Every Alberta budget since striking it lucky at Leduc Number One in 1947 has been tied to the sweet allure of natural resource revenues. And every five years or so, governments listen to the prognostications of academics and experts warning that this is a bad idea, and promise to do something about it. And then they don’t. It’s just politics, and it’s unlikely to change regardless of the party in government. You don’t have to like it, but you probably have to accept it.
However much government revenues in Alberta may be tied to revenues from oil and gas, Albertans have a reasonable expectation that government’s will make reasonable, conservative projections for prices in their budgets. Sometimes they do; most of the time they don’t.
The dramatic crash in world oil prices caused by Saudi Arabia and Russia’s price war has Alberta’s benchmark oil price (WTI) sitting at US $34.06/bbl as of writing this column. This is no fault of anyone in Alberta, or North America, but it is a crisis that will hit Alberta directly.
Recent Alberta governments of all partisan hues have a less than stellar record in projecting oil prices in their budgets, especially further out than the next fiscal year.
Former Alberta NDP Finance Minister Joe Ceci canned the practice of long-term five-year projections, reducing the budget to a mere three years. Long-term projections were always a bit of a crap-shoot, but this was mostly likely done to allow him to claim that the government was headed towards a balanced budget at some point in the distant future, without ever having to show the math about how he would do it.
But even the NDP’s shorter three-year fiscal plans were on average, poor at forecasting oil prices.
In Rachel Notley’s four NDP budgets as premier, they overshot WTI prices by an average of US$5.23/bbl, if we use today’s sad WTI spot price as the benchmark for 2020-21. If we are more charitable and leave 2020-21 out of it, they still overshoot by US$3.07.
The first UCP budget undershot oil prices by a modest US$1.00/bbl, but that budget was tabled late in the fiscal year when predictions are always easier to make. That being said, the NDP’s first budget was also late in the year, and still managed to overshoot by US$5.00/bbl.
The real test comes in the next three fiscal years, when UCP Finance Minister Travis Toews projected relatively (but not wildly) optimistic oil prices to reach US$62.00/bbl by 2021-22. This was key in their very (quite wildly) optimistic projections of an extra $8 billion in extra annual government revenues over the final two years of the budget.
The budget has only been tabled and the speech read in the legislature. It is currently being debated and is still roughly a month away from being passed into law.
So while the government defends a budget based on oil that was US$49.78/bbl when it was tabled – and projected to reach US$63.00/bbl, it now sits at a paltry US$34.06/bbl.
That, is a very, very big hole.
Let’s put it into more tangible terms. According to the budget’s own “revenue sensitivities” in the fiscal plan, every US$1.00 fluctuation in the price of WTI is worth $355 million to the government coffers.
With WTI now hovering around half of what the Toews projected in his budget, that would mean a theoretical shock of $8.5 billion a year to the government’s balance sheet. That however, is quite impossible for the simple reason that it only expects to net $5.1 billion in all non-renewable resources revenues (combined) in 2021-22.
The government’s “revenue sensitivities” are only useful within a range of relative sanity, after which they have to be rewritten. It goes without saying that if today’s WTI numbers hold anywhere near their current range, they will have to be thrown out entirely.
In fact, the entire Alberta budget may need to be thrown out. The revenue projections when it was tabled on February 27th were already optimistic – now, they are downright delusional, if they hold to them.
Chances of reaching the UCP’s balanced budget platform commitment by 2022-23 were already tenuous enough with the modest $1 billion spending cut spread over four year. They were relying on a thundering economy to do the heavy lifting for them – plus a few (relatively modest) tax increases here and there.
Since the UCP came to power, Ottawa has passed bills C-69 (no more pipelines), C-48 (tanker ban), and killed the Teck Frontier oil sands mine. As of today, global oil prices have fallen through the floor. None of those things are the UCP’s fault, but it is now the hand they are dealt.
If they wish to have a prayer of reaching a balanced budget by 2022-23, they will have to shelve this budget and reintroduce a new one with updated, realistic oil prices, and much more serious spending restraint.
Derek Fildebrandt is Publisher of the Western Standard and the President and CEO of Wildrose Media Corp.
GEROW: WE scandal shows how government corrupts our charities
“Charity work is an important and meaningful part of human activity; one far too important to leave in the hands of corrupt politicians and useless bureaucrats.”
On July 23, 2020, federal Ethics Commissioner Mario Dion announced an investigation into Justin Trudeau and the decision to have WE Charity administer a $30 million Canada Student Service Grant Program. The red flags which prompted the investigation were the fact that this type of program is within the regular mandate of Employment and Social Development Canada (ESDC). The ESDC is the government bureau where the unemployed go to collect E.I. benefits and employers can hire a temporary foreign worker at a reduced rate.
After scratching just below the surface, it was revealed that Trudeau’s mother and brother had received over a quarter-million dollars from WE Charity. His wife had been involved with WE Charity. Finance Minister Bill Morneau’s daughters worked for WE Charity and the organization had paid for trips his family had taken to Kenya and Ecuador.
It’s easy to understand why Canadian’s are outraged at the conflict of interest. It appears the Trudeau government took money from taxpayers and intended to launder it into the coffers of family and friends through a non-profit organization. Opposition parties called for a variety of actions. The CPC’s Pierre Pollievre demanded the release of documents. The Bloc Quebecois’ Yves-Francois Blanchet suggested that Trudeau should step down. The culpability of the Prime Minister and his inner circle is apparent, but the opposition fails to address the real problem. That is, that the government and their preferred tax-exempt organizations having the ability to engage in racketeering. Instead they argue for tougher regulations.
Charity is the reciprocal love of one’s fellow man manifest in the giving of alms to the poor, ill or helpless. To give voluntarily, to sacrifice your time or property for the good of mankind, is foundational in religious and spiritual thought. It is an act of civilized, empathetic kindness and community. Regulations which limit the ability of charity to function on a large scale have made most non-profit organizations in Canada an extension of Ottawa’s social bureaucracy. There is nothing honourable in filling out government grant applications.
In its attempts to preserve those aspects which are most dear to the idea of charitable giving, the federal government has instead built a web of red tape and restrictions that limit supply by creating artificial barriers to entry. This in turn creates monopoly privilege for organizations like WE Charity who are close to political power. Just the same as in corporate monopolies, non-profit monopolies create higher profits for its stakeholders.
In extreme cases we see entitled families grabbing tax dollars that would otherwise be used on local community initiatives and using them to backstop speaking engagements for the irrelevant aging mother of a prime minister plagued with scandal. The calls for stronger regulation on charities are misguided. More regulations on these organizations only further monopoly privilege and collusion with Ottawa. The only regulation needed for true charity is that it is free from political influence.
Why was the Canada Service Grant Program not administered by Employment and Social Development Canada?
On July 16, Rachel Wernick, the senior assistant deputy minister at ESDC testified to a parliamentary committee that WE Charity had been selected to administer the program because of the charities connections to youth and their ability to administer the program on a scale and with speed which the ESDC could not. Part of which is true. Private charities are much more efficient at delivering these types of initiatives than bureaucratic agencies, although it seems obvious that WE Charity was chosen for different reasons.
The question still has deeper meaning and further reaching implications than that which have been obscured through a myriad of partisan talking points. The answer is if a $30 million program is itself not a valid use of that departments regular mandate, then it should not be administered at all, or if that mandate is better left in the responsibility of private charities, then Employment and Social Development Canada should cease to exist.
Charity work is an important and meaningful part of human activity; one far too important to leave in the hands of corrupt politicians and useless bureaucrats.
Darcy Gerow is a columnist for the Western Standard
DAVIS: After Trudeau’s throne speech, the West must fight back with more than words
“Shaking our fists, going to court, and promises of greater autonomy someday, are no longer enough.”
It’s really no surprise that the Liberal throne Speech was more of the same rhetoric they’ve been regurgitating for the last five years. It’s really just more of the same tired march toward his idea of liberal-socialism: with gun grabs, censorship, and condescending emergency orders during the pandemic.
If anything was surprising, it was his lacklustre reiteration of the throne speech with no added value to speak of. Sure, it was delivered in his same breathy tones, but for a guy who likes to ham it up, it was decidedly bland.
What we saw in the throne speech and his remarks in the House the next day was an open disregard for the plight of the West and the growing tinderbox of alienation here. It’s hard to tell at this point if Justin Trudeau is just that blissfully unaware, or is being willfully ignorant.
As the pundits were busy reporting on a “Liberal re-set” that wasn’t – forgetting the scandals which made this entire farce necessary – the opposition and provinces weighed in on what they heard.
Conservatives won’t support the government. The NDP are being obtuse, and the Bloc leader Yves-Francois Blanchet sounded like an extortionist as he insisted that the government has one week to hand over more healthcare money, or else.
Alberta Premier Jason Kenney sounded more like a spurned lover than a premier ready to go to the mat for his province. I say this not because of how he said things, but because of what he did and didn’t say.
Essentially, Kenney plans to stay his course of angry words and lawfare, suing the federal government over every breach of the constitution. This means uncertain outcomes, and years in court. Years Alberta doesn’t have.
He spoke of implementing the findings of the Fair Deal Report, but hasn’t taken any concrete actions toward achieving those goals. Appointing the Alberta Firearms Officer is one of his “we’re going to do’s”, but when? He’s devoting $2 million to analysing the viability of a provincial police force instead of investing that money in recruitment and training facilities for the new force now. These uninspiring actions look like flinching under the pressure of a sovereigntist movement that keeps getting federal oxygen fanning the flames of discontent.
In fairness, the United Conservative government has done a good job during the pandemic. As much as some may cry foul at that assertation, the fact remains that we were able to send PPE to other provinces because of Alberta’s preparedness.
I admire Jason Kenney for going to the airport to verify if reports of a lack of COVID testing were true; they were. In response to this, he began more thorough checks at the Calgary airport, one of four airports still receiving international flights during the crisis.
Kenney has also been actively seeking investment and diversification of the Alberta economy. It should be a personal thorn in his side that immediately after the throne speech, much of his work was undone as investors are back to questioning if they can do business in Canada with the regulatory uncertainty restated by the Liberal government.
It was disappointing to hear Mr. Kenney say that he will continue on, bullishly complaining, going to court, and fighting a game that he cannot win. Time is of the essence and Albertans need him to come up with a plan B fast.
Asserting provincial autonomy, removing ourselves from as many federal programs as possible is a necessary start regardless of if independence is the end-goal or not. But independence must be put on the table as a last ditch option regardless of whether Mr. Kenney likes the idea or not. We face an existential threat – survival or disintegration under this federal government, bent on crushing everything Westerners hold dear or essential for survival.
We must begin a strategic plan, create a contingency blueprint, putting the pieces in place so that if it should come to it, Alberta is ready to go its own way. The province must be prepared and ready to implement those plans quickly.
We could take the example of Quebec’s preparations in 1995, learning from their mistakes and successes. We should be speaking to indigenous leaders, forming alliances early in a fair and equitable fashion. International relationships for both trade and support ought to be pursued now.
Shaking our fists, going to court, and promises of greater autonomy someday, are no longer enough. Tangible action is required and it’s required now. The United Conservative Party must face these facts and acknowledge that foundational steps are necessary to put Albertans on firmer ground and give us the leverage we need to say no to Ottawa the next time they come with matches and kerosene.
Gilly Davis is a guest columnist for the Western Standard
ANDRUS: Kenney prepares to fight “all-out war” from his knees
“A constitutional convention may be the only way to keep the country together. Without one, enflamed regional anger will continue to divide the country and the viability of remaining a single nation will continue to deteriorate.”
“The only time in the Speech from the Throne that Saskatchewan was essentially mentioned was in the phase out of our energy industry workers.”
That was Saskatchewan Premier Scott Moe’s response to the massive shift in direction signaled by Prime Minister Justin Trudeau in the Throne Speech on Wednesday. His words rang true across the West and the fight for the heart of the energy industry has ramped up yet again.
Alberta Premier Jason Kenney described the Throne Speech as a “full-frontal attack” on the constitution.
“There were more policies that invade provincial jurisdiction than I could count,” said Kenney. “Alberta will continue to work with our allies across the country to focus on lives and livelihoods.”
From the reaction of the premiers, it is now clear that national unity hangs in the balance.
The announcement of ambitious legislation guaranteed to be detrimental to the interests of Westerners, pits Moe and Kenney against the full might of a federal government targeting the heart of the energy industry.
The rhetoric both have displayed in recent days highlights the rage bubbling amongst their electorates, already concerned about their futures, but rhetoric is just that.
While both premiers have talked the talk, angry citizens await firm action. In Alberta, Kenney has slow walked his Fair Deal plan to a crawl. Two of his best options – a provincial pension plan and referendum to abolish equalization – have been delayed until next fall at the earliest. Constitutional challenges, while bold in rhetoric, will take years to unwind. Strong letters are just words on a page; empty threats unless backed up with strong action.
More than ever, the need for bold leadership is of vital importance. The constitution is under attack. Western alienation, scoffed at by the Laurentian establishment and Trudeau himself, is on the rise. Further delays will only see that anger redirected at provincial governments and Premiers that are seen to be waffling. Watering down messaging in a time when strong action is needed will further weaken the fabric of national unity.
The next few months will demonstrate clearly that constitutional reform is required to strengthen national unity and provide equal footing for provinces wary of federal intrusion into provincial jurisdiction. The current constitutional order is designed to favour voter-heavy provinces, with no real defence available to smaller provinces.
A constitutional convention may be the only way to keep the country together. Without one, enflamed regional anger will continue to divide the country and the viability of remaining a single nation will continue to deteriorate.
These reforms are long past due. It’s time to recognize gravity of the situation and act. Words will simply fall on deaf ears.
Josh Andrus is a columnist with the Western Standard and the Executive Director of Project Confederation.
ANALYSIS: Saskatchewan Party’s strengths & weaknesses
GEROW: WE scandal shows how government corrupts our charities
WATCH: Trump-Biden Debate, Sask Election, & “Cheeziegate”
EXCLUSIVE: CN Rail to send emergency propane shipments to Quebec
EXCLUSIVE: Teamsters union could block emergency propane shipment to Quebec
ANDRUS: Trudeau has bet double-or-nothing on Freeland to pacify with West
Sign up for the Western Standard Newsletter
News4 days ago
Trump approves $22-billion railway between Alaska and Alberta
News4 days ago
Feds cancel private sector program to help with gun grab
Opinion4 days ago
CAMERON: Canada has embraced medical authoritarianism
Opinion2 days ago
BYFIELD: An open letter to Jason Kenney
Opinion1 day ago
ANDRUS: Kenney prepares to fight “all-out war” from his knees
News1 day ago
UCP MLA calls Alberta CERB recipients lazy ‘Cheezie-eaters’
News2 days ago
Alberta on board with rail line from Alaska green-lit by Trump
News2 days ago
UPDATED: Saskatchewan election called