Quote:
Originally Posted by Tinordi
Lets play the counterfactual card. Say WRP was in power the last 18 months. How would Alberta's fiscal situation be materially different? What specific policies would they have done besides sprinkling fairy dust?
No I'm sorry to tell you that policy "uncertainty" or "taxes" had essentially zero impact on investment in oil and gas. Policy uncertainty has had no bearing on the fact that the Canadian patch is cash flow negative leaking $2 in costs for every $1 in revenue.
Investment in the broader economy is down because of the figures above.
So yes, we all want someone to blame. We all want to think that there's some causal connection between the government and our economy but in this instance, we need to accept that as a province we live by the resource economy and we die by the resource economy. That was a long-term policy built over generations of PC governments that the success of this province hinged on oil and gas development.
The outlook is particularly grim as well. We may well have witnessed the peak of the Canadian oil patch 8 years ago.
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I disagree strongly with this. I work for a global company who has decided to defer meaningful spending in Canada for the foreseeable future. They have a global portfolio, they can pick and choose what assets they fund at a given time. As a result, they are laying off more staff. This is not a company with a small presence in Canada either... they are significant (not saying who, but you can guess).
Their reasons include increased corporate tax, increased property tax and increased regulatory costs. While this is likely not as large of a driver as let's say, getting product to market (Tidewater Pipeline or LNG), it's a reason that is being echoed by many businesses in Alberta regardless of industry.
Policy that destabilizes or increases the cost of doing business
can (will) shift investment to places that are more stable, or where the costs of doing business are so small that its worth the risk of destabilization (ie. emerging markets). Businesses that cannot shift investment to grow or find new revenue sources will be under threat of closure or staff reduction.