AB Pol Econ

20May

By Bob Ascah1 Comment

S&P downgrades Alberta to A (Stable) Moody’s maintains Aa3 rating

Citing COVID-19 and budgetary balances which have not "yet recovered from the slump in oil prices that began in 2014, to a greater degree than we had expected," S&P Global Ratings downgraded Alberta's long-term credit rating to A from A+. Today Moody's issued a release noting the completion of a periodic review of Alberta's ratings. No change to the rating was initiated. S&P Global Ratings There really wasn’t anything newsworthy in yesterday's downgrade announcement. The agency noted that Alberta’s after-capital deficits, that is Revenue less operating and capital expenses is the “largest of any local and regional government in the country this fiscal year and last” resulting in the one-notch downgrade. Of concern was a deterioration of liquidity: “free cash and investment balance...

12May

By Bob Ascah2 Comments

Banks, Environment, Opinion/Research

Mark Carney’s magnum opus: A Book Review

Mark Carney, the much-celebrated central banker from Canada has a new book entitled Value(s). This 600-page (with endnotes) book represents a much-awaited synthesis of his ideas from his days as bank governor, senior Finance official and Goldman Sachs investment banker. His return to Ottawa, appointment at Brookfield and earlier appointment as the U.N. Special Envoy for the Environment might seem like a crowning achievement but Dr. Carney’s career has probably not peaked yet. Naturally there is much speculation about his future relationship with the Liberal Party of Canada but it strikes me that his ambitions (and talents) are more global in nature. Carney is not what I would consider a conventional economist. His D.Phil at Oxford was entitled "The dynamic advantage of competition,” ...

26Apr

By Bob AscahNo Comments

Uncategorized

Greenhouse Gas Pollution Pricing Act: Analysis and Opinion

Updated 18 May 2021 On 25 March 2021 Canada’s Supreme Court issued arguably its most crucial judgment in a decade. The case arose from three appeals from the high courts of Alberta, Ontario and Saskatchewan respecting the constitutionality of the Greenhouse Gas Pollution Pricing Act (GGPPA). Challenges of the GGPPA were made to the legislation by the Alberta, Ontario and Saskatchewan government in their various jurisdictions. In Ontario and Saskatchewan the courts of appeal sided with the federal government while the Alberta Court of Appeal ruled against the constitutionality of the GGPPA. While the jurisprudence within the case will be cited for generations, it is difficult at this stage to assess the long-term consequences on the future balance of the Canadian federation. The winners we...

18Apr

By Bob AscahNo Comments

Environment, Health, Opinion/Research

Exploring a regulatory maze

This post, the first of a series of articles dealing with the nature of regulation-making authority in Alberta endeavours to understand the breadth and complexity of regulation in various forms. This post was tweaked by a news release concerning a violation of the Environment Protection Enhancement Act. The series will investigate the complex nature of legislation and delegated regulation-making powers, the nature of enforcement, and the possible implications for society and the economy at large. Suncor pleads guilty On Friday 16 April the Alberta Department of Environment and Parks issued a press release stating Suncor Energy Products Partnership Product s Suncor Energie, S.E.M.E pleaded guilty to breaching legislation “relating to the release of hydrogen sulphide.” The event happened on ...

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 ...

8Mar

By Bob AscahNo Comments

ATB, Budget, Economic Data

Alberta Treasury Branches: Strategic Listening Posts

From the Provincial Archives of Alberta's collection of papers from the late Lou Hyndman comes an interesting case of the economic intelligence capacity of the Province's financial institution. As the Alberta cabinet's anxiety rose following the October 1980 federal budget and National Energy Program, evidence was being gathered on how damaging the federal policies were to the provincial economy. At the end of August 1981 the Office of the Superintendent of Alberta Treasury Branches (at the time the Superintendent of ATB was Fred Sparrow) prepared to update what were called "economic Assessment Reports" aggregated from Treasury Branch managers across the province. ATB logo pin Source: Pinterest The highly summarized five-page report divided the province into three "divisions"- Northern,...

28Feb

By Bob Ascah1 Comment

Budget, Capital Spending, Government Finances

Alberta Budget 2021-Analysis

Highlights Economic assumptions on balance appear realistic with some upside Spending kept flat mainly through cuts to ministries except Health, K-12 Education, and Social Services Capital spending to remain elevated although next two years see a significant reduction. No new taxes or tax increases- nothing on revenue structure review Debt levels will rise to close to government’s fiscal anchor Economic Assumptions The Government seems to be following the playbook from Ralph Klein's early years in leading the province out of what had been chronic deficits. Conservative resource revenue forecasts based on past history rather than hoped-for future prices helped return the provincial government to balance quickly. These conservative revenue forecasts restrained the public and v...

26Feb

By Bob AscahNo Comments

Budget, Government Finances, Opinion/Research, Politics

Budget 2021- the fine art form of scape-goating: Opinion

Finance Minister Toews has learned from his grandmaster, Premier Jason Kenney, the dark art of scape-goating. Budget 2021 offers more of the same- restraint in public sector spending which is, in fairness, what they have promised. Except for the disastrous decline in resource revenue and increased health spending due to COVID, the government has retreated from its promise to balance the budget in its first term. The scape-goats predictably are the federal government and the compensation levels for unionized public sector workers. The Alberta government continued to tilt at windmills like equalization payments and the federal government's environmental assessment process. Over nearly 2 years of UCP rule, total debt has risen from $92.8 billion to $133.6 billion and is projected to reach ...

25Feb

By Bob AscahNo Comments

Budget, Government Finances, Opinion/Research

Sales Tax debate will be difficult for political parties to ignore

Updated 25 February 2021 On 24 February, the day before the UCP's third budget, the Globe and Mail reiterated its editorial position about a sales tax for Alberta. This perspective will be written off by political leaders as paternalistic, unwanted central Canadian twaddle. But the mood is definitely changing as a 2020 CBC-Calgary public opinion poll indicates. The non-debate by our political leaders has also been picked up by Alberta's business leaders. In a recent report Towards a Fiscally Sustainable Alberta- A Review of Provincial Government Finances, the Business Council of Alberta (BCA) of Alberta proclaims on its website: "Alberta, we have a problem." This message is not dissimilar to the language used by the Financial Review Commission's Report to Albertans issued in March 1993- a...