AB Pol Econ

18Aug

By albertarecessionwatchNo Comments

Opinion/Research

Ontario vs. Alberta

A recent Globe and Mail piece (14 August 2016) uncovered an analysis prepared for Labour Minister MaryAnn Mihychuk in February 2016 contrasting the seriousness of the 2008-09 auto bailout with Alberta's current economic and financial woes. The analysis compared unemployment rates in Ontario's manufacturing sector with Alberta's oilpatch. Alberta's unemployment rate in the oil sector rose from 2.9 per cent in 2011 to 7.9 per cent in 2015, whereas Ontario's manufacturing sector unemployment rate rose to 21.9 per cent in 2009 from 8.4 per cent in 2007. The article acknowledged that unemployment in the oil patch remains high and the general unemployment is at its highest in 22 years. A Western University economics professor is cited as saying that another reason for the auto bailo...

Electricity De-Regulation and the "Enron clause"

16Aug

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Energy

Electricity De-Regulation and the "Enron clause"

Originally posted 16 August 2016 The de-regulation of electricity markets was a cornerstone policy of the Klein years. Recently the government has commenced legal proceedings to roll back a clause in the Power Purchase Agreements (PPAs) known as the “Enron clause.” (more…)

8Aug

By albertarecessionwatchNo Comments

Energy

The de-regulation of electricity markets was a cornerstone policy of the Klein years. Recently the government has commenced legal proceedings to roll back a clause in the Power Purchase Agreements (PPAs) known as the “Enron clause.” It is perhaps under-stating the case that electricity de-regulation in Alberta is “complex”. Historically, electricity rates for both retail and commercial customers were set by the Alberta Utilities Board who determined what rate of return the electricity provider would receive. Underlying regulation was a concept that electricity was central to the well-being of citizens and business enterprises and a stable market supplying electricity was in the public interest. This attitude shifted during the 1980s with the Thatcher reforms in Britain’s electricity and...

21Jul

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Retail sales

Retail Sales

Originally posted 21 July 2016 Consumer spending is an integral part of the economy. Usually retail sales constitute about 50-70 per cent of an economy. Alberta, with its high level of capital investment, generally would rely less on consumer spending. That said, Albertans are still the highest per capita consumers in Canada, with an appetite for big trucks and dining out. At least up until the current recession. As would be expected consumer spending has softened over the past couple of years.

12Jul

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Energy

Originally posted 12 July 2016 Energy drives politics in Alberta. Since the early days of the twentieth century when natural gas (1911) and oil (1914) was discovered in the Turner Valley, the politics of Alberta have been influenced by the growing wealth of the oil and gas sector. Three pillars of the Calgary establishment- Sir James Lougheed, R.B. Bennett and W.H. McLaws - created the Calgary Stock Exchange in 1913. Like so many Alberta financial stories, the stock exchange grew by leaps and bounds until its building was foreclosed upon. While Alberta's premiers have not come directly from the oil patch, premiers ignore the oil patch at their peril. (more…)

11Jul

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Health

Health care policy and delivery cost Alberta taxpayers about $20 billion per year or roughly 40 per cent of the province's operating budget. The NDP government has maintained funding in the system but now efforts are underway to identify ways of streamlining the system. A Primary Care Network Review by Alberta Health identified a number of troubles, some of which the Auditor General had noted in earlier reports. Of concern is the high ratio of physicians to health staff that weakens the rationale for multi-member teams. (more…)

Alberta Treasury Branches (ATB Financial)

28Jun

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ATB

Alberta Treasury Branches (ATB Financial)

2016-17 First Quarter Financial Results Originally posted 28 June 2016 Given the dreary news coming out of the commercial real estate market in Alberta this week, ATB's earnings were a surprise on the upside. ATB earned $25 million which represented nearly Budget 2016's full year estimate of earnings ($27 million) predicted on April 14th. The optimistic news in ATB's first quarter report contrasts starkly with news from commercial real estate REIT, Dream Office, that wrote down 45 per cent of its Alberta office portfolio. [See Commercial Real Estate for more details.] (more…)

27Jun

By albertarecessionwatchNo Comments

Budget

Fiscal Policy

The Voldemort of Alberta Politics- a sales tax No one likes to pay tax, least of all residents of Alberta. The Progressive Conservative Government of Alberta had for years been successful in stifling debate on the need for alternative sources of revenue to offset declines in non-renewable resource revenue. In fact, all parties in Alberta are equally silent on this question. The Conference Board of Canada's Q32016Outlook on Alberta weighed into the sales tax fray in their June briefing on Alberta's fiscal situation. Their analysis, part of the Conference Board's periodic review of provincial government finances, offered a sober outlook for the province. The Board's analysts Daniel Fields and Alicia Macdonald, forecast Alberta's economy to come out of back to back negative annual growth r...

27Jun

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Credit Ratings

Alberta's credit rating has been under pressure since before the NDP were elected in May 2015. While rating actions did not occur until later in 2015, provincial finances had been deteriorating since the financial crisis in 2007-08. Although oil prices recovered after the financial crisis, rising capital and operating expenditures, combined with a huge drop in royalty revenue, have considerably weakened the province's financial flexibility. In the most recent report, Moodys downgraded the province from Aaa to Aa1 because of " the province's growing and unconstrained debt burden, extended timeframe back to balance, weakened liquidity, and risks surrounding the success of the province's medium-term fiscal plan given the outlook for subdued growth." The report came just four days after the ...

27Jun

By albertarecessionwatchNo Comments

Rural

Land lease delinquencies The Alberta Surface Rights Board is reporting an four-fold increase in non-payments to rural landowners whose land (or portion thereof) is leased to oil companies.CBC Calgary reported that Gerald Hawranik, the Board chair, was predicting 1,600 to 2,000 complaints at the start of 2016 and is now predicting the number will be much higher and a $3 million compensation judged earlier to be sufficient will be exceeded substantially. (more…)