UCP LIES
Collapsed oil prices and an increase in spending amid the COVID-19 pandemic have pushed Alberta into a historic projected deficit of $24.2 billion.

The UCP government’s fiscal update, presented Thursday in the legislative assembly by Finance Minister Travis Toews, shows a projected deficit for 2020-21 that is $16.8 billion more than was previously forecast. The February budget had predicted a $6.8 billion deficit, however the government revised that to $7.3 billion in March.

Toews said the pandemic and energy price war “blindsided our economy, just as it was beginning to show signs of improvement and approaching pre-recession levels of economic activity,” pointing to markers such as increased drilling rig activity and building permits.

University of Alberta economist Andrew Leach said Toews’ speech gave a false impression of what the situation looked like before the pandemic hit.

For instance, GDP growth was forecast at 2.7 per cent in October’s budget and revised to 2.5 per cent in February.

“Even their own budget documents had downgraded their 2020 outlook, employment was decreasing, bank projections for GDP growth for Alberta were decreasing, we had negative growth in 2019,” he said Thursday.

“All of these things, … if you watch the finance minister’s speech, you’d have no sense that that was true.”

NDP Opposition finance critic Shannon Phillips said the government failed to create jobs before the pandemic and was neglecting to make the investments in health care, education and child care that the economy needs to recover.

“We do not work if child care doesn’t work. We do not work if the school plan does not work …The choice here instead has been to give away large sums of money to already wealthy corporations in the hopes that they would create jobs, which they were not doing before the pandemic,” said Phillips.

Earlier this year, the government accelerated its corporate tax cut to eight per cent from 10 per cent, which took effect July 1. Thursday’s fiscal update said that move will reduce government revenue by between $200 million and $300 million.

POSTMEDIA  



Many Albertans remember the iconic image of former premier Ralph Klein holding up the “Paid In Full” sign to symbolize a debt-free Alberta government.

“I’m very, very proud to announce that Alberta has slain its debt,” the late premier told a cheering crowd on July 12, 2004.

Albertans, in fact, lead the nation in consumer debt. Plus, many people in our province are living paycheque to paycheque. Nearly half of Albertans say they are $200 away from not being able to pay their bills.  

Another credit rating agency, TransUnion, reported last November that Alberta used to fall below the national average delinquency rate. That changed in the second half of 2015

See the provincial delinquency rates here. 

Average debt in Calgary is $28,421 excluding mortgages, while Edmonton's average debt is $26,479 compared to average consumer debt nationwide of $21,458. 

https://www.cbc.ca/news/canada/calgary/alberta-calgary-consumer-debt-equifax-1.3484940

https://www.cbc.ca/news/canada/calgary/road-ahead-brooks-alberta-debt-deficit-politics-1.4574465


'Ralph Bucks' 14 years later: Could the Prosperity Bonus have saved Alberta’s bottom line?

Matthew Black  CTVNewsEdmonton.ca Digital Journalist
  Tuesday, January 14, 2020



The Prosperity Bonus checks were mailed to all Albertans who were residents of the province as of September 1 and filed a 2004 tax return.

EDMONTON -- It’s hard to imagine now, but this time 14 years ago Alberta literally had more money than it knew what to do with.

A series of seemingly unending oil-fueled budget surpluses eventually peaked at $8.7 billion in June of 2006.

With so much cash on hand, Premier Ralph Klein announced the Alberta Prosperity Bonus in September of 2005: a one-time $400 rebate for every Albertans carved out of $1.4 billion of the provincial surplus.


“He came up with a typical populist approach,” said MacEwan University political scientist Chaldeans Mensah.

“Ralph was simply trying to placate his base, ordinary Albertans, to reward them for the difficulties he’d put them through to balance the books.” 

VIDEO: 'Ralph Bucks' come to Alberta

While the “Ralph Bucks” initially proved popular with many, the policy wasn’t enough to sustain Klein’s political future, or shelter the province’s bottom line from the boom-and-bust energy industry and the financial slump that was to come.

“It was strongly supported by ordinary Albertans but the political establishment had some issues with the approach,” said Mensah.

HOW TO SPEND?

Cheques started arriving in mailboxes during January of 2006, sparking sudden spending splurges.

“Dear Albertan: Enclosed is your Alberta 2005 Resource Rebate. This $400 per-person rebate is being provided by the Government of Alberta as a non-taxable, one-time bonus to all Albertans in recognition of their role in building this province," the letter accompanying the check read.

"Congratulations, and thank you for helping build this province.”



With inflation, $400 in 2006 equates to just under $500 in present-day value.

“To be perfectly honest, a lot of people will be going out to buy an iPod,” university student Dan Arnold said in 2006.

“A big shopping spree,” said Grade 8 student Shelby Airth when asked how she would spend her bonus.

Her mother was less enthused, saying “every kid I know is pumped about the $400 that they're getting. That money should go towards offsetting high energy bills, but of course these guys don't see that.”


Savvy businesses picked up on the boom as well, including the Fairmont group of hotels which offered $400 packages encouraging Albertans to "Stay with the Fairmont and let Ralph pick up the tab!"

Others called for a more charitable use for the bonus, with websites like ProsperityInPerspective encouraging donations to local causes.

“I think Albertans are intelligent enough to spend their own money and that’s what this is,” Deputy Premier Shirley McClellan told CTV News in 2005.

CASH BOON BACKLASH

But the cash giveaway wasn’t a smash hit.

The Opposition and others called for a more planned approach to spending the surplus including on ideas like a provincial endowment fund, heightened education funding and a high-speed rail line linking Calgary and Edmonton.

"What's the point of even having a budget? What has happened to the discipline that this government was known for?" asked then-Alberta Liberal Leader Kevin Taft.

Even the right-leaning Calgary Herald took issue with an op-ed headline reading,

“Nice gesture, wrong message.”

“Our issues were very different than they are today,” remembers Scott Hennig with the Canadian Taxpayers Federation.

He wrote an Edmonton Journal editorial opposing the bonuses as a bait-and-switch shortly after they were announced in September of 2005.

“If your government unfairly imposes a regressive $528 ‘premium’ and then refunds you $400 of that money as a ‘prosperity rebate,’ do you thank it?”

In 2005, Hennig called for an end to the province’s health care premiums, saying it would have amounted to an annual $884-million tax break.

“It would have meant more to a lot of people,” he said looking back years later.

“We thought it was a really ham-fisted way to give a tax cut.”



RALPH BUCKS LEGACY

Hennig says had the government of the day handled its surpluses differently, the province would be in very different economic shape today.

“Even with oil prices down we’d be nowhere near deficit if they’d taken corrective action,” he said.

“It was all very avoidable had they had more modest spending and put it into long-term savings.”

Politically, any popularity boost Klein got from the bonuses was short-lived, within his party at least.

Two months after the cheques were mailed out he announced his intention to resign after his fourth term on Oct. 21, 2007, some 19 months later.

“He was beginning to lose his edge,” said Mensah. “The Ralph edge, the common touch.”

But by the end of March, the Progressive Conservatives had had enough with delegates giving Klein an underwhelming 55 per cent show of support at a party leadership review.

“It was a combination of bumbling leadership … [Klein] ran into problems with his health care reforms and he had some clashes in the legislature,” said Mensah.

“He was done in by the party establishment.”

Klein eventually resigned near the end of September of 2005.

Oil prices crashed in 2008 and the province has posted deficits in every year since, save for one.

“I don’t think any other government is going to follow that path,” said Mensah. “That path was a unique period in Alberta’s history where the government was simply flush with all the money coming in.”

“In hindsight, we see that was not an appropriate approach given what we are now facing as a province.”

With files from the Canadian Press

.

Thanks largely to rapid spending increases that actually began in the later stages of the Klein era, Alberta’s net assets started falling in 2008-09.

By 2016-17 the province had burned through all its net assets and started racking up debt.

Alberta has been adding an average of nearly $10 billion in debt annually since 2015-16, and provincial net debt is projected to hit $35.6 billion this year (2019-20).

The Kenney government’s recently-released 2020 budget calls for gradual deficit-elimination and a substantial slowdown in the pace of debt accumulation.

But energy prices have fallen so far that the budget’s revenue projections are no longer worth the paper they’re printed on.

And stock markets have crashed.

And the coronavirus, trade wars and other factors threaten to trigger a global recession.

So what happens if Alberta’s debt accumulation continues at something like its current pace?

Alberta’s net debt has climbed to almost $8,200 per person, which puts us in spitting distance of British Columbia ($8,782) and Saskatchewan ($10,210).

If Alberta continues to rack up debt in the next five years like it has over the past five — now a plausible scenario — the government’s net debt will hit $85.1 billion by 2024 or $18,500 per Albertan.

Under this scenario, Alberta will carry more debt per person than any Maritime province, where fiscal problems are well documented.

And while it once seemed unthinkable, formerly “debt free” Alberta is in danger of catching Quebec, once the poster-child for fiscal mismanagement, in per-person debt, hitting approximately $20,500 by the middle of the decade.

The consequences of this type of debt accumulation would be painful.

Government debt interest, negligible as recently as 2009, has climbed to $2 billion annually.

The 2020 budget forecasts an increase to $3 billion annually by 2022-23 — but again, that now looks very optimistic.

It’s been two decades since Ralph Klein held up his “debt-free” sign.

Since then, irresponsible choices have derailed Alberta’s finances.

BY THE PC PARTY NOW REBRANDED UCP

https://calgarysun.com/opinion/columnists/guest-opinion-alberta-careening-towards-fiscal-disaster

1999 ALBERTA BUDGET

Revenue Variability – Alberta has been described as having one of the most volatile economies in North America. We are vulnerable to swings in commodity prices and changes in the North American and world economies. While the economy has become more diversified over the last decade, unexpected changes, especially in energy prices, continue to have a significant effect on government revenues. Alberta’s revenue has varied, and will continue to vary, considerably  

Overestimating revenue is a recipe for disaster in Alberta. It resulted in $21 billion of debt being accumulated from 1985-86 to 1993-94. A debt that Albertans are still repaying. It is critical for the government and Albertans to maintain a longer-term perspective on what is affordable. What appears to be affordable one year may not be the next. The events of the last year clearly demonstrate why Alberta needs to be prudent in its budgeting. As a result of weaker world economic growth and low oil prices, provincial government revenue declined from $17.8 billion in 1997-98 to $16.6 billion in 1998-99 – a decline of $1.2 billion or 7%. 

If 1998-99 spending had been based on 1997-98 revenue, we would have had a $1.2 billion deficit. Annual Percentage Change in Revenue 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 -10 -5 0 5 10 15 (per cent) "A legislatively mandated revenue cushion provides additional comfort to withstand price volatility in the energy sector and possible revenue downturns." - Moody's Investors Service September 1998 from year to year. During the 1990s, revenue grew by an average of 7% in six of the nine years. However, in the other three years, it declined by an average of 4.5%. Protection Against Uncertain Revenue – Revenue cushions were required in the Deficit Elimination Act and the Balanced Budget and Debt Retirement Act to help protect against revenue variability. They ensured that spending was not based on overly optimistic revenue forecasts and provided insurance against in-year revenue declines. Since first introduced in Alberta, similar concepts have been adopted by a number of other governments in Canada. However, the complicated calculation formula and method of presentation of the revenue cushion made it difficult for the public to understand what the ‘real’ forecast of government revenue was and what debt payment was really expected at year end. Also, due to the way the cushion was determined, its size varied considerably over the last few years. It ranged from about 4% of revenue in 1996-97 and 1997-98 to only 2.7% in 1995-96 and 1998-99

1

OPINION

Rio's latest mistake: Putting a price on the priceless

Elizabeth Knight Business columnist
August 28, 2020

The biggest problem with this week’s response from Rio Tinto to its management-made destruction of an archaeological treasure is that it put a $7 million price on destroying something that was priceless.

Three senior executives, including the chief executive Jean-Sebastien Jacques, had a portion of their bonuses docked and were absolved of any blame because, as Rio says, the mistakes had been made collectively over a number of years under different management regimes.

Rather than quelling concerns and placating stakeholders, including traditional owners, shareholders and the broader international archaeological community, the findings of Rio’s internal investigations into the destruction at Juukan Gorge would be incendiary.

While Rio’s board and management are sticking with the line that there is nothing more to see here, even they must understand that this issue is a slow burner, and is far from over yet.


Anger over Rio's destruction of the Juukan Gorge and its subsequent handling of the matter keeps building.CREDIT:MICHELE MOSSOP

That $7 million price tag won’t even hit the sides when it comes to accountability.

When it comes to corporate governance and accountability it was Graeme Samuel, the co-author of the report into the Commonwealth Bank’s Prudential Inquiry, who distilled a board’s decision making into answering two questions: Could we? And should we?
The Rio management knew it could legally blow up the Juukan caves. Yet the second question some anonymous Rio person or group asked instead of 'should we?' unfortunately was ' when can we’?

It is now up to the shareholders to impose their own governance standards on Rio’s board and management.

AustralianSuper boss Ian Silk has this week set the standard, saying that $7 million of punishment is not enough to compensate for the Juukan destruction. In doing so publicly he was signalling to other major shareholders that he would like a bit of company on the ethical high stool.

Others, like Hesta, are becoming a bit more courageous. "[Rio's report] doesn't address strongly who is ultimately responsible for ensuring adherence to its standards and for ongoing oversight, and that is something we continue to engage on’, its chief executive Debby Blakely said.

"We do remain concerned about the gap in their public commitments and their actions, and we want to continue to engage on that."

Does the company feel that £4 million is the right price for the destruction of cultural heritage?Louise Davidson, Australian Council of Superannuation Investors

Meanwhile, the Australian Council of Superannuation Investors’ Louise Davidson’s eyebrows were also raised at the findings from Rio’s internal investigation.

"Remuneration appears to be the only sanction applied to executives. This raises the question – does the company feel that £4 million ($7 million) is the right price for the destruction of cultural heritage?

"The report from the Rio Tinto board review does not deliver any meaningful accountability for the destruction of some of the most significant cultural sites in Australia. The company should explain why greater accountability was not applied in light of this disaster," she said.

AustralianSuper seeks tougher penalties for Rio Tinto cave blast

A string of other investors including Aberdeen and Legal & General have also voiced their concerns, albeit not as strongly.

Over the past couple of days, having read the Rio report the UK’s Local Authority Pension Fund Forum described the company’s actions as an appropriate first step, but said it was looking to see what further action is taken when the findings from the current Senate inquiry are released.

Meanwhile, the really big owners of Rio’s British and Australian shares are the international investment giants BlackRock, Vanguard and State Street. These are passive investors that tend to talk big on their environmental, social and governance credentials but have a spotty history when it comes to pushing these issues or voting against boards.

One thing Rio does have in its favour is the Chinese-owned Chinalco as a 14.6 per cent shareholder. Last year it voted, unsuccessfully, against the board’s share buyback proposal, but this was because it was prohibited from taking its stake over 15 per cent. It's considered less concerned though about Rio's social licence to mine culturally sensitive areas.

If there is sufficient groundswell from investors in Rio to vote against directors at next year’s annual meeting it could be enough to embarrass one or two into not seeking re-election.

But history has shown boards tend to throw their chief executives under the bus before it comes to that.

Nation 'woefully unprepared' for climate change, business groups warn

By Nick O'Malley
August 28, 2020 — 

Australia is "woefully unprepared" for the scale of the climate change threats it faces, and suffers from a public debate focused too much on the cost of action rather than the costs of failing to act, says a coalition of environment and business groups.

"There is no systemic government response (federal, state and local) to build resilience to climate risks," says a paper published by the Australian Climate Roundtable, which includes climate groups such as the Australian Conservation Foundation and business bodies including the Business Council of Australia, Australian Industry Group and the Australian Aluminium Council.


Black Summer: Fires jump the Monaro Highway outside Bredbo, near Cooma.CREDIT:DEAN SEWELL

"Action is piecemeal, unco-ordinated, does not engage business, private sector investment, unions, workers in affected industries, community sector and communities, and does not match the scale of the threat climate change represents to the Australian economy, environment and society," the group said.

"Even with ambitious global action in line with the objectives of the Paris Agreement, Australia will experience escalating costs from the climate change associated with historical emissions," said the paper, written after months of consultation between the member groups


OPINION
GLOBAL WARMING
Draining the nation's energy: how Canberra lags industry on green power

"These costs will be significant and will require a concerted national response to manage these now unavoidable climate related damages."

The Roundtable is calling for climate change to be made a standing item for National Cabinet and for Australia to "play our fair part in international efforts" to keep global warming in check by pushing for net zero emissions.

"To this end, and in addition to the resilience measures outlined above, the Australian Climate Roundtable encourages the Commonwealth Government to guide its policies by adopting a long-term objective of net-zero emissions by 2050," says the paper.

It says the delay of the planned Glasgow international climate talks give the government time for more "deep consultation" with the Australian community.

Jennifer Westacott, Business Council of Australia chief executive, said the Australia not only risked that embracing a net zero by 2050 policy could, "drive billions of dollars of new investment, create new jobs, create new industries, boost our resilience and build the stronger regions we’ll need to supercharge our recovery from the COVID-19 pandemic."

That a group representing business, union and conservation groups could arrive at such strong language in its call for action suggested that the Morrison government was becoming more isolated in its climate change stance, said Australian Conservation Foundation chief executive Kelly O'Shanassy.

"The conversations we are having [at the Roundtable] are not the same as the ones we were having six years ago. Everyone except the government is on the same page now."

NSW environment minister Matt Kean, who is among the government leaders sent the statement, said that for too long climate change politics had been simplified to either stoking fear about the cost of reducing emissions or inciting guilt for living in a modern economy which emits carbon.

"It is time that debate moved on. The science is in, climate change is already taking a toll on our country," he said. "The reality is that the world is moving to low carbon economies with ratings agencies, global investors and our trading partners looking to reduce their emissions.

"This represents a huge opportunity for Australia. No country is better positioned to export clean energy and help support global emissions reductions," Mr Kean said.

"Every State and Territory in the country has committed to the goal of achieving net zero emissions by 2050."

A spokesman for federal energy and emissions reduction minister Angus Taylor said Australian emissions had been coming down since the Coalition formed government in 2013 and that it was committed to meeting international commitments.

"The Technology Investment Roadmap and our response to the King Review will position Australia to beat that target, and support jobs and productivity growth as we recover from COVID-19," he said.

"Now more than ever, a technology not taxes approach to reducing emissions will be critical as we grow our economy in the years ahead."

Former Aussie PM Tony Abbott's new British trade role called into question as gig exposes European jaunt

Greens called for Abbott to be stripped of his parliamentary pension, worth $300,000 a year 

By Latika Bourke Sydney Daily Herald
August 27, 2020 — 
London: British Labour is stepping up its opposition to the appointment of former Australian prime minister Tony Abbott as an adviser to the British Board of Trade and is demanding UK Prime Minister Boris Johnson explain the details of the plum job.
In Australia, Abbott's critics have called on him to be stripped of his $300,000-a-year parliamentary pension while he is working for a foreign government that is negotiating a trade deal with Australia.

Former Australian prime minister Tony Abbott has been hired by British Prime Minister Boris Johnson for a role in the British Board of Trade.
Abbott, born in Britain, was appointed by British Trade Secretary Liz Truss and the pair had breakfast together in London on Tuesday to confirm his new role.
A spokesman for Abbott said he applied to travel overseas under the rules and was granted approval by the commissioner of the Australian Border Force
Abbott's successor in the federal seat of Warringah, independent MP Zali Steggall, questioned the double standards of Abbott being allowed to travel when families trying to reunite had been barred, as well as his work for a foreign government.
Abbott's travel costs, including the mandatory two weeks of hotel quarantine upon return, would be met privately, his spokesman said. Abbott had not sought an exemption from any of these requirements nor would he, the spokesman said.



Abbott does not intend to make any further comment, he said.
Originally a Remain supporter, Abbott won over arch-Brexiteers after the referendum by advocating that Britain follow the most economically disruptive form of leaving the EU – a so-called no-deal Brexit.
But mystery surrounds the exact nature of Abbott's appointment, which was met at an official level with silence. No statement was issued on Wednesday, London time, by either the British Department for International Trade nor No.10, despite widespread reporting of the appointment.
Abbott's exact title with the Board of Trade is still to be confirmed. Questions about whether the job is paid or not have also gone unanswered by both the British government and Abbott himself, and neither Johnson nor Truss have said anything of the decision to recruit Abbott to their ranks.


Zali Steggall, federal MP for Tony Abbott's old seat of Warringah, has asked why Abbott was allowed a travel exemption to leave the country.
Labour's trade spokeswoman Emily Thornberry told The Sydney Morning Herald and The Age that she would be demanding answers, amid concerns over the secretive nature of the appointment.
"Boris Johnson needs to explain why he believed Tony Abbott was the right person to appoint to this role, but he also needs to explain the appointment itself," Thornberry said.
"What exactly is the job? Is it paid? Will Abbott be accountable to the British Parliament? Did the appointment process follow Cabinet Office rules? When was the job offer made, and when was it accepted?"
Thornberry also queried what personal meetings were held in the lead-up to the job offer.
"What meetings did Boris Johnson and Liz Truss have with Tony Abbott over the last year, and were they conducted in line with the Ministerial Code?
"The rules around public appointments and ministerial meetings exist precisely to stop the government cutting corners to suit their cronies, or hiding their dealings from public scrutiny.
"That’s why the answers to these questions matter, and we’ll be demanding them loudly in the coming days."
Tony Abbott granted travel exemption to take on UK Brexit job
Arch-Brexiteer and Leader of the Commons Jacob Rees-Mogg acknowledged the move, saying it was "an excellent appointment".
The report was also welcomed by Brexit Party leader Nigel Farage but strongly criticised by a range of MPs in both Britain and Australia, who questioned Abbott's trade credentials, his opposition to gay marriage and his climate-change denialism.
Steggall said she was surprised to see Abbott's new role, given he had supported both Leave and Remain.
"Like many Australians, I’m surprised at his appointment in light of his previous changing positions on Brexit and his very divisive and combative style.
"I would also question the appropriateness of a former Australian prime minister in a senior trade role now negotiating for the benefit of another nation.
"What would the reaction be if a former prime minister like Kevin Rudd was appointed in a trade advocacy role for China?" she said.
Greens leader Adam Bandt called for Abbott to be stripped of his parliamentary pension, worth $300,000 a year.
"Tony Abbott’s job is now to promote another country, even if it means disadvantaging Australian farmers, producers and exporters," he said.
"The Australian public should not be paying him to advance another country’s interests.
"He should be stripped of his hefty prime ministerial pension," Bandt said.
Former South Australian premier Mike Rann, a former high commissioner to Britain and Italy, questioned whether Abbott, who infamously gave a knighthood to Prince Philip, was after his own title.
"Maybe this could be Tony’s pathway to a knighthood," Rann said, speaking from his home in Puglia, Italy.
"If the story is true, it is an indictment of the UK’s capacity to take back control from unelected foreigners".
Travel ban exemption
This masthead revealed that Abbott had breakfast with Truss in London this week to confirm the role after being granted an exemption by the Australian government from its ban on citizens from leaving the country.
Abbott would not respond to questions about why his travel, which included attending a golf tournament in Wales, warranted an exemption.
He is in Italy and is due in London again next week to give a speech to the centre-right think tank Policy Exchange about the international response to the coronavirus pandemic.
Steggall said Abbott's travel exposed the double standards at play, with many of his former constituents denied the chance to see their loved ones overseas.
"I wonder whether he has had to make numerous applications like many of his former constituents.
"His permitted travel unfortunately only adds to the perception that there is a double standard in who can travel in and out of Australia and will be distressing for those who have repeatedly been turned down for important travel."