Tag Archives: “Tough Economic Times”

Albertan Graffiti: Jim Prentice buys a 1956 Ford Thunderbird

Jim Prentice Ford Thunderbird 1956 Albertan Grafitti

The 1956 Ford Thunderbird is a great car and was made iconic in the film American Graffiti.

After months warning Albertans that declining oil prices will have dire consequences unless we ‘tighten their belts‘ and make ‘tough choices,” Alberta Premier Jim Prentice has made some tough decisions of his own.

Jim Prentice Ford Thunderbird 1956 Albertan Grafitti 2

Jim Prentice, at the car auction in Arizona.

Returning home from an official government visit to Houston, Texas last week, Mr. Prentice made a side trip to Scottsdale, Arizona, where he bid $54,000 on a classic 1956 Ford Thunderbird at a Barrett Jackson auction. It must have been a day of tough choices, but through persistence and determination Mr. Prentice walked away as the proud owner of this classic American car.

You can probably detect a hint of sarcasm by now. And as you can imagine, the optics and timing of Mr. Prentice’s new purchase are not great.

Jim Prentice Ford Thunderbird 1956 Albertan Grafitti 1

A 1956 Ford Thunderbird

Some people will argue what Mr. Prentice does in his personal time is his business. I have nothing against a hard working private citizen, or wealthy bank vice-president, who decides to purchase classic cars as a hobby. But Mr. Prentice is not a private citizen, he is the Premier of Alberta. And when his recreational activities and personal purchases contrast what he is saying in public, then Albertans deserve to know.

Only ten days ago, Mr. Prentice told reporters that Alberta could be facing its worst economic situation in 25 or 50 years and signalled that he may look to public sector workers for cuts or salary freezes. Why there is some hyperbole to his messaging (politicians always claim Alberta is in tough economic times), it is mind boggling that Mr. Prentice would not have the political sense to postpone this personal purchase. After nearly 30 years in politics, it is hard to believe he would not recognize how bad the optics could look.

It is also notable that the trip from Houston to Arizona was not included in Mr. Prentice’s official itinerary. It is common for “private time” to be listed on a public itinerary when the premier or a cabinet minister decides to assume personal cost to take a day or two as personal time during official travel outside the country. It is perfectly reasonable for Mr. Prentice to have taken this private time, so why was the side trip to Arizona not listed on his public itinerary?

In his short time as Premier, Mr. Prentice has proven himself to be a shrewd and skilled politician. A boost in the polls and the mass-floor crossing of Wildrose MLAs demonstrate that he has strong appeal among conservatives in this province. Just as frequent visits to the golf club undid Don Getty and a taste for overseas travel and luxury penthouses helped undo Alison Redford, it would not take much to undo Mr. Prentice’s image as Alberta’s competent “new management.”

As Premier, he needs to lead by example. And if we are indeed facing tough economic times, this $54,000 purchase in Arizona definitely sends the wrong message.

Could the Wildrose collapse mean an early 2015 election?

Jim Prentice Danielle Smith Alberta Wildrose Merger PC

Former Wildrose leader Danielle Smith and her new boss, PC Party Premier Jim Prentice.

This week’s defection of nine Wildrose MLAs to the Progressive Conservative Caucus has drastically impacted Alberta’s electoral map. The governing PCs now hold 72 of 87 electoral constituencies with the remaining opposition consisting of 5 Wildrose MLAs, 5 Liberal MLAs, 4 New Democrats and 1 Independent MLA.

Preston Manning

Preston Manning

The mass-floor crossing, encouraged by Conservative Godfather Preston Manning, could increase the likelihood of an early 2015 general election. Now with 72 MLAs, the PCs are in a position to quickly nominate candidates across the province and take advantage of an opposition in disarray by calling a snap election early in the new year.

With Premier Jim Prentice increasingly warning of Alberta’s tough economic times, it is not far fetched to believe the PCs could seek a new mandate earlier than the 2016 fixed-election period. There is suspicion that Mr. Prentice wants to take advantage of the low price of oil in order to impose budget cuts before the price exits the “price trough” and begins to rise.

Rob Anderson MLA Airdrie PC WIldrose

Rob Anderson

NDP MLA Brian Mason and blogger David Climenhaga suggest a snap election could be called in early January 2015, but it could be more likely the Tories would wait until February or March.

In their 43 years in government, it has been common for the PCs to table a provincial budget in February or March and then immediately drop the Writ of election in order to use the budget as their de-facto campaign platform. This timeline would also allow for an early 2015 cabinet shuffle to make room for floor-crossers Danielle Smith and Rob Anderson, and allow the Tories time to build their message around a “tough economic times” budget/campaign platform.

Alison Redford Alberta Election 2012 Conservative leader

Alison Redford

An early election would also allow Mr. Prentice to attract new candidates and force PC MLA’s too closely associated with former premier Alison Redford into early retirement (ie: Doug Horner, Fred Horne, Sandra JansenDoug Griffiths).

Mr. Prentice may also want to hold an election before more information is released by the R.C.M.P. regarding their investigation into Ms. Redford and her staff. The CBC reported on November 4, 2014 that a Justice Department internal review concluded Ms. Redford could face criminal charges if allegations about her use of government airplanes are proven by an RCMP investigation.

Doug Horner

Doug Horner

The possibility of an early election should be a wake-up call for Alberta’s fractious non-conservative opposition parties, who are mostly contained within Alberta’s two largest cities. The lack of conservative vote split that the New Democrats, Liberals and Alberta Party had hoped to capitalize on may have vanished the moment Ms. Smith crossed the floor.

One potential speed bump to an early election could be dissent within the PC Caucus to the Wildrose MLA floor-crossing. I am told that more than a few PC MLAs are not pleased with their new colleagues of convenience, who have spent the past two years attacking and embarrassing them as the opposition. If Mr. Prentice suspects this internal dissent is potentially explosive, he may decide to hold off an election until tensions inside the PC Caucus cool down.

Fred-Horne-Alberta

Fred Horne

It is yet to be seen if the hostility to the PC-Wildrose Caucus merger – including the RecallDanielle campaign – will die down or whether it will manifest itself into a real backlash at the polls. This could have a big impact on whether an early election is held. The defection has certainly left a bad taste in the mouths of many Albertans, but the political maneuver removes the most likely alternative that voters had to send a message to the Tories.

Despite having the luxury of a government-in-waiting for the past two years, it appears that the PC Party are once again are on a trajectory to form another massive majority and extend the their 43-year reign.

Wildrose candidates?
Drew Barnes Wildrose MLA Cypress Medicine Hat

Drew Barnes

Before the mass floor-crossing, Ms. Smith’s Wildrose Party had nominated candidates in 28 constituencies. Following the leader-led defection, the number of nominated Wildrose candidates has dropped to 18.

Many of the party’s now-former MLAs were already nominated to run under the Wildrose banner in the next election. Of the five remaining Wildrose MLAs, only Drew Barnes, Pat Stier and Rick Strankman have been nominated to run in the next election.

Calgary-Fish Creek MLA Heather Forsyth, a former five-term PC MLA who crossed the floor to the Wildrose in 2010, has announced she will not seek re-election.

Shayne Saskiw MLA Wildrose

Shayne Saskiw

And Lac La Biche-St. Paul-Two Hills MLA Shayne Saskiw‘s intentions remain unknown. It is suspected that Mr. Saskiw was waiting until after the Lakeland federal Conservative nomination to make a decision about staying in the Wildrose Caucus. His wife, past Wildrose candidate Shannon Stubbs, won the nomination late last week.

It is also likely that some of the already nominated Wildrose candidates will re-think their decision to run under that party’s banner in the next election. I am told that Edmonton Catholic School District Trustee Laura Thibert dropped out as the Wildrose candidate in Edmonton-Mill Woods earlier this month.

Jeff Wilson MLA Calgary-Shaw

Jeff Wilson

In Wetaskiwin-Camrose, nominated Wildrose candidate Gordon Hatch has dropped out of the race and endorsed incumbent PC MLA Verlyn Olson. And in Grande Prairie-Smoky, Wildrose nomination candidate Greg Tymchyna has dropped out in response of the ‘Wildrose-PC merger.’

But in Edmonton-McClung, Steve Thompson announced on his Facebook page that he would remain the Wildrose candidate and will challenge PC MLA David Xiao in the next election.

The NDP have nominated 10 candidates, not including their four MLAs and the Liberals have not yet started their candidate nomination process. Two Liberal MLAs, Kent Hehr and Darshan Kang, are leaving provincial politics to run as federal Liberal candidates in next year’s federal election.

Of the floor-crossers, none have publicly declared their plans to run for re-election as PC candidates, but many will try. And despite Mr. Prentice’s promised pledge of endorsement for their candidacies, the new PC MLAs could still face nomination challenges from their former opponents on the constituency level.

In Calgary-Shaw, arch-conservative activist Craig Chandler has already announced plans to seek the PC nomination, challenging Wildrose-turned-PC MLA Jeff Wilson.

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.