Tag Archives: Roberto Noce

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.

 

Alberta Politics Roundup – Eve of Fall Sitting

Alberta Legislative Assembly

Alberta’s Legislative Assembly will begin the fall session on Monday, November 17, 2014.

Fall Legislative Session
November 17, 2014 will mark the start of the first legislative session for new Premier Jim Prentice, Health Minister Stephen Mandel and Education Minister Gordon Dirks. The 43-year old governing Progressive Conservatives have promised to introduce new laws focusing on property rights and ‘ending entitlements’ for their MLAs.

This will be Rachel Notley’s first session as leader of the NDP Caucus. And Liberal MLA Laurie Blakeman will introduce a private members’ bill supporting students who want to create Gay-Straight Alliances in their schools. Newly Independent MLA Joe Anglin is also expected to introduce a private members’ bill.

With the price of oil declining to the mid-$70 range and next year’s budget being prepared, Jonathan Teghtmeyer has shared 9 ways that Alberta could better manage our resources.

Constitutional Property Rights
Flanked by Lethbridge Conservative Member of Parliament Jim Hillyer and Lacombe-Ponoka MLA Rod Fox, Wildrose leader Danielle Smith announced her plans to introduce a motion calling on property rights to be included in the Charter of Rights and Freedoms.

The Wildrose motion will likely call for stronger action than will be included in Mr. Prentice’s flagship property rights bill. Also, it is almost politically impossible to amend the Canadian Constitution.

Wildrose in Red Deer
The Wildrose Party is holding its annual convention in Red Deer on November 14 and 15 (the PCs will meet in Banff). Sparks are expected to fly as activists vent their frustration about the party’s poor showing in four recent by-elections.

The departure of Mr. Anglin, a cancelled leadership review and a controversial motion to take away the ability of MLAs to remove their leader and the leader’s staff are also expected to fuel intense debate.

Government House leader
CBC reporter John Archer tweeted news that Justice Minister Jonathan Denis has replaced Municipal Affairs Minister Diana McQueen as Government House leader. Ms. McQueen was appointed to the position two months ago.

Tobacco
Mr. Mandel has announced plans to make it illegal for adults to smoke tobacco in vehicles with children and ban flavoured tobacco, but not menthol cigarettes. Menthol cigarettes are said to be favoured by seniors, who also tend to vote in larger numbers.

In 2012, Liberal leader Raj Sherman introduced the Tobacco Reduction (Protection of Children in Vehicles) Amendment Act, which would have made it illegal for adults to smoke tobacco in vehicles with children. Dr. Sherman’s bill was passed but never proclaimed by the PC Government.

Tailing Ponds
It has been one year since a breach of a containment pond at the Obed Mine spilled 670 million litres of toxic tailings into the Athabasca River and its tributaries.

The Alberta Wilderness AssociationMikisew Cree and Athabasca Chipewyan First Nations  and other groups are criticizing the federal and provincial governments for laying charges against the mine’s former owners, Sherritt International, or new owners, Westmoreland Coal Company.

Pro-pipeline Democrats force Keystone XL Vote
Hoping to stave off defeat in a December 6, 2014 runoff vote, Louisiana Democratic Senator Mary Landrieu is trying to force the United States Senate to vote on approval of the Keystone XL Pipeline before the end of 2014. Approval of the pipeline’s crossing the US-Canada border ultimately rests in the hands of President Barack Obama.

Yellowhead by-election
Voters in the Yellowhead federal riding will cast ballots in a by-election on Monday, November 17, 2014. Although Conservative candidate Jim Eglinski is expecting an easy victory, federal Liberal leader Justin Trudeau visited the constituency to campaign with candidate Ryan Mahugn last week.

Calgary Liberals
November 28. Kent Hehr expected to be acclaimed as federal Liberal candidate in Calgary-Centre. The popular MLA was first elected in Calgary-Buffalo in 2008. It is unclear if Mr. Hehr and fellow Liberal MLA Darshan Kang, who is running for the federal Liberals in Calgary-Skyview will resign their provincial positions before the next federal election.

Borderlands By-election
Voters on the Saskatchewan side of the divided city of Lloydminster elected a new MLA in a by-election held yesterday. Saskatchewan Party candidate Colleen Young was elected with 64% of the vote, defeating second place New Democrat Wayne Byers, who earned 29%. It is almost impossible to image an NDP candidate receiving that much support on the Alberta side of Lloydminster.  

Ms. Young replaces former Rural and Remote Health Minister Tim McMillan, who resigned in September to become the President of the Canadian Association of Petroleum Producers.

A plug…
I had the pleasure of joining the good folks at The Unknown Studio podcast to chat about Alberta politics this week. I also appeared on this week’s Alberta Primetime politics panel with Edmonton lawyer Roberto Noce and Mount Royal University professor Lori Williams.