Alberta Economy Outlook - 2015 Version

[oilyfan]

I know we have a couple other threads that are related but I thought a new thread about the 2015 outlook might be useful

http://calgaryherald.com/news/politi...cial-situation

Premier Jim Prentice warned Friday that spending cuts are coming and tax hikes are under consideration to deal with what he said is the Alberta government’s worst fiscal situation in generations.

In a year-end interview at McDougall Centre, Prentice also said that other capital projects — including new schools promised during the fall byelection campaign — could be deferred along with a planned cancer centre for Calgary that has already been put on hold.

The premier said Alberta is facing an “unprecedented fiscal hole” of $6.25 billion in the upcoming budget year, with a $5-billion shortfall expected the year after — due to falling oil prices.

It adds up to a government financial position worse than during the worldwide recession of 2008-09 or the doldrums of the early-1990s that led to major cuts under Ralph Klein.

“You have to go back a generation — maybe several — to find a time when Alberta has faced some of the challenges that we face now,” said Prentice, who has presided over a whirlwind of activity since becoming premier, including this week’s floor crossing of a majority of Wildrose MLAs into his Progressive Conservative government.

[oilyfan]

And some perspective...

http://calgaryherald.com/news/politi...bitumen-bubble

Two years ago, on Dec. 19, Alison Redford told me a “bitumen bubble” would cost the Alberta treasury $6 billion.

And now, again on Dec. 19, Premier Jim Prentice says low oil prices will bring a $6.2-billion revenue shortfall in 2015-16.

He goes on to say there could be a $5-billion loss the following year, and $5-billion more the year after that.

Yes, he’s talking about $16.2 billion in deficits out to 2018, unless the government both cuts spending and increases revenue.

This is truly dire, the premier adds in a year-end interview, unlike any oil crisis since the 1970s.

“Alberta simply can’t run a $6-billion deficit,” he says. There will be tough austerity as well as consideration of revenue increases — meaning higher taxes.

The trouble is, such scare stories have proved false in the past. Even the numbers are similar.

That may explain why Prentice is staking his credibility on the reality of his claims. He has to win over skeptics who remember how the bitumen bubble proved to be just what you’d expect — hot air.

[rd_aaron]

Will the lower revenues be a catalyst for talking about a provincial sales tax again? Or will the PCs ever bring this to the table?

[ExiledFlamesFan]

At this point a sales tax has to be on the table. Prentice has a lot of work ahead of him.

[redforever]

I think health care premiums will be coming back.

[shermanator]

We need to get away from revenue that is so heavily tied to natural resources. IMO, a sales tax is the best way to do this, but doing so would be political suicide, so it will never come to fruition.

[chemgear]

Time to work off/cut that fat!

[corporatejay]

Originally Posted by shermanator

We need to get away from revenue that is so heavily tied to natural resources. IMO, a sales tax is the best way to do this, but doing so would be political suicide, so it will never come to fruition.

Political suicide to a party that has 90% of the seats? Probably not, and I doubt that either the libs or the NDP would be opposed to a sales tax in any event. If anything, this is the time to ram it through....c'mon Prentice, get some balls and get it done already.

[Dan02]

Maybe the dismantling of the Wild Rose party was a precursor to adopting a sales tax. They were the only party who would probably have substantially gained from it and now they're essentially dead.

[RougeUnderoos]

Originally Posted by shermanator

We need to get away from revenue that is so heavily tied to natural resources. IMO, a sales tax is the best way to do this, but doing so would be political suicide, so it will never come to fruition.

You can't kill yourself if you are immortal.

The Conservatives are going to run the province forever. Here we have a Premier who says a dip in oil prices has led to "the Alberta government’s worst fiscal situation in generations", and they will still win the next election handily.

I mean if you can pull that off, you can pretty much do whatever you want. Maybe the sales tax will start on baby food and drinking water, and they'll ease us in from there.

But yeah, I agree with you. Not sure if that came across. Maybe a corporate tax hike would be a better start than a sales tax though.

[ranchlandsselling]

Health premiums.... wow, forgot about those.

[4X4]

It would annoy me if health premiums came back instead of a sales tax.

[oilyfan]

Sales tax is Prentice's best option, I am not sure why he is so resistant to it.

[Bunk]

Some changes to our income tax structure and a (relatively) small sales tax would probably solve the basic revenue problem we have and we'd still be the lowest tax jurisdiction in Canada.

When prices start to rise again, surpluses from royalties should be used for only a few purposes - savings and endowments, Advancing some capital projects where appropriate and toward economic diversification within the energy industry and the provincial economy generally. Time to start future-proofing ourselves in earnest.

The stupid thing they're also doing is also deferring capital projects like the cancer centre. This is the backward fiscal policy we've been exercising for generations. The time to build capital IS during a downturn, especially with lower interest rates. It's cheaper to borrow and build when there's lower labour competition. Instead, we build in boom times with high inflation.

We're so dense and short-sighted. I'm almost compelled to run to help fix this mess we have made.

[nik-]

Originally Posted by 4X4

It would annoy me if health premiums came back instead of a sales tax.

Health Care premiums would absolutely come back before a sales tax.

[Johnny199r]

I don't care if Prentice has to make big budget cuts, I don't want any extra taxes. True, I'm not in the lower class who relies on gov't programs all that much. Oil will rebound next year. I feel if taxes are raised, the money will be blown and I won't get an increase in my quality of life anyway.

[RougeUnderoos]

Originally Posted by Johnny199r

I don't care if Prentice has to make big budget cuts, I don't want any extra taxes. True, I'm not in the lower class who relies on gov't programs all that much. Oil will rebound next year. I feel if taxes are raised, the money will be blown and I won't get an increase in my quality of life anyway.

I hear you. The Conservatives will likely blow any added tax revenue anyway. We've been pulling billions literally out of the ground for decades and we still end up in a hole (no pun intended).

On the other hand, I'm sure you rely on the same infrastructure and healthcare system that the "lower class" uses, so you might end up caring about big budget cuts.

[Red]

Originally Posted by Bunk

Some changes to our income tax structure and a (relatively) small sales tax would probably solve the basic revenue problem we have and we'd still be the lowest tax jurisdiction in Canada.

When prices start to rise again, surpluses from royalties should be used for only a few purposes - savings and endowments, Advancing some capital projects where appropriate and toward economic diversification within the energy industry and the provincial economy generally. Time to start future-proofing ourselves in earnest.

The stupid thing they're also doing is also deferring capital projects like the cancer centre. This is the backward fiscal policy we've been exercising for generations. The time to build capital IS during a downturn, especially with lower interest rates. It's cheaper to borrow and build when there's lower labour competition. Instead, we build in boom times with high inflation.

We're so dense and short-sighted. I'm almost compelled to run to help fix this mess we have made.

I believe Alberta already has higher income tax than other provinces for most of the population. It's only the highest bracket that pays less.

This province needs a cleansing of these criminals that run the PC party and for once get some politicians that care about more than their own future. Not gonna happen though, we will just continue to hear about the "BS" alberta advantage etc. Most people will fall for it.

[Johnny199r]

Originally Posted by RougeUnderoos

I hear you. The Conservatives will likely blow any added tax revenue anyway. We've been pulling billions literally out of the ground for decades and we still end up in a hole (no pun intended).

On the other hand, I'm sure you rely on the same infrastructure and healthcare system that the "lower class" uses, so you might end up caring about big budget cuts.

I don't drive to work, don't care about the roads, absolutely never use the healthcare system, or have any kids in school. Will I need healthcare someday? Probably, but not likely ever like those people who are always in the emergency room with a cough, wasting health resources. As for lower class, I meant relying heavily on social programs.

[RougeUnderoos]

Alright, well you're good then.