With the recent announcement of high energy royalties and another 1.4 billion dollars in the budget, I was thinking about what we could do with the next surplus. The main idea that kept floating around in my head deals with the national and provincial debt. Alberta is currently the only province to be debt free. Currently Canadians pay billions of dollars on interest of the debts, something which disturbs me greatly. So the idea I thought of was to use the surplus to help pay off the national or provincial debts. This would not be a gift mind you; it would be a low to no interest loan (NO HANDOUTS). But I think the investment would pay off itself. Firstly Canadians would save billions each year on interest payments, effects we might see immediately. Secondly this can be seen as an investment in the rest of Canada, because the oil will run out and when it does we might need some help from the rest of Canada. But if the rest of Canada is not fit to help us, then we could potentially be all alone. Now is the time to remove the debt burden and free this country from a debt burden. Now I am no Economist, but I do know a thing or two about paying off a mortgage, credit card bill or car loan; the sooner the better (or in our case a close relative with gambling debt and a history of going on spending sprees). Any thoughts, input, criticism, compliments or rants would be great. But to some well informed economists: Would this plan/idea be viable? Thanks!
Something We (Alberta) Can Do With Our Next Surplus
- Thread starter Paulk
- Start date
I used to live in Alberta
I remember in the winter freezing the stones and in the spring the bugs eat you alive.
Has it changed much since then?
I think the idea that we'll 'loan' some money to the other provinces to pay off their debts, rather than just doing the right thing to create a strong country as a whole and paying them off, no strings, is a lot of why Alberta gets looked down on like it does.
No offence Karrie... but if you want a division of powers and responsibilities and obligations that we didnt' owe (nor give) Alberta more than a stated amount..
Why is it obligated to go above and beyond that same deal. If it wants to buy the debts of other provinces, perhaps offer to consolidate the debts, good for it. I hope it turns out to be a good investment.
Why is it obligated to go above and beyond that same deal. If it wants to buy the debts of other provinces, perhaps offer to consolidate the debts, good for it. I hope it turns out to be a good investment.
Alberta should (like any gov't with a surplus) be giving the money back to its rightful owners. A "surplus" is simply over-taxation.
It would be one hell of an investment either way. As it is Alberta helps pay for those debts through equalization and federal taxation. Wiping them out would still mean more money in our pocket, whereas consolidating them might merely mean that we get to take the money from those provinces before we hand it right back to the federal government.
And it's well within Alberta's rights to offer to consolidate them IF it ever wanted to. it would be a boon for the province. But, what I said would still stand, it would reinforce the negative view many provinces have of Alberta.
Canada's federal national debt stands at around $481.5-billion. Alberta should take it's 1.4 billion and put it in the bank for the day when their oil is gone. At the rate the Alberta government is selling it off the oil will be gone soon and Alberta can go back to being a "have not" province like they were before the oil.
If all they have worth money is oil, then what does it matter they rate they pull it from.
If they get it all quicker they can get the same income over a shorter period with less matching expenses then move on.
Or you know, maybe with all this money they will be ready for the next phase (at least as ready as Ontario is for losing its manufacturing)
If they get it all quicker they can get the same income over a shorter period with less matching expenses then move on.
Or you know, maybe with all this money they will be ready for the next phase (at least as ready as Ontario is for losing its manufacturing)
That is not what I said. I'm sure Alberta has enough oil to last for the next eighty or ninety years, but not if they pi$$ it out as fast as they can just to make the oil companies richer, faster. Alberta has always had a good cattle and farming industry. The oil should have been used as a subsidy to the more permanent agricultural industry that will always be there.
That's a mighty noble sentiment Paul, but I can't imagine Alberta went to the trouble of raising taxes on oil revenues to give it to someone else. Even low interest loans "costs" Alberta in that they could make more with their savings elsewhere.
However, given the proclivity of politicians to piss it all away, maybe that's not a bad idea.
However, given the proclivity of politicians to piss it all away, maybe that's not a bad idea.
That makes no logical sense.
The oil has the same value. Not only can they gain interest on it if they sell it and squeeze it out asap, they will have less matching expenses.
Its not any better to make the Oil companies richer, slower. Especially since in 25 years no one may want oil, then we have a toxic substance instead of a cash cow laying around.
Its like asking "Would you like me to pay you $1000 a year over the next 90 years, or $90,000 now?"
Hell, even if they offered 60,000 or even less you'd be silly not to take it.
Take the money as quickly as possible and invest it. You don't gain wealth on the oil by letting sit in the ground. You're plan would litterally involve pissing money away, rather than earning with the wealth. Take the wealth now, let it earn through investment and use that to subsidize any industries you think are needed.
we need train lines between Fort Mac and Edmonton. And a passenger line from Ed to Calgary.
That's the first place a surplus ought to go.
@Karrie
Building a high speed train between Calgary and Edmonton is no economically feasible yet. Traffic between the two cities would need to at least double before it would be a good idea. Also, with the current state of public transportation, how would the people able to get around the two cities, with rent a car or taxis which would only increase the price further. So I think the money if spent in Alberta would be much better spent improving local transportation. The main items which should be improved are the C-train and all the major roads in Calgary (which have very thick rush hours) and LRT and roads in Edmonton as well. Road systems are the veins and arteries of a city.
Building a high speed train between Calgary and Edmonton is no economically feasible yet. Traffic between the two cities would need to at least double before it would be a good idea. Also, with the current state of public transportation, how would the people able to get around the two cities, with rent a car or taxis which would only increase the price further. So I think the money if spent in Alberta would be much better spent improving local transportation. The main items which should be improved are the C-train and all the major roads in Calgary (which have very thick rush hours) and LRT and roads in Edmonton as well. Road systems are the veins and arteries of a city.
Alberta needs to take that money and use it to divest our economy away from a primarily oil and agriculture economy and actually plan for the future when either oil is replaced by alternatives or greatly frowned upon due to the environmental impact. Our latest boom had as much or more to do with the massive influx of people and construction and spending that followed this as it does the Oil industry. I think we lose sight of this fact. A migration fueled boom cannot last forever, that's when we generally suffer the hangover referred to as a Bust!
