AB Pol Econ

6Nov

By Bob Ascah3 Comments

Economic Data, Energy, Fiscal History, Government Finances

Presentation to Professors Emeritus

Yesterday I presented to a small but engaged group of retired University of Alberta emeritus professors. My talk was provocatively entitled "Alberta's Crumbling Economic and Fiscal Foundation." Key points emphasized in the presentation include: Volatility in price of oil over past 6o years and its impact on provincial finances Over past 40 years Non-renewable resource revenue represents a high of nearly 50 per cent of own source revenue (excludes federal transfers) to lows of just under 10 per cent recently. Based on Canadian Association of Petroleum Producers data since 1947, Alberta collected royalties equivalent to about 10 per cent of the total value of production over this 70-year span. In the early 1980s, Albertans were receiving about one-third of the rent from their resource owne...

ATB CEO Executive Compensation – unwrapped

28Oct

By Bob AscahNo Comments

Agencies, ATB

ATB CEO Executive Compensation – unwrapped

This article examines CEO executive compensation at Alberta Treasury Branches (ATB Financial) since it became a provincial agency or Crown corporation, in 1997. The focus of this article is how the return on capital or equity and the pay of the CEO are related over a 23-year period. Also, the question of fairness of compensation in relation to compensation of senior government officials, average ATB salaries, and the CEO of Canadian Western Bank (CWB) is canvassed. [The data used is the total of salary and benefits or total compensation and comes from ATB's annual reports. A separate PDF of the article and PowerPoint/PDF of the figures is produced at the bottom of the article for better viewing of the charts.} Background In 1994, Treasurer Jim Dinning was facing persistent and difficult q...

18Oct

By Bob AscahNo Comments

Government Finances, Opinion/Research, Politics

Harmonized Sales Tax not a Panacea- Opinion

But neither will ignoring the revenue side cure the deficit problem Franco Terrazzano's Opinion piece in the 9 October Edmonton Journal is quite right when he observes that a “provincial sales tax won’t erase Alberta’s red ink.” No single mechanism can do that. Alberta’s massive deficit and future deficits will not go away merely by blaming Alberta politicians (past and present) who have spent resource wealth on maintaining a high level of public services and infrastructure. However to suggest that sales tax advocates believe a sales tax will eliminate the deficit by itself is disingenuous. The economic argument for a sales tax is compelling for a number of reasons. First, it is a far more efficient tax than personal or corporate income taxes. A commonly used metric of the economic cost...

10Oct

By Bob AscahNo Comments

Employment, Energy, Environment

Knowing a future?

An indirect effect of the “cashing-in” on virgin natural resources by the introduction of the new industrial technique with government support has been an indeterminate relationship between government expenditures and government revenue. Expenditures made on the assumption that revenue will return from various directions has been responsible for the incurable and dangerous optimism which characterizes government effort. On the whole, public enterprises to which government contributes have introduced an element of uncertainty in the financial position of the government and a degree of unwholesome inelasticity. Harold A.Innis, Problems of Staple Production in Canada. 1933, 64-65-emphasis added On Tuesday, 6 October Premier Kenney, Associate Minister of Natural Gas Dave Nally, and a phalan...

4Oct

By Bob Ascah4 Comments

Uncategorized

Presentation to Edmonton West Rotary Club

Updated 15 October 2020 with correction to Chart 24 in Slide presentation On Thursday 1 October, I gave the following Power Point presentation entitled "Alberta’s Halting Economic Recovery- Implications for Alberta’s Public Finances" to a local group of Rotarians. It was a rather sobering and depressing presentation. The presentation also gave me an opportunity to plug the edited collection A Sales Tax for Alberta: Why and How to published next year by Athabasca University Press. In my view the present government is doing what a succession of provincial governments have done for decades: accept the myth that Alberta is defined solely by its economy and the economy IS the exploration, mining, development and production of fossil fuels. This mindset has clouded the decision-making o...

Another Downgrade from Moody’s: Aa2 to Aa3

4Oct

By Bob AscahNo Comments

Agencies, ATB, Credit Ratings

Another Downgrade from Moody’s: Aa2 to Aa3

Analysis and Opinion On 2 October 2020, Moody's Investors Service downgraded the Province's debt to Aa3 from Aa2 while revising the outlook to Stable from Rating under Review. The short report and review was initiated on 31 August 2020 shortly after the provincial government's skeletal First Quarter Fiscal Update. The downgrade leaves Alberta one notch above the single A rating category. Downgrades in theory mean the borrower will have to pay higher rates of interest on its debt. The downgrade was expected and gave a balanced view on the fiscal picture acknowledging the province's strong liquidity position and the province's fiscal capacity to "enact additional tax measures to support revenue growth, which nevertheless the provincial governments have been reluctant to fully use in recent y...

8Sep

By Bob AscahNo Comments

Agencies, Budget, Energy, Government Finances, Politics, Uncategorized

After waiting an extra 2 months 2019-20- some major surprises missed in February forecast

Updated 10 November 2020 In an earlier report on the crucial role played by the Alberta Petroleum Marketing Commission (APMC) in government finances, we highlighted the Commission's role in overseeing the North West Redwater Upgrader investment, commenced in the latter years of the Stelmach regime. We raised some doubts, given APMC's record with the North West Redwater Partnership (NWRP), about its competence in negotiating with TC Energy on the Keystone XL project. APMC is also the agency tasked with negotiating the Energy East commitment and the controversial oil-by rail contracts. With the two-month delay in the publication of the Government of Alberta's Annual Report and audited consolidated financial statements, the public finally has been apprised that Alberta's budget shortfal...

31Aug

By Bob AscahNo Comments

Budget, Credit Ratings, Government Finances

“Triple Black Swan Event”

Themes from the press conference "No credible date for rebalance" "Doing everything we can to encourage economic growth and development" "Stay tuned for Budget 21-22" "We can no longer afford to be an outlier" "This is not a time to be talking about raising taxes." A focus on delivering public services more efficiently and growing the economy. "Important for Albertans to have a discussion about revenue structure" Albertans will continue to be "self responsible" "We will be very reluctant to shut down the economy" Finance Minister and Treasury Board President Travis Toews presented the UCP government's much anticipated Fiscal Update on Thursday, 27 August. The thin 20-page document was much less substantive than I expected. At his press conference, the Minister presented both the govern...

26Aug

By Bob AscahNo Comments

Budget, Credit Ratings, Government Finances, Politics

Fiscal Update- August 2020

It appears our UCP friends have left it to the last moment to drop the fiscal update and financial accounts on the Opposition NDP who will debate the documents tomorrow.. It could be cynicism or it could be the UCP Cabinet and Caucus still have not agreed among themselves how to position the past year's financial accounts- blaming the NDP- or how do we preach fiscal austerity in a sea of red ink, and how do you budget credibly to a balanced budget in 22-23 or 23-24? How can you make the numbers add up, even with glowing expectations of energy and other investment pouring into the province? The latter point may not be seen as credible by the rating agencies. In reality for the next two years, Alberta, will be a net taker from Confederation, not leading the country in economic growth and dr...

24Aug

By Bob AscahNo Comments

Agencies, ATB

ATB quietly reports another losing quarter- Analysis and Opinion

Curtis Stange, ATB President and CEO Source ATB.com On Thursday 13 August, ATB Financial issued its financial results for its quarter ending 30 June 2020. The rosy press release "Supporting Alberta's economic recovery" acknowledged the "triple impact event" of COVID--19, oil price shock, and market volatility, while affirming the results "demonstrate its financial strength while supporting customers." Buried in the news release was the fact that ATB had lost $114 million in the quarter driven mainly by another $245 million provision for loan loss. This is the second consecutive quarterly loss for ATB which lost $93 million in the previous quarter. Not to be deterred by persistent negative news, the release boasted: In the first quarter, ATB delivered solid operating revenue of $424.6 m...