AB Pol Econ

Reset for federal-provincial-municipal fiscal arrangements? Opinion

17Apr

By Bob AscahNo Comments

Credit Ratings, Fiscal History, Government Finances, Intergovernmental, Opinion/Research

Reset for federal-provincial-municipal fiscal arrangements? Opinion

It is cliché to say we are living in extraordinary times. Comparisons with the Global Financial Crisis doesn’t work, although monetary madness is again afoot. For Alberta, there are comparisons with the 1980s when homes were sold for a dollar, allowing mortgagors to walk away. And of course, there is the Great Depression, which devastated all of Canada and left lasting resonance on how people related to others, to governments, and to money. So now, we are in a time of both crisis and reflection. Should governments (national and sub-national) be co-operating or competing? We know the beggar thy neighbour policies of the Great Depression did not work, but our next-door neighbour seems intent to draw up the bridges on the castle. In Canada, we are in in a period of inter-governmental co-oper...

Keystone-XL, the Alberta Petroleum Marketing Commission and the Borrowers

9Apr

By Bob AscahNo Comments

Agencies, Credit Ratings, Energy, Energy, Government Finances, Opinion/Research

Keystone-XL, the Alberta Petroleum Marketing Commission and the Borrowers

At the end of March, the Alberta cabinet passed Order in Council 104/2020 which authorized the “President of Treasury Board and Minister of Finance to make advances to or purchase securities of the Alberta Petroleum Marketing Commission.” In addition, the Minister was given the authority to raise: “up to $2 000 000 000, by the issue and sale from time to time of notes, bonds, debentures or interest-bearing or non-interest-bearing treasury bills issued by the Crown in right of Alberta or any other securities under which the Crown in right of Alberta is the debtor (collectively referred to hereafter as “Government securities”) for the purpose of making advances to or purchasing securities of the Alberta Petroleum Marketing Commission in respect of the development of a...

3Apr

By Bob AscahNo Comments

Agencies, Energy, Government Finances, Opinion/Research, Politics

Politics of Alberta Growth Mandate (AGM)

Politics of the Alberta Growth Mandate In past articles, the Alberta Growth Mandate was explained as a significant policy initiative in the first NDP budget of October 2015. It should be noted that, in the fall of 2015, Alberta was reeling from significant declines in investment and job losses, and a rookie NDP government was looking for quick wins to support jobs in the Alberta economy. The policy objective was to support Alberta companies (as defined by the Alberta Investment Management Corporation (AIMCo)) and based on meeting one of the following criteria. a. Creates jobs in Alberta b. Builds new infrastructure in Alberta c. Diversifies Alberta’s economy d. Supports Alberta’s growth e. Connects Alberta’s companies to export markets f. Develops subject matter expert...

Keystone XL- Some Questions- Analysis and Opinion

2Apr

By Bob AscahNo Comments

Energy, Energy

Keystone XL- Some Questions- Analysis and Opinion

On Tuesday 31 March, Premier Jason Kenney announced the province was making a $1.5 billion investment to “kick-start” the Keystone X-L pipeline owned by TC Pipelines (formerly TransCanada Corporation-TRP-TSX). Calling Albertans “resilient,” this “bold move” was deemed necessary to “ensure a future for our largest industry.” The Premier, in his brief announcement, equated jobs and the economy with pipelines. Noting that the “world needs a reliable, democratic source of energy,” Kenney elaborated on a theme popularized by Stephen Harper and Ezra Levant known as “ethical oil.” Drawing a line between Alberta’s vast oilsands- the biggest resource play in any democracy- and the XL pipeline to get Alberta’s bitumen to market- this investment will immediately create 7,000 jobs, according to Albe...

30Mar

By Bob AscahNo Comments

Budget, Credit Ratings, Government Finances, Intergovernmental

Government Borrowing

Updated 2 April 2020 A number of historic events have taken place this past week, with long-term ramifications for the Canadian and Alberta economies. Bank of Canada actions to purchase money market paper of provincial governmentsBank of Canada starts quantitative easing and will purchase commercial paperManitoba Premier calling on the federal government to establish a Pandemic Emergency Credit FacilityProvince of Alberta issues a century bond Alberta is witnessing the deepest economic storm since the mid-1980s and likely will see conditions similar to the Great Depression over the next few months. Unlike the Great Depression, our social safety net and government willingness to “do whatever it takes” will moderate the financial and economic distress. Unlike the Great Depression, ...

Alberta ‘Growth’ Mandate- Analysis and Opinion

22Mar

By Bob AscahNo Comments

Agencies, Budget, Government Finances, Opinion/Research, Politics

Alberta ‘Growth’ Mandate- Analysis and Opinion

While now is not necessarily the best time to be taking stock of one's investment portfolio, government and provincial agency officials, who face a March 31 fiscal year end deadline, are concerned about the impact of accounting rules that require "fair market accounting" for their investments. The performance of both bond and equity markets over the next ten days will determine whether forecasts for investment income in the provincial budget ($1.96 billion for the Heritage Fund) will actually pan out. Investment income for investment portfolios are typically composed of two types of income: (1) dividends and interest payments or cash distributions from private equity, and (2) increases or decreases of the "fair value" of the investment at year -end compared to the initial cost of buy...

22Mar

By Bob AscahNo Comments

Budget, Credit Ratings, Government Finances, Opinion/Research, Opinion/Research

Budget 2020-Credit Perspective

[Updated 23 August 2020. Note: This report was in development before the DBRS Morningstar report of Thursday 19 March. The report is only available to purchasers of the service. Normally, the Province of Alberta posts on its Investor Relations page the reports. To date, this has not taken place. Nor has there been an official reaction to the downgrade to AA- from AA and the outlook to negative.] One of the key audiences of any government budget, but especially a budget under increasing duress and scrutiny, are credit rating agencies such as Moody’s, Standard & Poor’s and DBRS Morningstar. Credit evaluation is as much an art as a science, requiring an understanding of financial principles, economics and political science. Agencies provide opinions on probabilities of default of b...

11Mar

By Bob Ascah2 Comments

Uncategorized

Alberta Growth Mandate

In October 2015, the newly minted NDP government released their first budget. It was a difficult time for this rookie government as Alberta's economy was in free-fall and Calgary's economy was reeling. Finance Minister Joe Ceci sought something positive and the two major provincial financial agencies, reporting to the minister, were enlisted into a program to support deserving Alberta companies. According to Minister Ceci, there were three cornerstones in his maiden budget: 1) to stabilize public services, 2) a plan to balance the budget, and 3) to act on jobs and diversification. Included under jobs and diversification was a measure to mandate AIMCo "to focus a prudent but significant portion of our province’s Heritage Fund to directly invest in Alberta’s growth. Three percen...

1Mar

By Bob AscahNo Comments

Energy, Energy, Environment, Investment, Politics

Teck withdraws from Frontier

Teck's withdrawal signifies a major turning point in the struggle between forces opposing a fundamental shift in the use of fossil fuels and governments and industries resisting a transition. The company's signalling that Teck would have to write off $1.l billion of its spending on the Frontier project, foreshadowed the difficult corporate decision. The immediate political fallout: in Ottawa a sigh of relief. In Alberta: instant anger but also a slow realization, a coming to terms that the "last boom" was indeed the last boom. It is now time for the adults in the room to come to terms with a new tomorrow. It will be especially painful for the Kenney government which had placed so much attention on the project, demanding "Ottawa" approve the project. But the tone was irrelevan...

12Feb

By Bob AscahNo Comments

Energy, Energy, Opinion/Research

Teck-Frontier -Opinion

There are alternatives to Teck-Frontier I have not witnessed this level of political intemperance in Alberta since I was a graduate student at the University of Alberta in 1980. I am alarmed and deeply disturbed with the nasty rhetoric that has been displayed recently by the Alberta government – notably the statement by Jason Nixon, the Environment and Parks Minister. At issue is the impending decision by the federal government on the Teck-Frontier project. Proponents of the project stress the project will create 7,000 jobs during construction and up to 2,500 workers during operation. The project, which has been under review for ten years, is estimated to deliver $70 billion in taxes over 40 years of production and billions of dollars in spin off activity. There is no doubt that it i...