Top Ten Reasons Alberta’s in a Deficit

[Rathji]

Originally Posted by Slava

That is OK. We know enough about what they wouldn't do....that is go into debt. We all know that even responsible debt is against fiscal conservatism and has nothing to with their ideology.

One day even the rampant right-wingers in Alberta will come to understand basic economics though. It might take until all of the oil is gone, but the day will come when they recognize that building major capital projects during the downtimes is the most feasible time. From a pure cost perspective things are cheaper. There are more qualified workers to be had, which is important as well. Finally that hospital or highway that you are building and will use for the next 50 years can also be paid off within the same time frame.

I totally agree it should be, but is it really cheaper to build a road now when compared to a year ago? Most employees have same or similar wages now, most capital invested in equipment, land, training etc over the last 2-4 years was still paid for at a higher rate. Can, and more importantly ARE the people we are paying to build these roads etc suddenly going to be charging less?

I only see things from my perspective of being involved in running a small business, what I see in the labour market etc. Maybe I am wrong, and I hope I am.

[longsuffering]

Originally Posted by Azure

No, pretty sure that isn't the point.

Price of oil is $45/bbl. You can't keep spending, and basing a budget on $70/bbl.

Pretty simple. Make some cuts, ride out the tough economy, wait for oil to get back to normal. Pretty simple.

No, that is EXACTLY the point. (I was the one making a point!)

First Lady stated her belief that a government should not borrow money for capital projects. Given her position in her Party, its not unreasonable to believe her Party would have the same position. That said, if her Party had formed the government, they wouldn't have funded a national railroad.

As another poster pointed out, it is asinine not to borrow for long term capital projects.

Should everyone buy everything for cash?

[Slava]

Originally Posted by Rathji

I totally agree it should be, but is it really cheaper to build a road now when compared to a year ago? Most employees have same or similar wages now, most capital invested in equipment, land, training etc over the last 2-4 years was still paid for at a higher rate. Can, and more importantly ARE the people we are paying to build these roads etc suddenly going to be charging less?

I only see things from my perspective of being involved in running a small business, what I see in the labour market etc. Maybe I am wrong, and I hope I am.

Well maybe over a 8-10 month period its hard to assess. But inflation during these times is way down, and really you are looking at some temporary deflation. Not in every area, but most noticeably fuel and materials. While last summer you would've paid a fuel surcharge, no questions asked you certainly have some bargaining power this time around.

My point is that by continually waiting until your economy is raging ahead and you have the cash in the bank, you are trying to take on the major projects when they are least effective in general. Plus if you know that you are going to want to put a road in a certain spot, even in 5 years why not buy the land today when its certainly cheaper than last year?

Clearly it would be best to plan and have shovel-ready projects ready to go for times like these with some cash in the bank to begin with. There was a party in Alberta hounding the PC's to put some money away over the last boom, and it wasn't the WRA!

The real reason that the government is in deficit here is basically a complete and utter lack of foresight. Nothing was put away for even an overcast day, let alone a rainy one. The price of oil was rising and there was no concern for the day when that would stop. I have no confidence that the WRA or whatever they are going to be called by next election would've done anything different here. I get the impression they would've squandered the money in different areas, like opting out of CPP or some ridiculous proposal like that.

[bcb]

Perhaps compromise?
Spend on capital projects but go through the budget with a fine toothed comb and save the BILLIONS being spent on things like "community spirit and culture".

[First Lady]

Originally Posted by longsuffering

That said, if her Party had formed the government, they wouldn't have funded a national railroad.

I gave you a flippant response the first time because it is a ridiculous question. First we are a provincial not federal party; second we have been around less than ten years.

That aside, no our party would not handle funding of a major project through bribery like what plagued the railroad and led to the resignation of Macdonald.

[bcb]

IMO, we need strong healthcare and public education systems and we should invest in research and development. If it is truly advantageous to spend on infrastructure now, then so be it.

[First Lady]

Originally Posted by Slava

Clearly it would be best to plan and have shovel-ready projects ready to go for times like these with some cash in the bank to begin with. There was a party in Alberta hounding the PC's to put some money away over the last boom, and it wasn't the WRA!

HUH? It has been embedded in our policies since our inception in 2002.

A Wildrose Alliance Government will institute a policy of depositing a set percentage of government natural resource income each year into the Heritage Savings and Trust Fund.

The real reason that the government is in deficit here is basically a complete and utter lack of foresight. Nothing was put away for even an overcast day, let alone a rainy one. The price of oil was rising and there was no concern for the day when that would stop.

Well that we can agree on.

[Ronald Pagan]

Not to mention Slava that running deficits now is also beneficial because lending rates are almost 0 especially to government.

That whole list is just garbage.

Want to know why Alberta is in a deficit? Less tax receipts due to less economic activity. (especially corporate tax receipts as only profits are taxed and I don't think there's a single oil company making a profit at this oil price)

[Bend it like Bourgeois]

Corporate taxes are a small portion of government revenues.

We're in deficit because the government learned nothing from the past and allowed spending to grow well in excess of inflation and population growth for more than a decade. All based on oil money. To support that we need $60 or $70 oil forever. Dum dums.

[longsuffering]

Originally Posted by First Lady

I gave you a flippant response the first time because it is a ridiculous question. First we are a provincial not federal party; second we have been around less than ten years.

That aside, no our party would not handle funding of a major project through bribery like what plagued the railroad and led to the resignation of Macdonald.

Well you certainly dodge like a politician. You've got that goin' for you.

You're not stupid, I know you understand that principle but you won't address it. If it was up to you, your government would not borrow money for long-term capital projects. There are so many instances, many mentioned here already, that clearly demonstrate why that rigid position is, for lack of a better word, stupid.

[vanisleflamesfan]

Originally Posted by bcb

Perhaps compromise?
Spend on capital projects but go through the budget with a fine toothed comb and save the BILLIONS being spent on things like "community spirit and culture".

Citation required.

[Rhettzky]

Originally Posted by Rathji

I totally agree it should be, but is it really cheaper to build a road now when compared to a year ago? Most employees have same or similar wages now, most capital invested in equipment, land, training etc over the last 2-4 years was still paid for at a higher rate. Can, and more importantly ARE the people we are paying to build these roads etc suddenly going to be charging less?

I only see things from my perspective of being involved in running a small business, what I see in the labour market etc. Maybe I am wrong, and I hope I am.

Capital projects go through a bidding process. If contractors want the work they are forced to enter a competitive (lower) bid. So really when work starts to thin out you start getting lower rates immediately. It doesn't really effect the workers wages as much as it effects the contractors pure profit.

[jammies]

Originally Posted by First Lady

The top ten are not a WAP press release. They are a list one of our directors did up as a tongue-in-cheek piece to send to his local paper, which happens to be small-town Alberta. The only press he is hoping for or even likely to get is a "letter to the editor".

Originally Posted by First Lady

Also, so hopefully a few small papers pick up on it. It is no secret we have difficulty getting press when we don't hold a seat in the Legislature.

Again, I think the reason your party has difficulty getting press is because I wouldn't even submit that as a letter to the editor - it looks like some guy incoherently rambling all over the map and NOT something you want to share with the public. The current economic situation is an opportunity for your party to articulate your vision of what the government is doing wrong and what you would do right, and reading something like this from your party - official press release or not - makes it hard to take your position seriously.

Media relations and public image are crucial if your party ever wants to get beyond the fringe. This isn't the Alberta of the Socreds or even the Klein PCs - it's not enough to act like regular guys and gals just fixin' to fix what ails the body politic. Having everything vetted through a media relations team is probably antithetical to how your party thinks right now, but if you don't have a big charismatic voice for people to focus upon, you'd at least better have all the little voices in some kind of chorus and the tone-deaf kept quiet.