leadership vote.

Cabinet Shuffle next week

Much of the mainstream media coverage this week focused on speculation that Mr. Prentice could appoint individuals from outside the legislature to what is expected to be a smaller provincial cabinet.

As the rumours fly, three names have been widely speculated as prospective outside appointments – AIMco CEO Leo DeBeaver, Conservative MP James Rajotte and former Edmonton mayor Stephen Mandel. Mr. Mandel is currently serving on Mr. Prentice’s transition team and endorsed his candidacy in the PC leadership race earlier this summer.

Alberta Progressive Conservative Party Politics

Progressive Conservative MLAs leaving a morning caucus meeting at Government House in March 2014.

It is expected that any cabinet ministers appointed from outside the Assembly would be required to run in by-elections alongside Mr. Prentice, who currently does not hold a seat in the Alberta Legislature.

As I wrote last week, appointing cabinet ministers from outside the Legislature is not entirely unheard of in Canadian politics but it does come with some risks. Take for example Quebec Premier Bernard Landry, who appointed David Levine as a junior health minister in 2002 only to see him lose a by-election shortly afterward. The defeated candidate resigned from cabinet the next day.

While he may choose to include new talent from outside the PC Caucus, Mr. Prentice will still need to choose the bulk of his cabinet ministers from inside the current PC caucus. And his picks became slimmer yesterday as former Energy minister Ken Hughes announced that he will not seek re-election as MLA for Calgary-West.

New Senior Staff

Mr. Prentice announced that former Liberal MLA Mike Percy will be his Chief of Staff and Patricia Misutka will be his Principal Secretary. Both could bring a stronger Edmonton-perspective to Calgarian Mr. Prentice’s inner circle and appear to be competent choices for the roles.

Dr. Percy is the former Dean of Business at the University of Alberta and served as the MLA for Edmonton-Whitemud from 1993 to 1997 (defeating rookie PC candidate Dave Hancock in 1993). He served as the Official Opposition Finance Critic for much of his time in the Legislature. It is suspected that Dr. Percy would have been appointed as Finance Minister if the Liberals, led by Laurence Decore, had won the 1993 election.

Ms. Misutka is the former Chief of Staff to Mr. Mandel and was one of four co-chairs of Mr. Prentice’s leadership campaign. After Mr. Mandel’s retirement, she worked as a Senior Advisor with the Canadian Strategy Group, a government relations company run by long-time PC Party insiders Hal Danchilla and Michael Lohner.

Redford staffer lands pipeline job

It appears that Alison Redford’s former communications director, Stefan Baranski, has landed a new job as Regional Director for Ontario at with TransCanada’s Energy East Pipeline project.

Redford versus Rutherford on Twitter.

High-drama took place on Twitter’s #ableg hashtag yesterday morning as Premier Alison Redford‘s online communications team took aim at QR77 talk radio host Dave Rutherford. In response to a tweet from Innisfail-Sylvan Lake Wildrose MLA Kerry Towle congratulating Mr. Rutherford on the 30th anniversary of the show, the Premier’s Communications staff tweeted that the show was “Wildrose Radio.”

The popular radio talk show host has become a vocal critic of the provincial Tories and is seen as a tacit supporter of Wildrose leader Danielle Smith, who is a frequent guest on his show.

While it might not seem smart to attack a radio program with a large audience across the province, it is not as if the Premier was receiving rave reviews on the Rutherford Show anyway. After being pummelled in the media by the opposition parties in last year’s fall sitting of the Assembly, this could be the beginning of a new and more aggressive communications strategy from the Premier’s office.

Any observer of the #ableg hashtag will have become accustomed almost daily Twitter battles between hyper-partisan Wildrose Caucus staffers and increasingly-partisan Ministerial Press Secretaries, who are now free from the non-partisan veneer of the Public Affairs Bureau.

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During a telephone town-hall to Progressive Conservative Party members last night, Premier Redford took a shot at the Wildrose, claiming that “if another political party had been elected, there would be NO building in this province.”

This comment follows comments by Wildrose critic Rob Anderson about the government’s four-year project to renovate the historic Federal Building in downtown Edmonton.

In fairness to the Wildrose Party, with some high-profile exceptions, its platform in the last election would have would have rolled back spending and stretched out infrastructure projects over a longer period (but not cancel it altogether). – h/t Josh Wingrove

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Last week, I had an opportunity to speak with Premier Redford over the phone for a few minutes following her televised address. I will have some notes about the interview posted on the blog over the next few days.

no shock and awe, alberta pc leadership debate was a tame affair.

Alberta PC leadership Debate 2011

PC leadership candidates on the set of the Global TV debate: Doug Horner, Gary Mar, and Alison Redford.

Last night’s Alberta Progressive Conservative leadership debate, broadcast live province-wide on Global Television and QR77 and 630CHED, was a tame affair.

Overshadowing the evening was the recent passing of candidate Alison Redford‘s mother, who had been admitted into the hospital in High River the day before. Despite what must have been an incredibly difficult day, Ms. Redford demonstrated personal strength and delivered a strong performance during the debate. She was also the only candidate not to refer to notes during the course of the debate, only glancing at her notes during her opening and closing remarks.

None of the three candidates hit a home run during the debate, but each of the candidates demonstrated their own strengths and solid speaking skills. Each of the candidates highlighted their experience, both at and away from the cabinet table.

Unlike the 2006 leadership contest, where there were very obvious ideological and policy differences between the top three candidates, the three candidates standing at the podiums last night share similar political space within their party, with some notable exceptions.

Over the course of the hour-long debate, Ms. Redford and Doug Horner honed their criticisms on first-ballot front-runner Gary Mar. A seasoned politician of almost 20 years, Mr. Mar was quick to fend off criticisms of his support for privatized healthcare and his quiet acceptance of more than $400,000 in MLA transition allowance when he became Alberta’s chief lobbyist in Washington D.C. Both Ms. Redford and Mr. Horner took positions that health care can be improved from within the public system, rather than introducing more for-profit health care. They also raised the issue of trust in reference to Mr. Mar’s transition allowance flip-flop.

Mr. Mar played the front-runner game during the debate, saying a lot without actually saying much. Mr. Mar is intelligent and articulate, but his highly staged campaign has given him the air of an overly polished professional politician. He took every opportunity to remind the viewers that unlike his two opponents, he did not sit at Premier Ed Stelmach‘s cabinet table (though most of that cabinet table is now supporting Mr. Mar).

Ms. Redford and Mr. Horner used the debate to differentiate themselves from Mr. Mar on issues including health care, education, municipal affairs, and the oilsands. Mr. Mar earned 40% on the September 17 first-ballot vote, which presents a tough challenge for any candidate trying to close that lead. Is it impossible? No. Is it improbable? Maybe.

PC members will vote in a second-ballot preferential vote on October 1. If no candidate receives more than 50% on the second-ballot, the third place candidate will be dropped off and their second place votes will be redistributed among the top two candidates.

A big thanks to Rob Breakenridge for inviting me to talk about the PC leadership debate on his radio show on QR77 and 630CHED last night.