Fiscal History Archives - Page 3 of 5

12Jun

By Bob AscahNo Comments

Capital Spending, Energy, Fiscal History, Investment

Hyndman Papers: public vs. private investment and rising interest rates

Private sector investment has been the main driver of the Alberta economy over the past half century. Private investment in Alberta is highly correlated to secular movements in oil prices. Interest rates too play a major factor in driving economies. Low interest rates make investing in capital assets such as energy projects and housing more viable than when interest rates rise dramatically as they did in the early 1980s. The global economy is facing rising interest rates and a current boom in commodity prices including oil, natural gas, potash and grain prices. The two documents below illustrate the nature of Alberta's capital investment stock relative to other provinces. Alberta in 1981 had double the per capita private sector investment of the next province Saskatchewan. As a conse...

1Mar

By Bob AscahNo Comments

Budget, Capital Spending, Energy, Fiscal History, Government Finances

Budget 2022- Analysis and Opinion

The Alberta government’s recent budget reveals- once again- the provincial treasury’s over-dependence on non renewable resource revenue. This budget continues a six-decade tradition of resource revenue making up for a deficient, unstable revenue base to produce budget balance. However, as the chart below illustrates Alberta has never had a budgetary surplus, when excluding resource revenues since 1965-66. The surplus targets for fiscal years 2022-25 also produce the same results. This year, Albertans are expected to only contribute 78 cents on the dollar to Alberta’s expected revenues. If oil persists at an average of $90 U.S. per barrel over the whole fiscal year beginning April 1, then an extra $10-billion will be received meaning taxpayers will only foot 59 per cent of the bills. C...

20Feb

By Bob AscahNo Comments

Budget, Fiscal History, Government Finances, Investment, Uncategorized

Hyndman Papers- Budget 1982-83

In the following remarkable document from former Provincial Treasurer Lou Hyndman, he succinctly summarizes the quintessential fiscal policy questions his predecessors and successors have grappled with. These questions relate to: the Alberta public's "rising expectations;" use of Heritage Fund savings and investment income for general operating purposes; the scope for tax increases; how to cope with resource revenue uncertainty; and the sustainability of government expenditures. All these questions are pertinent today. Undated from Lou Hyndman- presumably to caucus or to Treasury Board/Cabinet Key questions The following are some of the key questions to consider in setting the 1982-83 target expenditure level. How should rising public expectations be reconciled with limited financial r...

12Dec

By Bob AscahNo Comments

Budget, Employment, Fiscal History, Intergovernmental

Hyndman papers- women’s equality and capital budgeting

In the first excerpt Peter Lougheed's Social Planning Committee supported Canada's ascension to a United Nations Convention on eliminating discrimination against women. As outlined in the short Committee Committee recommendation the Alberta government committed itself legislative measures designed to implement the concept of equal pay for work of equal value. Equal Pay CABINET COMMITTEE RECOMMENDATION CABINET COMMITTEE: SOCIAL PLANNING DATE OF CONSIDERATION: October 7, 1981 SUBJECT: UNITED NATIONS CONVENTION ON ELIMINATING OF DISCRIMINATION AGAINST WOMEN RECOMMENDATION: This committee RECOMMENDED that the Minister of Labour inform the Federal Government of the support of the Alberta Government respecting...

25Sep

By Bob Ascah1 Comment

Budget, Credit Ratings, Fiscal History, Uncategorized

Public Debt does matter

Earlier this year I was asked to contribute a paper on Alberta's public debt to the School of Public Policy's Alberta Futures project. My particular subject was "Alberta's Public Debt: Entering the Third Crisis." The questions I attempted to answer included: When has government borrowed too much?What will rapidly rising debt levels mean for Alberta taxpayers?What are the critical debt thresholds for the Province?What role will credit rating agencies play as they evaluate debt thresholds in relation to those in other provinces?What do higher debt levels mean for the Alberta Tax Advantage and Alberta’s long-term economic growth?What role does the federal government play in monitoring provincial deficits and debt levels? For the analysis, I went through over 100 years of Alberta's public ac...

11Apr

By Bob AscahNo Comments

Budget, Fiscal History, Government Finances

Budget 1982-83: A Message not sent

During the fall of 1981, Peter Lougheed's government was facing stagnant government revenue and, at the same time, pressing demands for additional spending during a time of historically high interest rates and rising unemployment. This memorandum, which was not sent, reflects the Treasurer's and Alberta Treasury's worries that spending was spiraling beyond the limits set by the Priorities Committee. This was an era when the notion that spending reductions really entailed reductions from what was being requested or needed or expected in light of inflation and population growth. This was an era where the capacity to raise revenue and the capacity to spend was bifurcated. At the federal level the position of Treasury Board President and Finance Minister was coincident with rising deficits, ...

28Mar

By Bob AscahNo Comments

Budget, Economic Data, Energy, Fiscal History, Government Finances

The Perils of Economic Forecasting in a Commodity-based Economy

In the wake of the "energy settlement" of August 1981 when Trudeau and Lougheed toasted champagne, economists at Alberta Treasury's Budget Planning and Economics group were refreshing their economic forecasts. In the Economic Outlook reproduced below, attention focused on the anticipated mega-projects expected to drive Alberta's economy in the medium term. The Outlook reinforces the notion of Alberta as a single-commodity based economy relying on the construction and engineering sectors to drive economic growth and employment. As the Chart shows, things did not turn out quite what the analysts have thought they would based on econometric models based upon assumptions about the trajectory of various mega-projects. Very shortly after the projection, an inflection point was reached in 1982 ...

13Feb

By Bob AscahNo Comments

Budget, Fiscal History, Government Finances

Budget Process: Pros & Cons of Supplementary Estimates

This memorandum from the late summer of 1981 captures the momentum of spending that had built up under the Lougheed government in 1981. As previous documents have shown, a great deal of money was being spent to cushion the blows from the National Energy Program and the attendant difficulties associated with lower oil price projections and high interest rates. As departments rushed to take advantage of a more generous attitude within the provincial cabinet to spend, the volume of additional requests suggested mid-year of supplementary estimates to presented at a fall sitting of the Legislative Assembly. Collins' memorandum attempts to get ahead of the list of Special Warrants, appropriations made by the provincial cabinet rather than the Legislative Assembly. These Special Warrants would ...

7Feb

By Bob AscahNo Comments

Budget, Capital Spending, Fiscal History, Government Finances

Hyndman Papers- 1982-83 Budget Deliberations

1982 was a pivotal year for Alberta as the twin effects of a world recession and falling oil investment forced Alberta policy-makers to pull out all the stops. Western separatism was a worry for Peter Lougheed when Gordon Kessler of the Western Canada Concept party won a February 1982 by-election in the rural constituency of Olds-Didsbury. This was also a time for budgetary largesse. In a 2011 article in Policy Options, economists Herb Emery and Ron Kneebone: Provincial support for the industry included a $5.4-billion program, introduced in 1982, consisting of royalty reductions and grants designed to increase the flow of revenue to the industry. In the same year the federal government would supplement this effort with its own $2-billion assistance plan. Measured in 2008 dollars, these t...

11Jan

By Bob AscahNo Comments

Budget, Energy, Fiscal History, Government Finances

Hyndman Papers-Budget, NEP and Production Cutbacks

In this densely worded 4-page memorandum and Appendix from Deputy Provincial Treasurer A.F. "Chip" Collins to Treasurer Lou Hyndman, a financial analysis is undertaken by the staff within Fiscal Policy & Economic Analysis. The initials at the end of the memorandum indicate G. Lynn Duncan an Assistant Deputy Provincial Treasurer and A.G . (Arnie) Heisler, the Comptroller were its principal authors. This memorandum responds to a number of questions posed to the department in early March. The central question to be answered was "what is the value of the foregone production and is there a financial reward from shutting in production?" This would have been also been a central question for the Notley government back in 2017-18 when the differential was so low certain segments of the oil ind...