Oct 2015 Alberta Budget Discussion

[chemgear]

Originally Posted by Johnny199r

Everyone here just ripping gov't workers to shreds. I've worked for gov't and the private sector, there are plenty of idiots in both the public and private sector, often times both overpaid.

Except the government workers essentially cannot be fired or laid off unless they're a wacko bigot bus driver or you start sleeping with your students. Heck, I personally know people who have to deal with an individual who has DOZENS of sexual harassment complaints who still can't be fired because of the union at Calgary Board of Education.

Can you imagine what the "Oil Patch Layoff" thread would look like if it had the crazy job security of unions? The prospect of doing whatever (or rather nothing) and being immune to pay cuts or layoffs in this (or any) economic environment?

[chemgear]

http://www.cbc.ca/news/business/albe...nomy-1.3291097

Oil forecast optimistic

The budget assumes oil prices will average $50 US this fiscal year, then $61 US in 2016-217, and $68 in 2017-18. While that may seem reasonable, the futures market thinks differently.

The so-called forward strip, the U.S. futures contracts on which traders and energy companies alike depend when making investment decisions, assumes the U.S. crude benchmark will be $55.43 US in December 2018, $13 US lower than the province assumes.

If the market is right and Alberta is wrong, that's a $2 billion difference to the budget in 2017-18.

[Slava]

Originally Posted by chemgear

http://www.cbc.ca/news/business/albe...nomy-1.3291097

Oil forecast optimistic

The budget assumes oil prices will average $50 US this fiscal year, then $61 US in 2016-217, and $68 in 2017-18. While that may seem reasonable, the futures market thinks differently.

The so-called forward strip, the U.S. futures contracts on which traders and energy companies alike depend when making investment decisions, assumes the U.S. crude benchmark will be $55.43 US in December 2018, $13 US lower than the province assumes.

If the market is right and Alberta is wrong, that's a $2 billion difference to the budget in 2017-18.

I mentioned that (along with a couple other concerns) to my MLA on twitter last night. To his full credit he replied every time and answered my concerns head on. He didn't try to avoid the question or just not answer. Truthfully, that is impressive alone just because I have not had my previous MLA or MP do the same. My current councillor block me on twitter, so clearly she doesn't want to chat!

Anyway, he told me that they actually revised the projections down here, so I guess in a sense this was them being conservative. The original figure was $80/bbl. I had originally responded to a tweet of his saying that borrowing for operations is bad and that I thought they should make the hard choice instead of that. I don't agree, but his comment was that it is better to pay for operations rather than flood the market with skilled workers due to more layoffs.

Just thought I would add their position, or at least one MLAs position to the thread. Like I say, I personally don't agree, but kudos to my MLA for at least replying after what was surely a long day.

[puckedoff]

Originally Posted by chemgear

http://www.cbc.ca/news/business/albe...nomy-1.3291097

Oil forecast optimistic

The budget assumes oil prices will average $50 US this fiscal year, then $61 US in 2016-217, and $68 in 2017-18. While that may seem reasonable, the futures market thinks differently.

The so-called forward strip, the U.S. futures contracts on which traders and energy companies alike depend when making investment decisions, assumes the U.S. crude benchmark will be $55.43 US in December 2018, $13 US lower than the province assumes.

If the market is right and Alberta is wrong, that's a $2 billion difference to the budget in 2017-18.

It could easily be worse than that too if oil sands production ramps up (as the AB budget expects) and the WCS discount blows out in response.

[chemgear]

Originally Posted by Slava

Anyway, he told me that they actually revised the projections down here, so I guess in a sense this was them being conservative. The original figure was $80/bbl.

Was the original figure of $80 from the previous government or the previous NDP estimate? I'm not sure I'd call it "conservative" if that is the comparison . . . or maybe I would . . . given the poor pun referencing the previous government party in power.

Seriously though, it's the first budget of a new government. I wouldn't care much about a relative comparison to a previous government estimate that's a year (or more?) out of date.

[CliffFletcher]

Originally Posted by stampsx2

Let me try again for you. Alberta is an economic leader in Canada with the lowest taxes and debt and highest migratory growth. What part of that do you consider a mess.

Personally, I consider it a mess that we enjoyed one of the greatest commodity booms in history, sucking untold billions of a public resource out of the ground, and yet we have nothing lasting to show for it. No public fund like Peter Lougheed envisioned, for when the oil runs out or declines in value to be little better than coal (and it will). No great public infrastructure to make us the envy of the world. Nothing to pass on to our children as a legacy. We used all that energy revenue to keep taxes incredibly low, and let Albertans go on a consumer spending spree the likes of which astonished outside observers.

So when my kids are 40, when the energy boom is long over and Alberta is Manitoba with mountains, and they ask me what happened to those billions, I'll have to honest and tell them it paid for a lot of trips to Mexico, a lot nights out at the Keg, and a lot of kitchen renovations. Maybe they'll laugh at the absurdity of it all. Maybe they won't.

Originally Posted by CampbellsTransgressions

Is there any good reason for why we spend so much more on health care per capita than other provinces?

The Alberta government has been operating in the same overheated labour market as every other employer in the province for the last 15 years. Everyone from the Royal Bank to Canadian Tire has had to pay employees in Alberta more than they do in Nova Scotia or Manitoba.

[Thor]

Yeah it upsets me every time I see Norway and what they have done, wish we did something like them.

[burn_this_city]

Norway is a horrible example. We aren't the state, we don't have crazy high taxes, and we don't have a state oil company. Norway isn't sending money to other jurisdictions via transfer payments, which is the biggest difference between the two.

Also the futures markets are pretty bad predictors of future commodity prices. They essentially assume conditions will be the same as it is now. The oil market is far too opaque to make any guess long term.

[Fuzz]

While Norway isn't good for a direct comparison, they do some things right, that we should have been doing. And that is putting resource revenue in a separate fund, not general revenue. If we had done that from the start, sure we would probably have a PST, but we wouldn't be in this mess AND would have a large fund to use the interest from to finance other things. We also wouldn't have governments depending on it to balance budgets.

[Addick]

Originally Posted by burn_this_city

Norway is a horrible example.

So there are no lessons from which we can learn and the only option is too forge a completely different path?

All things do not have to be equal in order to gain valuable insight from a comparison. Hell, didn't the Norwegians use Alberta as a stating point and customised things from there?

[darklord700]

Originally Posted by chemgear

If the market is right and Alberta is wrong, that's a $2 billion difference to the budget in 2017-18.

Joe Ceci in yesterday said that if the forecast is wrong, he'll revise the deficit projection. But he didn't mention anything about spending cut if our revenue in take is lower than forecast.

[corporatejay]

####, enough with Norway already. It's not like they are some bastion utopia that we all strive towards.

Totally different countries. Leave it alone already.

[Locke]

Originally Posted by Fuzz

While Norway isn't good for a direct comparison, they do some things right, that we should have been doing. And that is putting resource revenue in a separate fund, not general revenue. If we had done that from the start, sure we would probably have a PST, but we wouldn't be in this mess AND would have a large fund to use the interest from to finance other things. We also wouldn't have governments depending on it to balance budgets.

Sure, sounds nice.

Probably have a PST? Not Norway's 25% VAT?

What about income taxes? 55%? I'm surprised they have anything left to spend on the VAT.

Corporate taxes? 28%-78%

[darklord700]

Originally Posted by corporatejay

####, enough with Norway already. It's not like they are some bastion utopia that we all strive towards.

Totally different countries. Leave it alone already.

I think now is the time to move the discussion to Alaska and then to diversification.

[Slava]

Originally Posted by CliffFletcher

Personally, I consider it a mess that we enjoyed one of the greatest commodity booms in history, sucking untold billions of a public resource out of the ground, and yet we have nothing lasting to show for it. No public fund like Peter Lougheed envisioned, for when the oil runs out or declines in value to be little better than coal (and it will). No great public infrastructure to make us the envy of the world. Nothing to pass on to our children as a legacy. We used all that energy revenue to keep taxes incredibly low, and let Albertans go on a consumer spending spree the likes of which astonished outside observers.

So when my kids are 40, when the energy boom is long over and Alberta is Manitoba with mountains, and they ask me what happened to those billions, I'll have to honest and tell them it paid for a lot of trips to Mexico, a lot nights out at the Keg, and a lot of kitchen renovations. Maybe they'll laugh at the absurdity of it all. Maybe they won't.




The Alberta government has been operating in the same overheated labour market as every other employer in the province for the last 15 years. Everyone from the Royal Bank to Canadian Tire has had to pay employees in Alberta more than they do in Nova Scotia or Manitoba.

This is the most disappointing thing here in Alberta. I know I've posted similar sentiments before, but its so silly that we have had these booms and gobs of money provincially and after two of them we have absolutely nothing to show except that one generation paid lower taxes than the rest of the country.

[DoubleK]

Are there any other examples of governments borrowing to fund operating expenses?

That seems really unsustainable.

[Slava]

Originally Posted by DoubleK

Are there any other examples of governments borrowing to fund operating expenses?

That seems really unsustainable.

Well the 1993 PCs under Ralph. That was the last time in Alberta.

[peter12]

Originally Posted by corporatejay

####, enough with Norway already. It's not like they are some bastion utopia that we all strive towards.

Totally different countries. Leave it alone already.

Direct access to markets. Minimal pipelines. Biggest difference between us and them.

[CliffFletcher]

Originally Posted by Locke

Sure, sounds nice.

Probably have a PST? Not Norway's 25% VAT?

What about income taxes? 55%? I'm surprised they have anything left to spend on the VAT.

Corporate taxes? 28%-78%

Norway has those thing because the citizens want, and are willing to pay for, a comprehensive cradle to grave welfare state. Since it's unlikely Albertans would want that, there's no need have that sort of tax regime.

Just tell me this - why couldn't Alberta have put all energy royalties into a sovereign wealth fund, and run its government on a tax regime similar to Saskatchewan or B.C. (or Washington state, or Colorado, etc. etc.)?

[CaptainCrunch]

Originally Posted by Slava

I mentioned that (along with a couple other concerns) to my MLA on twitter last night. To his full credit he replied every time and answered my concerns head on. He didn't try to avoid the question or just not answer. Truthfully, that is impressive alone just because I have not had my previous MLA or MP do the same. My current councillor block me on twitter, so clearly she doesn't want to chat!

Anyway, he told me that they actually revised the projections down here, so I guess in a sense this was them being conservative. The original figure was $80/bbl. I had originally responded to a tweet of his saying that borrowing for operations is bad and that I thought they should make the hard choice instead of that. I don't agree, but his comment was that it is better to pay for operations rather than flood the market with skilled workers due to more layoffs.

Just thought I would add their position, or at least one MLAs position to the thread. Like I say, I personally don't agree, but kudos to my MLA for at least replying after what was surely a long day.

to me that's outright stupid, to me, the government shouldn't be hiring people to decrease the unemployment numbers, or to act as a jobs repository.

Would I feel bad if these people lose their jobs? Absolutely. but at this point the government needs to take a serious look at bloat and inefficiencies, the minute you start taking out loans to support your operations, is the minute that your doing it wrong.

to me its the equivalence of taking out a loan to pay for your electricity in your house.