Alberta Economy

[Erick Estrada]

The 90's weren't exactly boom times in Alberta. It was not easy to find work out of college/university until late in the decade.

[Frequitude]

Ultimately, I think the best "diversification" is not to diversify, but to better manage the swings. A dose of Keynsian economics if you will. Get the oil out of the ground ASAP. We have it, people want it, its our competitive advantage. Get the Heritage Trust Fund as big as possible as fast as possible. Deposit into it during the boom and draw from it during the bust.

The single worst thing the Conservatives did while in power was to get away from that and fund general operations with too much royalty revenue. (as an aside and not to get into Provincial Election thread type talk, but I'm not against a royalty increase in the way. I am an Albertan first and an employee of O&G second. As an O&G employee, I just want Notley to reduce the uncertainty around her vague promises. Similarly, as an Albertan though I am also conscious of increasing royalties at the wrong time and doing more harm than good.)

Note that I am referring to provincial finances, i.e. the government's business. There's absolutely nothing the government should be doing with respect to personal or corporate behaviour. If you want to be someone who buys a bunch of toys or be a company who leverages themselves to the tits during the boom then have at 'er.

[CliffFletcher]

Originally Posted by Frequitude

The single worst thing the Conservatives did while in power was to get away from that and fund general operations with too much royalty revenue.

Yep. And that's what allowed them to get away with having the lowest taxes in the country by far. It was grossly irresponsible, though voters have themselves to blame for thinking we could have top-notch public schools, roads, and hospitals and extremely low tax rates. We sold out the heritage fund for trips to Mexico, new SUVs, and dinner at Earls' once a week.

[Fuzz]

Originally Posted by Frequitude

Ultimately, I think the best "diversification" is not to diversify, but to better manage the swings. A dose of Keynsian economics if you will. Get the oil out of the ground ASAP.

The only problem with that is costs go up the faster you try to move. Labour and material shortages are a limiting factor.

[EldrickOnIce]

Originally Posted by CliffFletcher

Yep. And that's what allowed them to get away with having the lowest taxes in the country by far. It was grossly irresponsible, though voters have themselves to blame for thinking we could have top-notch public schools, roads, and hospitals and extremely low tax rates. We sold out the heritage fund for trips to Mexico, new SUVs, and dinner at Earls' once a week.

Jim Prentice, is that you?

[Frequitude]

Originally Posted by EldrickOnIce

Jim Prentice, is that you?

I am of the opinion that that was the smartest and most correct thing he said during his brief time in power. And not relatively speaking...it was just outright smart and correct. I was and remain very disappointed in Albertans' reaction to that comment.

Originally Posted by Fuzz

The only problem with that is costs go up the faster you try to move. Labour and material shortages are a limiting factor.

And therein lies the dilemma. But I don't see a role for government in managing that queue. You have to leave it up to the free market to sort itself out. We obviously haven't cracked that nut perfectly, but we took strides (some discussed above) such as:
-companies working together to stage projects
-modularization of oil sands assets into smaller investment chunks
-temporary foreign workers (ok, government played a roll in that one I guess so maybe there is a place for them in the solution)

[polak]

Originally Posted by Frequitude

I am of the opinion that that was the smartest and most correct thing he said during his brief time in power. And not relatively speaking...it was just outright smart and correct. I was and remain very disappointed in Albertans' reaction to that comment.

The comment is right but why wasn't he saying that when times were good?

Where was his preaching when his party was flushing away the Heritage fund?

What he actually did was go "Oh crap, we screwed up. I'll blame the people".

[CliffFletcher]

Originally Posted by polak

Where was his preaching when his party was flushing away the Heritage fund?

Prentice was a federal cabinet minister, and then vice-chairman of the CIBC until October, 2014. He wasn't even an Alberta PC backbencher.

Alberta voters are childish. It needed to be said. Anyone who thinks they can have modern schools, roads, and hospitals and the highest public spending in the country while paying the lowest taxes by far is a child. If you punish any government that proposes to raise taxes, while demanding that hundreds of new schools be built, and medical centres in the smallest rural centres kept running, you're a child. If you think the gravy train of energy royalties will last forever, you're a child.

"Look in the mirror" was about the mildest way to express the gulf between what Alberta voters expect and what they're willing to pay for.

[Tron_fdc]

Originally Posted by VladtheImpaler

Some interesting posts, except Daradon's. I am exactly the same demographic as Cliff, and recall our 21% mortgage and my parents turning over the keys to the bank. I particularly like the posts of puckedoff and Frequitude... I recall the "diversification" mantra since 1980 and nothing has actually ever happened. Nuclear is interesting, but that industry seems to be in the doldrums, and I don't know how realistic it is to go there from scratch. If I were to guess, our diversification would have to begin as some sort of a spin-off from NG - it's hard to imagine anything that's not already here coming in, given the remoteness (relative)...

Yeah but how does one diversify? It takes money and manpower. When times are good and there's lots of money, there's no manpower because of the giant vacuum that is the O&G sector. I don't think we could afford to diversify at that time. There's also a lot of public sector groups needing cash to fund infrastructure, so diversifying into something like Solar/nuclear, etc probably isn't high up on the list of expenditures.

Right now we are likely gaining on the manpower issue, but there's no cash to fund new ventures unless we borrow. Will Albertans be ok with that? I certainly am, as long as it gets paid back when times are good. I doubt the majority hold that view, especially after the last debacle that was the PC Government. Hard to trust government these days.

IMO you need to time it properly. Borrow when times are not so good, invest WISELY into the Ab economy in non O&G, and when the royalty revenues turn around pay out what you borrowed. It takes a strict government to follow that though, because when times get good everyone starts clamoring for cash, totally forgetting about debt servicing.

I still haven't formed an opinion on the NDP yet (still too early), but if they can reign in the waste and invest properly over the next few years I know I will certainly vote for them next election.

[polak]

Originally Posted by CliffFletcher

Prentice was a federal cabinet minister, and then vice-chairman of the CIBC until October, 2014. He wasn't even an Alberta PC backbencher.

Alberta voters are childish. It needed to be said. Anyone who thinks they can have modern schools, roads, and hospitals and the highest public spending in the country while paying the lowest taxes by far is a child. If you punish any government that proposes to raise taxes, while demanding that hundreds of new schools be built, and medical centres in the smallest rural centres kept running, you're a child. If you think the gravy train of energy royalties will last forever, you're a child.

"Look in the mirror" was about the mildest way to express the gulf between what Alberta voters expect and what they're willing to pay for.

lol yes don't put any blame on the policy makers themselves.

I will agree with you overall though. Just look how 90% of the people on here reacted to the Oil Royalty Review and increased Corporate Tax. They don't want to pay more personal tax, they don't want their corporations to be taxed more as that probably means less money for them in terms of jobs/salary and they still want all of their interchanges and schools.

The people are dumb and the PC's are dumb for pandering to them and only once they realized they're #####ed do they start talking about it.

Ridiculous

[WCan_Kid]

Originally Posted by polak

The people are greedy and the NDP/Liberals/PCs are dumb for pandering to them and only once they realized they're #####ed do they start talking about it.

Ridiculous

Fixed that for you - Income taxes should have been raised across the board, letting the "middle class" off the hook was pretty dumb, along with a sales tax. 90% of the population wants it all, but think that someone else should pay for it.

[polak]

Pst.

[indes]

Originally Posted by WCan_Kid

Fixed that for you - Income taxes should have been raised across the board, letting the "middle class" off the hook was pretty dumb, along with a sales tax. 90% of the population wants it all, but think that someone else should pay for it.

Agreed. To accuse the PCs of pandering when the NDP just went right to the top of the food chain to tax more is pretty hypocritical. PST or paid healthcare would go a longer way than letting your voting base off the hook for tax increases lol.

[polak]

Originally Posted by indes

Agreed. To accuse the PCs of pandering when the NDP just went right to the top of the food chain to tax more is pretty hypocritical. PST or paid healthcare would go a longer way than letting your voting base off the hook for tax increases lol.

That's because we had the lowest corporate tax rate in the country?

Easiest thing to increase.

Unless you're talking about having a problem with progressive income tax in which case we're not going to agree.

[Jacks]

Originally Posted by CliffFletcher

Alberta voters are childish. It needed to be said.

What did you expect? people to march on the legislature and demand higher taxes?

With the exception of a couple of blips the PC's had a stranglehold on government for over 40 years, we elect governments in the hopes that they will make the smart decisions and plan for the future. It's not like the PC's had to fear an election loss by making taxes a bit higher and saving money, most Albertans would have supported that and even if they didn't the opposition wanted to tax them more.

I place 90% of the blame on the PC's, they had no plan for what to do once the debt was paid off so they started throwing wads of cash at every problem they saw. Instead of spending every dollar we made we should have been building up the Heritage Fund so that when times are bad we had a nest egg rather than borrowing tens of billions of dollars like we will be in the next few years.

[gladaki]

In BC life science companies get tax break, they have incubators which support IT companies, provides startup with initial office space in one of their buildings for dirt cheap and free in some cases. If Some start up idea comes in my mind related to above areas then why I will choose Alberta over BC..No reason..

[Fozzie_DeBear]

Quick question about innovation and science in economic development.

As you are all members of Alberta's public to you which sounds like a smarter way to invest $x in the Alberta economy.

A : All of X in Research that is of interest to local industry...the technology is close to readymade.

B : 50% of X is invested in cool research which can stand a good chance of being very important (eg quantum computers) but local industry uptake is small at best (it's a riskier long term play). And the other 50% in the same way as A

[bizaro86]

Originally Posted by Fozzie_DeBear

Quick question about innovation and science in economic development.

As you are all members of Alberta's public to you which sounds like a smarter way to invest $x in the Alberta economy.

A : All of X in Research that is of interest to local industry...the technology is close to readymade.

B : 50% of X is invested in cool research which can stand a good chance of being very important (eg quantum computers) but local industry uptake is small at best (it's a riskier long term play). And the other 50% in the same way as A

If we're spending public money I want to spend it on A. If we happen to have a quantum computing or similar breakthrough here (which is pretty darn unlikely, even with gov't $$) that technology would almost certainly get commercialized out of silicon valley or somewhere else where there was an established ecosystem. So you get bragging rights but little economic development.

I'd be more in favour of things that are tangentially related to what we do here, or at least build on our strengths. I do think diversifying makes sense, but do it as a step out from the base. For example, we produce petrochemicals, so research into new types of plastics. Or, instead of making investments directly into oilfield technology, are there valuable products we could be making using some part of the bitumen barrel. Basically, can we diversify our economy from a position of strength as opposed to trying to steal an industry we have no native expertise in.

My two cents.

[Tinordi]

nm

[Faust]

An interesting read:

To Diversify Alberta’s Economy, Start With Fiscal Policy