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DOLPHIN: Inside Alberta Budget 2020

Ric Dolphin takes a dive into the UCP’s 2020 budget.

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Coming less than four months after last year’s, the Kenney government’s budget for 2020-21 offers little that is new and proceeds on the slow path toward (sort-of) fiscal balance, with spending freezes, staff reductions, some tax increases, and dubiously optimistic predictions for improved oil prices, increased energy investment, and reduced unemployment.

Things could hardly be worse than for the current 2019-20 fiscal year. According to the third-quarter update – which was presented alongside the Budget 2020 – growth was essentially flat at 0.3 per cent, unemployment topped seven per cent (20 per cent for 18-25-year-olds), personal income tax revenue was $160 million lower than budgeted, and bitumen revenue – while estimated to be up slightly over budget ($4.7 billion), began a downward trajectory in the second half of the year that is predicted to result in a 33 per cent revenue drop in 2020-21, down to $3.3 billion. 

This reduction is the result of higher differentials and reduced exports caused by lack of access to markets (that is, no pipelines).  Finance Minister Travis Toews told reporters that he does not expect resource revenues to exceed their 2019-20 levels for four years. This is despite the de-indexing of income tax brackets, which Jason Kenney denounced as “bracket creep” when he was the young head of the Canadian Taxpayers Federation.

Nonetheless, the Finance ministry is predicting 2.5 per cent GDP growth for the coming year. This optimistic forecast is based partly on an expected 1.5 per cent population increase, a one per cent decrease in the unemployment rate, and gains in the energy sector. The latter include increased drilling activity, new energy projects coming on line, and growth in oil and gas investment encouraged by more cost-efficient production methods and the imminent prospect of greater market access (the US portion of Enbridge’s Line 3 is expected to open in 2021).

And according to the budget document, “With investors becoming increasingly concerned about U.S. shale oil well productivity and lack of investment returns, Canadian energy companies are in a good financial position to attract investor funds.”

Despite the predicted growth in the overall economy, the government itself is projecting a two per cent reduction in its revenue for 2020-21 – from $50.95 billion to $49.99 billion – largely as a result of those lower bitumen royalties.

On the expense side of the ledger, total operating spending is estimated at $56 billion, which is $865 million (1.7 per cent) less than that forecast for the previous year in the Q3 update. And in the absence of any other good news, Toews was quick to point out that the estimated $7.54 billion deficit for 2019-20 was $1.2 billion lower than budgeted. 

The deficit for 2020-21 is budgeted at 6.8 billion, which, as will doubtlessly be repeated ad infinitum from the opposition benches, is slightly greater than that NDP’s last deficit of $6.71 billion in 2018-19.

Asked how this could be considering the 1.7 per cent reduction in spending, Toews blamed it on the cost of the Notley-initiated oil-by-rail contracts, which the UCP recently cancelled at a cost of $1.2 billion. Another contributor is the incremental increases in servicing costs on a debt that will grow from $67.9 billion in 2019-20 to $76.9 billion in 2020-21. This means the servicing cost will rise from $2.1 billion to $2.5 billion.

Despite this fiscal millstone, Toews was adamant that the UCP government will eliminate the deficit by 2022-23, in part by reducing operational spending by three per cent. The deficit-elimination schedule is also predicated on revenue rising to $54 billion in 2021-22, and $58 billion in 2022-23 – predictions based on increases in oil revenue, which in turn are dependent on completion of the Line 3 and TMX pipelines.

Asked what will happen if these predictions are unrealized, Toews said, “If we don’t achieve additional energy egress, additional restraint will be required.”

The budget is titled “A Plan for Jobs and the Economy,” and Toews touted the increase in capital spending – from $5.8 billion in 2019-20 to $7.0 billion in 2020-21 – as a stimulator of employment in projects that will include the twinning of Highway 40 in the gas fields between Grande Prairie and Grand Cache and expansion of the Peter Lougheed Hospital in Calgary.

Ric Dolphin is the Alberta Political Editor of the Western Standard. He has had a long career in journalism with Maclean’s, the Globe and Mail, Edmonton Journal, Calgary Herald, Alberta Report, and the original Western Standard. He was previously Publisher and Chief Editor of Insight into Government. 
rdolphin@westernstandardonline.com

Ric Dolphin is the Alberta Political Editor of the Western Standard. He has had a long career in journalism with Maclean’s, the Globe and Mail, Edmonton Journal, Calgary Herald, Alberta Report, and the original Western Standard. He was previously Publisher and Chief Editor of Insight into Government. rdolphin@westernstandardonline.com

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Search for a Western Anthem: “All Hell for a Basement” (Heaven in Alberta)

You must hear this song to understand why it speaks to so many Albertans on a visceral level

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The Western Standard put out a call for our readers to help us pick the unofficial anthem for Alberta (or more broadly, Buffalo or Western Canada). We asked you to submit songs that would inspire us during hard times, would speak to our distinct Western culture, and would be good for crowds to sing together. You didn’t disappoint.

We received many great anthem ideas: some familiar classics, some newer hits, and many excellent rarer songs which I had never heard before. Many are strong contenders, and some a little off mark. I have been sifting through reader e-mails and social media comments, and narrowed it down to the best handful of songs. We will not be able to cover all of them, but over the next few weeks we will be selecting some of the best suggestions and explaining why we think they would make a great pick to become the unofficial anthem of the West.

As expected, one of the top submissions was “All Hell for a Basement”, also known as “Heaven in Alberta”, by Big Sugar. Originally released in 2001, the song features thrashing drums and electric guitars. For some listeners, this original version evokes the feeling of driving an F350 to a rig site, across the empty prairie landscape before the sun comes up.

In my opinion, the unofficial acoustic version does the most compelling job of capturing the song’s emotions. Like all anthems, you can’t just read the lyrics. You must hear this song to understand why it speaks to so many of our people on a visceral level.

The title “All Hell for a Basement” sounds odd at first. The phrase actually comes from a quote by Rudyard Kipling, the novelist and poet famous for The Jungle Book. Upon visiting Medicine Hat, Alberta in 1907, Kipling was impressed by the region’s massive quantities of underground natural gas. He remarked, “This part of the country seems to have all hell for a basement, and the only trap door appears to be in Medicine Hat.”

Gordie Johnson wrote this song when he was the front man for the Big Sugar. Johnson was born in Winnipeg and grew up in Ontario before his family moved back west to Medicine Hat.

The song is simultaneously tragic and hopeful. The opening line, “I am a working man, but I ain’t worked for a while,” captures a reality that requires no explanation for our readers. The writer feels discarded “Like some old tin can, from the bottom of the pile.” As the song understands, unemployment is not only a crisis of material means, but also of identity and meaning. So many of us derive much of our sense of self-worth from our work and from the ability to feed our families.

But there is hope in this song as well. The lyrics to the chorus are as follows:

“I have lost my way / But I hear tell / Of Heaven in Alberta / Where they’ve got all hell for a basement.”

There’s no question why this song was requested by so many of our readers. Alberta used to be a beacon of hope that attracted hard-working people from struggling economies far and wide. Many working men who had lost their way came here to find it. Of course, this song and its underlying drive hails from a time when Alberta’s economic engine was not under direct assault by Ottawa.

So yes, let’s acknowledge the tragedy that this song captures for us in the West: unemployment, loss of purpose, and the feeling of being discarded “like some old tin can” by those in power who no longer have a use for us. But let’s also take this anthem as a reminder of the hope that we in Alberta once provided for a hopeless people. Let’s reawaken that sense of hope within ourselves, and begin to take the necessary steps to get on the right path toward prosperity. Start with yourself as an individual by reclaiming who you truly are: not “some old tin can” to be discarded by the Laurentians, but a “working man” whose skills and work ethic are still valued by us here in the West.

So how does this song stack up as an anthem, based on the three main criteria we established? First, does it inspire us? Yes, in its call to face the tragedy of unemployment and reclaim one’s self-worth as a working man, this checks out. Second, does it speak to our unique culture, heritage, and experiences? Yes, at least to some aspects of our experiences (oil & gas: check). Third, is it good for crowds to sing at public events? That’s where I think this song may fall short of anthem material. The lyrics are simply not designed for that. With lyrics like “My words are like a rope / that’s wrapped around my throat,” people might see only the tragic side, and not the redemption part of the story.

Based on the reader responses, this song will no doubt make the top 10 list. Can I see it being the song that Westerners sing with their hands over their hearts at a hockey game? Personally, I don’t think so. The lyrics are applicable to the working man, but what about school children in their weekly assembly? An anthem needs to have wider appeal, in my opinion. But what do you think?

My verdict: Great song, but I’m not sure if we have found our anthem yet.

The search continues!

Do you have your own idea for the unofficial anthem of Alberta? It’s not too late. Leave a comment below, on social media, or send us an e-mail, and we will consider featuring your anthem idea in another column. Email your submissions for an Alberta, Buffalo, or Western anthem to anthemsearch@westernstandardonline.com

James Forbes is the Western Heritage Columnist for the Western Standard

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Working from home with dysfunctional ‘co-workers’

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Need to put a smile on your face amid nothing but bad, worse, and awful news? Read on.

A North Carolina mom started working from home and decided to ask Twitter for ‘co-worker’ stories.

For the accountants and bookkeepers:

Dieticians:

For the upwardly mobile:

For the artistically inclined:

Sanitation:

Lunchroom dramas:

When to call human resources:

And some things stay the same..

Deirdre Mitchell-MacLean is a Senior Reporter with Western Standard
dmaclean@westernstandardonline.com
Twitter @Mitchell_AB

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Two Alberta businesses – different challenges in a pandemic

“Whatever has happened elsewhere is what we’re barreling towards,” Jacobs said.

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Bryan Orr, a drilling engineer in Alberta, is employed with NBC Technologies, who subcontracts with larger operators such as Tamarack Valley.

“I love drilling but it’s about to fall off a cliff,” Orr said. “The oil price coupled with challenges relating to chemicals and materials from China…”

During the drilling process, water, or a mud mixture, is pumped down through the bit. Barite, one of the chemicals used in that process, as well as chemicals used to make cement, come from China. Orr says the supply is getting low.

There’s also other materials such as pipe which is also becoming more scarce. Piping used both in the drilling process so the rock doesn’t collapse itself and pipe that is used to transport product. Orr said some of the storage companies are setting to close and that’s going to cause a problem.

“Reasons for Canada running a fraction of the rigs of the US aren’t geologically driven but based on pipeline access and other regulatory issues that are solvable by a supportive federal government.”

But Orr says there are further difficulties with the changes enforced by the COVID-19 pandemic, especially when it comes to working remotely.

“Unique challenges with the pandemic lie with decision-makers – getting rapid approvals can be difficult.”

In a business that has been about face-to-face meeting and relationship building, the idea that all work can continue via email isn’t as welcome to those used to running the show in person.

Even with those challenges, however, Orr said he is still optimistic.

One positive of the rapid changes in oil that have been happening is that these issues also help drive efficiencies. Orr says the cost of drilling wells has gone down substantially in Canada – comparatively – to the U.S.

“We’ve been lucky (at Tamarack and NBC Technologies) because we had a huge success last year that’s been driving a lot of production this year. Even though it’s a reduction in drilling, we were able to prove that we could reduce our footprint with three-mile Tamarack wells that allow us greater access.”

The new drilling process is nominated for a Collaborative Trendsetter award at the Global Petroleum Show.

Orr admits the majority of his work, while reliant on a customer-base, isn’t reliant on in-person transactions. Others – who are reliant on the physical presence of consumerism – are facing additional challenges that aren’t just based on the point of sale.

Jonathan Jacobs owns a Fort Lanes, a bowling and virtual golf business in Fort Saskatchewan. He purchased the business after he was laid off from his job in the oil patch in 2015. Jacobs could see that times were changing for his trade and he and his wife decided to invest in a local business.

Jacobs says the family wasn’t likely to get rich but they made a living. He had enough business to hire some employees and, all in all, had a successful small business.

“We had a ‘soft’ year (in 2019),” he said. “We looked at 2020 and said ‘it’ll be fine as long as nothing goes wrong’.”

The small entertainment business Jacobs runs still has employees but a lot less customers.

“I underestimated (the impact of COVID-19) until right now,” he said. “As of last Wednesday, there was no reason to believe this was coming.”

“This” is mass cancellation of classes and people being told to self-isolate. What bothers him most is the apparent mixed messaging.

“The government response has been rapid fire and all over the map. It’s hard to get your feet under you,” he said. “And that’s just week one – what happens in week two?”

Jacobs said people are being told to stay home but the government is also saying businesses can remain open. He said it doesn’t help him to stay open if there’s no customers. It’s something he’s also hearing that from other business owners in the area.

“We (local business owners) talk every day right now,” he said. “I can’t work from home – I can’t deliver bowling pins to your house to play there.”

His alley hosts leagues for all ages and special Olympics training. Jacobs said they cut the league play but his alley won’t hold 250 people so he stayed open. Now the government is saying no more than 50 people should gather but they’re also saying people need to adapt to a ‘new normal’ that is based on social distancing.

Special Olympics is on hold until April 13, Jacobs said. but public health messaging is saying things will be on hold for “months”.

Jacobs said he’s getting a better idea of what to expect from watching what’s going on in other provinces – like Quebec – who just asked bars and restaurants to close.

“Whatever happened there is what we’re barreling towards,” he said.

He said he wished that business owners had better communication from the leadership in terms of what to expect. Jacobs said he realizes this is unprecedented but feels like a more coordinated effort to communicate, especially when so many businesses are reliant on customers being physically present, would have been beneficial for him – especially when it comes to planning.

“There were 29 cases when we implemented the social distancing. What are the parameters for ending this?” He asked. “Not knowing is the worst. I have employees. Is it going to continue until May? June? At least then I’d know it’s not April.”

“They have issues managers making a quarter of a million dollars per year – why don’t they manage some real issues?”

Jacobs said he’s hoping the communication will get better, particularly in terms of how “this ends”.

“What will they be looking for to ease the restrictions?” He asked. “How will we know if we should hold on or close up?”

Deirdre Mitchell-MacLean is a Senior Reporter with Western Standard
dmaclean@westernstandardonline.com
Twitter @Mitchell_AB

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