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Calgary & Alberta Economy

I'm generally sympathetic to people's indignation over equalization payments. My concern is that the response by the more bellicose proponents of the industry is largely futile. Even worse, it's a distraction and enables the government and in some cases, the industry itself, to not take ownership for Alberta's roll in its financial and economic situation. That's not to say don't try and hold Trudeau's feet to the fire for some support, more that that can't be your primary solution

I agree with this and want to explore it in detail. It's a long one so buckle in and let me take you on a word journey.

I'll start by saying I love successful industries that make people prosperous, but I hate bad public policy and governance even more. I think in Alberta spends way too much time thinking about the first part, way not enough time on the second part and why it totally matters.

Alberta's government answer to a boom-bust economy driven by over-reliance on a single sector has to be more than 40 - 50 years of "Trudeau is screwing us" and "Ottawa doesn't get it" rhetoric to whip the votes and do nothing about stabilizing our own situation with the powers that the Province fully has itself. Of course there is always a role to play federally that helps and hinders Alberta's prosperity, in the energy sector or others, but it's faaaaaaar overstated (about 1,000 to 1 if you read only the Herald for the past 25 years) that Ottawa's actions good or bad is the only issue.

Do you know what all other provinces do to be less reliant on Ottawa? Do the hard work to diversify their economies (painfully over decades, like Ontario and Quebec) and raise their own taxes through a variety of measures (yes PST and higher taxes on the rich) so they aren't victim to swings of their own revenues and don't rely on the flexibility (or lack thereof) of the Federal stabilization programs to bail them out. All this has been said countless times and has been known as a reasonable, largely non-partisan economic strategy for a province. Indeed every other province - whether it's a right-leaning or left-leaning government has this approach of diversification and effective taxation. So what makes us special that we don't ever make progress on these reforms?

At last can start seeing the true enemy that is holding Alberta back: it's not Ottawa, it's us. Or more specifically it's our captured political, economic and media system that enriches a specific political party and it's allies, elevates a single industry over all others and rejects good governance and stability in favour of accumulating ever increasing concentration of power, discourse and influence to a single group. Capture of nearly all economic policy and political influence by a single industry and it's supporters is far more threatening to the Province's future stability and prosperity than anything that Ottawa could ever do.

For decades, Albertan Provincial politicians spent so much effort rallying against big, bad Ottawa happy to regurgitate a single industry's talking points, churning out article-after-article and speech-after-speech to point fingers at anything other then themselves. Sometimes its Ottawa, sometimes its unions, sometimes it's cities - whoever is convenient to not point at the broken system that helps keep them in power.

Rather than do anything useful with the populist support decades of such consistent messaging provides (e.g. use your political capital to add PST to create a more financially stable Provincial government, for example), our Conservative political class spent their capital advancing unpopular ideological agendas, padding every board and panel in the Province at all levels with cronies who think identically, and building themselves jobs post-politics (top choices are usually some sort of provincial appointee to a made-up position, industry consultant, lobbyist, blue-ribbon panelist, or the Alberta classic of the endless Federal-Province-Municipal conservative swap). I mean who could blame them? We vote for them whether they do a good job, bad job or no job. Lots of Albertans also got rich along the way so who cares?

Meanwhile rational economic and taxation policies are ignored, provincial finances are (repeatedly) decimated and the cycle continues. Queue another article slamming how unfair Alberta has it - same as the article from 2014, 2004, 1994 etc. The only government - and I mean literally the only one as 49 of the other 53 years were the group - that made a (tiny) attempt to break this self-destructive cycle of petro-state cronyism was the NDP.

The NDP had good ideas and bad ideas, but their success/failure was more a function of an inability to co-opt/overcome the political, social and economic system that has been as distorted and slanted against approaching government even slightly differently than what decades of calcification and entrenchment would accept. Even basic and boring good governance reforms the NDP pushed (more transparent elections, better financial oversight to politicians, division of powers agreements with cities) have been slashed and removed by the UCP because our captured system rejects such democratic tools to ensure government is working properly.

What to do about this all this? Well hopefully the polls are true and the province has matured into a healthier democracy with two functioning political parties to at least get the ball rolling at reform and more inspired debate. Alberta is more politically and economically diverse than ever, cracks in a broken system can only be hidden for so long. Talking points, even good ones, get stale if they haven't changed in a few decades.

More practically, I would be perfectly happy matching the policies of BC across the board for 20 years: cut to the public service in line with BC wages while raising our taxation policies to make the whole system more stable - PST + increase progressive taxation on higher incomes. Essentially cede our provincial powers to the one next door until we retire out a few decades of patronage appointees at all levels of society.

I trust a copy-and-paste from another province's policy and tax code more than I trust another decade of "made in Alberta" grandstanding while doing nothing apart from enriching the connected and gaslighting the rest. Most our provincial politicians grew up in this system of patronage and cronyism (or moved here from Ontario to take advantage of it) so I'm not optimistic the needed reforms can be done from within.
 
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The NDP largely failed because of the economy. A poor economy and high unemployment is extraordinarily difficult to overcome if you are the government, and easy to exploit if you are the opposition and that’s exactly what the UCP did. Moreover, the NDP failed to build enough bridges to overcome that. Kenney ran in large part on the coattails of Lougheed, who, for all his faults is justifiably admired and is the reason the PC dynasty began. NDP doesn’t have that history of good will, especially in Calgary.

Historically it is more complicated. A lot of people underestimate the genuine distrust Albertans have towards the Federal government dating back to before we were even a province. The National Policy in the 19th century imposed tariffs on American goods to protect eastern industry which raised prices of imported goods (notably farming equipment) in the west. The Dominion Lands Act maintained Federal control over Crown land and natural resources in the prairie provinces until the 1930’s. And of course, the NEP, which no matter how you spin it, was a flagrant attempt to gain Federal control of the energy industry in Alberta to help stem skyrocketing gas prices in the east caused by the 70's oil embrago.

This history has directly influenced the development of reactionary parties in the province which the UCP is the modern incarnation of. That’s not to say I agree with the current policies (I very much oppose them) but people need to be aware of that history to better understand the political climate of Alberta at the moment.

My belief is that regardless of how unfair confederation has been, Alberta has no other choice but to move forward and change its tact. The global economy is changing, climate change is becoming perhaps the most pressing geo-political issue out there, and the resource development is too cyclical and uncertain to be properly depended on. No matter who is in Ottawa, these issues will remain. We need a government that is pragmatic enough to explain to people the hard reality rather than exploiting people's vulnerability by selling people a false bill of goods that the only thing standing in our way of a return to low taxation, high government services era, is the Federal government.
 

Alright .... the diversification of the economy begins. We still need to see global demand for hydrogen for it to be impactful but it is nice to see the province is getting in front of this and planning ahead.

👍 👍
 
OK. If you don't like my euphemism, I will make it clearer for you. 'Going to bat' for the energy industry means

1. Being honest with the environmentalists and green energy proponents .... the transition to renewables in Canada is going to be gradual. There will not be flipping a switch where solar, wind or hydrogen all of a sudden replaces fossil fuels. You ... enviromentalists/Green Party etc need to accept the fact that fossil fuel consumption is going to be around for decades more. At the same time, we ... government, business, consumers ....will work collectively to reduce our carbon emissions
2. The global demand for fossil fuels has not subsided. We have an abundance of energy products that the world wants. Common business sense dictates that we should get as much of this product to market as we can, for as long as we can.
3. For those countries/ organizations/ entities that are demonizing the oil sands and investing millions of dollars to discourage investment or even shut it down .... you are misinformed and ill-guided. We (the federal government) will take whatever steps necessary to counter this.

That is the kind of messaging I would like to see coming from all federal governments regardless of party. It is a shame that it is only coming from the provinces (Alberta/Sask).

This still seems like empty platitudes. Just "tough talk" and identity politics aimed at making Albertans feel like Trudeau is "on their side" rather than actually doing anything concrete to change the fate of the industry. Are you basically asking Trudeau to set up a federal-level war room and anti-Albertan activity commission? Those didn't work so well for Kenney.

Anyway, with regard to item #1, Trudeau already went against environmentalists when he bought the TMX. That completely outraged environmentalists. I'm not sure what else you expect. It's not like he's going to convince them to stop fighting O&G.
 
Anyway, with regard to item #1, Trudeau already went against environmentalists when he bought the TMX. That completely outraged environmentalists. I'm not sure what else you expect. It's not like he's going to convince them to stop fighting O&G.
Trudeau countered the TMX pipeline purchase with the passage of bill C69, which delighted environmentalists.
Anyway, you are missing the point. The federal government should be in lock step with the provinces on energy exports. This is not about provincial economies, it is what is best for the Canadian economy.
 
Again, I'm missing specifics here. I'm not sure what "lock step" is, particularly when the UCP's central political strategy is to drum up resentment toward Ottawa.

Also the environmental risks associated with O&G infrastructure are also economic risks. This is not an all or nothing issue. The federal government (no matter who controls it) needs to balance the interests of different constituencies.

Because the fate of Alberta's O&G industry is so dependent on global economic conditions that are well beyond the control of any government in Canada, it reduces all of these arguments to empty identity politics, which is perfectly encapsulated by the war room and anti-Alberta activities commission. Kenney can't actually do anything to improve the economic prospects of the oil patch, so he's left with "tough talk" ostensibly aimed at environmentalists and foreign investors (who aren't paying attention), but really aimed at his own voters.
 

Alright .... the diversification of the economy begins. We still need to see global demand for hydrogen for it to be impactful but it is nice to see the province is getting in front of this and planning ahead.

👍 👍
Glad they are talking about it. I don’t really understand why there is excitement from them about hydrogen versus other things though - other than it is something you can drill for and use chemical engineering to create and transform into usable products. Much like geothermal - is the focus on it a sop towards service companies even though hydrogen/geothermal won’t be at a scale even close to the old scale of drilling for decades.
 
Pretty exciting that even with a pandemic Calgary is gonna smash the record for venture capital funding. Already raised over $200 million by August compared to $136 million in all of 2019

 
Pretty exciting that even with a pandemic Calgary is gonna smash the record for venture capital funding. Already raised over $200 million by August compared to $136 million in all of 2019

Beat me to it! good news story for sure.
 

I suppose this is also good news if you are a drilling company or own a pipeline. However, we also need increased demand to incent new activity. I don't see that happening until either TMX or KXL is finished, and there is the capacity to get product to more markets other than the U.S.
Not sure where all this tax revenue deferral from government is going to lead us in Alberta. Government tax revenues (both provincial and city) have already been severely reduced by economic recession.
 

I suppose this is also good news if you are a drilling company or own a pipeline. However, we also need increased demand to incent new activity. I don't see that happening until either TMX or KXL is finished, and there is the capacity to get product to more markets other than the U.S.
Not sure where all this tax revenue deferral from government is going to lead us in Alberta. Government tax revenues (both provincial and city) have already been severely reduced by economic recession.
Some rural municipalities will be absolutely slammed by this plan as property taxes are their only form of revenue the province allows them to collect and now the province is forcing them to collect from only a smaller tax base. Removing these properties from the tax base without much lead time and not backfilling the local budgets will trigger a wild range of heavy cuts or local property tax increases that will vary depending on the dependence of the district on this revenue. Whether there are other benefits or not, this is how your make many local government impossible to function properly and predictably.

Combined with the earlier police changes (rural municipalities pay increasingly more of their share every year), and the ongoing catastrophe in doctor-government relations falling heaviest on rural districts, the provincial government has really done about everything they can to make rural life expensive, unstable and with fewer services. Perhaps without a booming drilling and oil and gas sector this was all somewhat inevitable - almost all non-boomtown rural districts away from major cities are stagnated/shrinking across the developed world for decades- I am just surprised the government would go after their own base so aggressively.

Perhaps it's also another doublespeak / shift the blame exercise: "hey don't get mad at us - we didn't raise your property taxes! We simply cut the tax revenue expected of your local government by 25% and they are the ones that chose to raise taxes on you. Not us! Remember to vote UCP again please!"
 


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Some rural municipalities will be absolutely slammed by this plan as property taxes are their only form of revenue the province allows them to collect and now the province is forcing them to collect from only a smaller tax base. Removing these properties from the tax base without much lead time and not backfilling the local budgets will trigger a wild range of heavy cuts or local property tax increases that will vary depending on the dependence of the district on this revenue. Whether there are other benefits or not, this is how your make many local government impossible to function properly and predictably.

Combined with the earlier police changes (rural municipalities pay increasingly more of their share every year), and the ongoing catastrophe in doctor-government relations falling heaviest on rural districts, the provincial government has really done about everything they can to make rural life expensive, unstable and with fewer services. Perhaps without a booming drilling and oil and gas sector this was all somewhat inevitable - almost all non-boomtown rural districts away from major cities are stagnated/shrinking across the developed world for decades- I am just surprised the government would go after their own base so aggressively.

Perhaps it's also another doublespeak / shift the blame exercise: "hey don't get mad at us - we didn't raise your property taxes! We simply cut the tax revenue expected of your local government by 25% and they are the ones that chose to raise taxes on you. Not us! Remember to vote UCP again please!"
Further to my point - without a rich provincial government looking for votes, this province's smaller municipalities are in real, and sometimes existential, trouble. This is true all over the country, but made all the worse from decades of stringing places along with expensive infrastructure they could never support on the local tax base.

Disappearing towns: Alberta municipalities struggling with crumbling infrastructure, meagre finances

https://www.theglobeandmail.com/canada/alberta/article-disappearing-towns-alberta-municipalities-struggling-with-crumbling/?utm_medium=email&utm_source=Western News&utm_content=2020-10-24_13&utm_term=Western Canada: It’s B.C. election day, but results likely won’t be ready for weeks&utm_campaign=newsletter&cu_id=O917tzL2Og5q0AYnTVaO3g4h/vSd4WZK
 
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