AB Pol Econ

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...

3Feb

By Bob AscahNo Comments

Energy, Energy, Fiscal History

Syncrude Royalties- Hyndman’s papers

In the mid-1970s, major efforts were made by the Alberta government to support the expansion of oilsands production. Up until this time, Great Canadian Oil Sands (GCOS), operated by Sunoco, was the only source of commercial bitumen. With the rapid increase of oil prices in 1973, the provincial government encouraged the development of a consortium involving private and public funds. Construction began in 1973 and production commenced in 1978. Between February 1975 to March 1980, the Alberta government had cumulatively advanced $281.8 million to the project of a total cost of $2.875 billion. Prior to 10 March 1980, the Province sold some of its interest to Alberta Energy Company for $54.9 million and had received cash receipts of $48.1 million from the sale of its entitlement of syntheti...

Bill 22 – Important changes to ATB, AIMCo and ACFA- Updated

28Nov

By Bob AscahNo Comments

Uncategorized

Bill 22 – Important changes to ATB, AIMCo and ACFA- Updated

Immediate outrage from Alberta's official opposition greeted the introduction of the Reform of Agencies, Boards, and Commissions and Government Enterprises Act on Monday, 18 November. While the opposition NDP focused on the political aspects of the firing of Lorne Gibson- his position was abolished by the Act- careful study shows the legislation will have significant implications beyond the political party sphere. The 172 page omnibus bill, introduced by Treasury Board President and Finance Minister Travis Toews, is part of the legislation necessary to give effect to some of the 24 October budget announcements. This analysis and opinion piece is devoted to three of the most important financial institutions owned by the Alberta Crown. Before commenting on the details in Bill 22, it is im...

Energy Wars in the 1970s- Hyndman’s files

26Nov

By Bob AscahNo Comments

Energy, Government Finances, Intergovernmental, Uncategorized

Energy Wars in the 1970s- Hyndman’s files

Two more excerpts from the files of the late Lou Hyndman come from the mid 1970s. The disputes being addressed by senior political leaders followed soon after the OPEC oil embargo. The conflict which emerged between Ottawa and the consuming provinces (e.g. Ontario) and Alberta involved a bitter fight over which order of government would collect the lion's share of the rapid increase in the world price of oil. The first excerpt is from a speech given by the then Treasurer, Gordon Miniely at a finance ministers' conference. The second extract is from a speech, presumably authored, by J.Peter Meekison, a special intergovernmental affairs advisor and then deputy minister of Alberta's Federal and Intergovernmental Affairs department dated in December 1974. The speech is significant as i...

A “fair deal” for Alberta? Historical Perspectives

11Nov

By Bob AscahNo Comments

Energy, Politics

A “fair deal” for Alberta? Historical Perspectives

On Saturday, 10 November, Premier Jason Kenney spoke to the Manning Centre “What’s Next?” Conference in Red Deer. His one-hour, five-minute speech was a spirited lament for the manifest unfairness directed towards Alberta in confederation. His speech recounted the long litany of indifference from the federal government and grievances dating back to Alberta and Saskatchewan's entry into the federation. In his speech, he stressed the immediate need for his administration to exercise leverage on the federal government. At the end of the speech, he identified a number of "demands" to the federal government including an "equalization" (sic) payment of $1.6 billion and tax credits to help Alberta companies to address orphan wells. Numerous grievancs were cited: senate reform, equalization, A...

9Nov

By Bob AscahNo Comments

Opinion/Research, Uncategorized

Budget 2019- Analysis and Opinion

Genesis, analysis, investment imperative, rating agencies Treasury Board President and Finance Minister Trevor Toews was provided considerable advice as he prepared his October 2019 budget. The precursors included the NDP's "path to balance"- a Recovery built to Last, the UCP platform, Alberta Strong & Free, the report of the Blue Ribbon Panel (MacKinnon Report) and the Shadow Budget produced by the C.D. Howe Institute. In this report, we look at how the Alberta budget compares with these other "suggestions" or "guideposts." Then we examine the "big gamble" that underlines the UCP budget- if they create the environment for investment, will it come? Finally, we ask how the rating agencies will evaluate the UCP's initial stewardship of Alberta's public finances. Genesis Unlike...