Alberta Finance - Heading for disaster big time!

[cyberclark]

Alberta Finance - Heading for disaster big time!
The Conservatives, through short sightedness and abject miss management has forced this province into a position of being at least, flat broke and at the outside near bankrupt.

During the great, high flying times they had drawn more than 90 billion from the Heritage trust (Arms Length ? AIMCo) Production remains flat meaning little new revenue while expenditures sky-rocket. Recent news broadcasts and releases tout more production but the fine print shows the increases are in foreign holdings.

Make work programs for the resource people costing 9 billion a year or more. Oil companies pulling a million profit or more for non producing wells while workers get 1 week in 3 employment. Not enough for any trickle down luck to take place. If these kids manage to get enough coin it goes for new rims for their favorite truck.

Much of this loose gold goes to the executive professionals who get full pay, most of whom are foreign educated because of the Conservatives attack on the people of Alberta forcing kids into trade schools rather than leave a University choice. The Conservatives found early on it was cheaper to put their kids though trades schools and employ professions from foreign sources.

Reports of high school students still leaving school to get into the artificial, non existent Alberta boom I find very disquieting.

The Conservatives reduced royalty to 5% Canadian before the crunch! This is not enough money to call it a break even deal! Now, they have no place to move!

Facing an election in the near future and dwindling profits they are trying desperately at taxpayer expense to generate a picture, no matter how false or how costly of a rollicking provincial economy and, it simply is not true.

Probably, "Arms Length" public service pensions administered by AIMCo are being invested in CCS, P3 financing and like programs so they don't show up as a debt. If they treat them like the Heritage fund they will be paid 4% for their "investment" This would be one reason why this Government is pushing so hard on a CCS program rift with misdirection and lies. They have already invested so the WRP grab for attention of saying "stopping CCS" would bring a whole new set of problems.
A Pension Fund was invested in Alberta Conservative projects would show on the pension side of the books as an investment and it would not show as part of the debt on the Government side. If it is treated like the Heritage fund there is no intention of repaying but will hold appreciation very low to push profits onto the projects.


You can see why this Government fought so hard against a Federal Securities commission! If you or I tried anything like this we would be in court!

Strapped for cash they tried Bond funds which didn't fly; industry doesn't trust them; knows better. But it is possible AIMCo bought up a bunch of the bonds and tacked them into their portfolios.

Arms Length with this Government means they can direct the funds which ever way they want, investing in whatever doubtful project they want and the "arms length" comes into effect barring the public from a look at the accounts and investment strategy.

Get rid of these suckers while you still can! And, the WRP is on side with all this stuff so you won't find an improvement there. If anything it will be much worse.

 

[MHz]

Did they ever do a real count on how many golf courses were built?

 

[Cannuck]

Alberta Finance - Heading for disaster big time!
The Conservatives, through short sightedness and abject miss management has forced this province into a position of being at least, flat broke and at the outside near bankrupt......

Which Alberta are you talking about?

 

[taxslave]

Which Alberta are you talking about?

It would appear to be the one in a parallel universe. You know the one where there is no oil boom that is carrying most of the rest of the country. And the province gets no royalties from the oil.
Or possibly the one that is a figment of the minds of socialists that seek to destroy the economy and everyone can become a government worker with no taxes and exorbanent pensions and a bankrupt government kind of like Greece.

 

[MHz]

These links have nothing to do with Alberta having oil or not having oil.
Canada's National Debt Clock : The Canadian Taxpayers Federation

http://en.wikipedia.org/wiki/Canadian_public_debt

 

[gerryh]

This site has nothing to do with Alberta having oil or not having oil
Canada's National Debt Clock : The Canadian Taxpayers Federation

Canadian public debt - Wikipedia, the free encyclopedia

Ok, and that has what to do with the OP and the province of Alberta?

 

[MHz]

It was a reply to the post saying Alberta was shouldering Canada's national debt, if it was any of your business, which it isn't unless you are part of the net-police, which you aren't.
The above post is a contrast to Alberta's history, see the differences? If Alberta can tighten the strings why can't the Federal Government.
Government of Alberta: Alberta Up Close

 

[gerryh]

The above post is a contrast to Alberta's history, see the differences? If Alberta can tighten the strings why can't the Federal Government.
Government of Alberta: Alberta Up Close

The federal government did, under the Liberals.

 

[MHz]

Watch this vid and tell me what changed in 1975 and then look at the chart that shows the history of our National debt and explain why it didn't have anything to do with that change, if you can. Before it was going single digit billions, then it jumped about $100B (most coming in just the last 5 years of that decade) and then jumping by $300B in the next decade.

Alberta only got out of debt by using the Heritage Trust Fund rather than them being truly able to reduce spending in those years. Alberta's companies (and most likely others) still enjoyed the pork-barrel way of doing business, it was social programs and education that took the severest of the cuts in funding.

 

[cyberclark]

It would appear to be the one in a parallel universe. You know the one where there is no oil boom that is carrying most of the rest of the country. And the province gets no royalties from the oil.
Or possibly the one that is a figment of the minds of socialists that seek to destroy the economy and everyone can become a government worker with no taxes and exorbanent pensions and a bankrupt government kind of like Greece.

Certainly Oil is carrying the country; no argument there. Improvements in Ontario run a close second however.

The tar sands are starting to pump back at their norms now after being down for refits and repairs. That is over 1 million bbd.

However, the oil companies can now pay "payments in kind" of which Alberta only receives 48 cents per bbl for the bitumen. The balance is held by the Government to sell to the up-graders. Being in the process rather than the supply Alberta will receive nothing except the regular taxes from this segment. No mention of recovering any of the other 80.00 per bbl in the process.

Alberta didn't use the Heritage Trust fund to get out of debt. They pegged the allowed growth of the fund at 4% taking everything above that out of the fund. This siphon was moved into General Operating expenses every year through out the boom years also. This amounts to 10 to 13 years total provincial budget has been pulled from that fund!

This in turn was used to artificially reduce the royalty payments taken from the resources!

Alberta is now at 5% Canadian compared to BC and Sask which are above 20% US.

It is this extreme low royalty rate over time that has taken out all the money; that and the fact the Heritage Trust sits at 4% profit leaves little more they can pull from there.

That leaves AIMCo, the "arms length" fund managing pensions and the Heritage Trust along with other things. These funds can be directed to "invest" in 3P partnerships, Bonds and whatever else the Conservatives want to finance cheaply.

If they had to pay it all back; we would be bankrupt. If they start paying dividends to the AIMCo or the latter finds it cannot finance their games, we are simply broke.

We are in so very much trouble with this Government!

 

[MHz]

Alberta didn't use the Heritage Trust fund to get out of debt. They pegged the allowed growth of the fund at 4% taking everything above that out of the fund. This siphon was moved into General Operating expenses every year through out the boom years also. This amounts to 10 to 13 years total provincial budget has been pulled from that fund!

This in turn was used to artificially reduce the royalty payments taken from the resources!

That fund used to get it's growth from the oil patch, that was eliminated in 1987 so that revenue was lost, sent to the public coffers instead. How can you say it wasn't used to battle the provincial debt. Look at the lobby from 1995-1998 in reguards to what the money should be used for, it started out as being a trust to be held for future generations until the debt became a higher priority and then the surveys stopped.

The only growth it has made since then is because it is used to play the markets and if they crash then that fund goes up in a vapor, certainly not what the Social Credit envisioned when the fund was first created.

"1987: In 1987, the transfer of natural resource royalty revenues to the Fund were stopped."

"The Heritage Fund 2002 Annual Report was released on June 24, 2002. The Heritage Fund performed well despite turbulence in equity markets. The Heritage Fund increased in fair value for the fiscal year ending March 31, 2002 to $12.4 billion, a net increase of $290 million over the previous year."
Alberta Heritage Savings Trust Fund - Historical Timeline

 

[damngrumpy]

It matters little a hell of a recession or worse is about to hit the global economy and
we will all pay through the nose for this one. Even China is about to face some huge
economic challenges, check out time magazine. The mess in Europe is just beginning.

 

[petros]

That fund used to get it's growth from the oil patch, that was eliminated in 1987 so that revenue was lost, sent to the public coffers instead.

Investments in the West

Western Economic Diversification Canada (WD) was established in 1987 to help broaden the economic base of the four western provinces – Alberta, British Columbia, Manitoba and Saskatchewan. Under the Western Economic Diversification Act, 1988, the department is mandated to “promote the development and diversification of the economy of Western Canada and to advance the interests of Western Canada in national economic policy, program and project development and implementation.”

Investments in the West

Doesn't anybody pay attention?

Hey look. More Sociaism for Alberta development.

Advanced Education and Technology - Western Economic Partnership Agreement (WEPA)

The Governments of Canada and Alberta are pleased to be working together through the Canada-Alberta Western Economic Partnership Agreement (WEPA) to stimulate local economies and foster growth by supporting innovative, entrepreneurial and sustainable communities.

With its own unique strengths, opportunities and challenges, Alberta continues to be a place of great potential. It has a rapidly developing technology sector, a high proportion of small- and medium-sized businesses, and emerging opportunities for enhanced links with international markets. A diversified and dynamic economy is key to ensuring that Alberta remains a vibrant place to live and work.

The current WEPA builds upon a strong foundation of shared federal-provincial economic development initiatives. Through the Canada-Alberta WEPA, we are working with organizations in the community to invest in priorities and projects that support a stronger future for all Albertans.

Together, we will advance economic diversification, strengthen economic activity and improve the quality of life in communities across Alberta.

Get off the teat little sister.

 

[cyberclark]

It matters little a hell of a recession or worse is about to hit the global economy and
we will all pay through the nose for this one. Even China is about to face some huge
economic challenges, check out time magazine. The mess in Europe is just beginning.

I totally agree with you. The worse is yet to come.

That fund used to get it's growth from the oil patch, that was eliminated in 1987 so that revenue was lost, sent to the public coffers instead. How can you say it wasn't used to battle the provincial debt. Look at the lobby from 1995-1998 in reguards to what the money should be used for, it started out as being a trust to be held for future generations until the debt became a higher priority and then the surveys stopped.

The only growth it has made since then is because it is used to play the markets and if they crash then that fund goes up in a vapor, certainly not what the Social Credit envisioned when the fund was first created.

"1987: In 1987, the transfer of natural resource royalty revenues to the Fund were stopped."

"The Heritage Fund 2002 Annual Report was released on June 24, 2002. The Heritage Fund performed well despite turbulence in equity markets. The Heritage Fund increased in fair value for the fiscal year ending March 31, 2002 to $12.4 billion, a net increase of $290 million over the previous year."
Alberta Heritage Savings Trust Fund - Historical Timeline

That article is Conservative propaganda; nothing more.
The fact remains they have pulled 90 billion dollars from the fund and used it in general revenues thereby allowing an artificial reduction in royalty rates! It has been capped at 4% profits; everything else has been pulled out.

Left alone there would have been 120 billion dollars sitting there to help us through the recession!

I say leave the dam resource in the ground until we get a government who will look after this province!

 

[damngrumpy]

While we hurl slogans and labels at each other like socialist, Conservative and who
knows what else before we are done, lets look at reality. Alberta has been a state
within a deep freeze for decades, nothing but conservative rule and its failures are
beginning to recognized for what they are, a massive failure for the people.
Oh I know the howl is about to go up from conservatives everywhere. But before
you scream too loudly, understand, that is not the half of it.
Socialism is a failure, Liberalism is a failure, fascism is a failure, communism is a
failure, dictatorship ends in failure, and democracy is a wasteland of impractical
ideas. Not a lot left is there?
Alberta has fallen into a trap that rarely happens outside of dictatorship. The people
excluded all other ideas for nearly half a century. Those who ran the system and
those who still master the halls of government, don't even dare mention any other
ideas other that conservative ideas. lest the electorate turn against them.
People tuned out years ago some still believe there is a heritage fund, with money in
it. The conservatives were astute and crafty in their ability to lead people to believe
the things they wanted them to believe. The problem is they used the funds to mask
their shortfalls, and now the harbinger of history is about to descend on them. The
Conservative Party needs to be replaced but what with? The people have made sure
there is no alternative with the experience to wade through the tangled web that has
been created. It should always be remembered, for a democracy to function, an
opposition party is supposed to be a government in waiting. Alberta has seen fit,
to have no effective opposition period.
Good government eventually erodes regardless of who is in power, and with no effective
opposition, there is no one to fill the vacuum. In short economically, politically and
socially, Alberta will pay a huge price for their conservative isolationism.

 

[Cannuck]

It would appear to be the one in a parallel universe. You know the one where there is no oil boom that is carrying most of the rest of the country. And the province gets no royalties from the oil.
Or possibly the one that is a figment of the minds of socialists that seek to destroy the economy and everyone can become a government worker with no taxes and exorbanent pensions and a bankrupt government kind of like Greece.

Oh that Alberta!!!! I was wondering because in this Alberta, every kid I know in the patch can afford more than rims for their favorite truck. In this Alberta, the smart kids are going to trades schools because that is where the money is...nobody is forcing them. In this Alberta, the boom isn't artificial, that is why I personally don't know anybody that doesn't have a job if they want one. That Alberta sounds like it sucks.

 

[cyberclark]

Oh that Alberta!!!! I was wondering because in this Alberta, every kid I know in the patch can afford more than rims for their favorite truck. In this Alberta, the smart kids are going to trades schools because that is where the money is...nobody is forcing them. In this Alberta, the boom isn't artificial, that is why I personally don't know anybody that doesn't have a job if they want one. That Alberta sounds like it sucks.

By what stretch of the imagination can you put "smart kids" in the rank of blowing off a chance for a full education in favor of a trade school? What boom? We are dead in the water except for Government (pension and heritage backed) funding goes into municipal improvements (which is very much needed). My point again; there is no boom only a survival effort.

Certainly, family finance and a level of desperation in a family can press kids in that direction; no fault.

Yes there are jobs but not the wall to wall "we need labor in Alberta" that the headlines project. As I said, many of the jobs offered are short shifts; 1 week work out of 3 or 4 weeks. Better than EI but hardly a career.

Yes there are jobs for Engineers. Because the Conservatives short funded the Universities freezing them at 1986 levels it is only a very few people in Alberta who can afford to attend Alberta universities. Alberta does not graduate many Engineers! As I said, Alberta took the advise they could not grow "big Business" because of the lack of graduates and low population.

When we were rolling in cash, they cut universities and pumped cash into trade schools. Senior matriculation was pulled out of the schools. My point is, we were in a position to afford both education choices and they elected to freeze out the higher one. I say this is another case of gross miss management and patently unfair to Albertans.

 

[mentalfloss]

Alberta's problem is not fewer jobs, but too many jobs with not enough people to fill them.

 

[cyberclark]

Alberta's problem is not fewer jobs, but too many jobs with not enough people to fill them.

That is the biggest BS of all the propaganda.

Alberta's major up-graders are still in the planning stages. Alberta needs Engineers (explained above), Alberta needs Physicians (explained above) Professionals in general.

If and when any of these pie in the sky schemes come to pass, Alberta will need technicians of every stripe. That however is several years down the road. Most graduating classes except mechanics will face a dark couple of years. (Along with the rest of the world)

I will use this as a segway into another story from another time; same Government.

In the recessions of the 80s and 90s the same thing was done time and again.
A customer of mine ran a heat exchanger business in Calgary and employed 100 people.

The crunch came and the Government talked of Tar Sands expansions which were imminent. Quotes for plans and material supplies went out across the province . The economy picked up and the quotes were set aside; not needed yet.

Then, the same thing all over again with the only economy generated was the capital flow from one supplier to the next. Nothing was real!

My customer phoned me one morning; from Minneapolis. He had shut his shop over the weekend, laid off 100 people and put in a telephone forwarding system. He told me he could make heat exchangers for Air Conditioners in Minneapolis and make a living. He was also in a position of join the paper game when ever Alberta decided to announce non existent projects.

This Government continually tailors its news releases by announcing a mega project that will be built in 15 years time and write it up in the text so that it sounds like it will all take place in the next couple of weeks.

These "announcements" are more BS than reality, for the majority.

 

[mentalfloss]

Employment in manufacturing fell for the second consecutive month, down 48,000 in October. Employment in the industry was down 2.7% compared with October 2010.

There were also employment losses in construction in October (-20,000). Despite this loss, construction employment stood 1.4% above the level of October 2010.

Natural resources was the only industry with employment gains in October (+12,000). Over the past 12 months, natural resources employment has grown by 5.0%.

Ontario's employment declined by 39,000 in October, with large losses in full time partially offset by gains in part time. The unemployment rate in the province rose 0.5 percentage points to 8.1%. Over the past 12 months, employment in Ontario has grown by 1.5% (+101,000).

Employment fell by 11,000 in British Columbia. Since October 2010, employment in the province has grown by 0.9%, slower than the national rate of growth (+1.4%).

In October, there were also declines in Nova Scotia, where employment fell by 3,900, and in Prince Edward Island, where it decreased by 1,300.

Overall employment in Quebec declined slightly in October and the unemployment rate rose 0.4 percentage points to 7.7%. Compared with 12 months earlier, employment in the province (+0.4%) was little changed.

Newfoundland and Labrador was the only province to experience notable employment gains in October, up 4,100. Employment in the province grew 0.9% compared with 12 months earlier.

Employment in Alberta edged up in October, and the unemployment rate declined 0.3 percentage points to 5.1%. Compared with October 2010, Alberta has had the fastest rate of employment growth of all provinces, with an increase of 4.3%.

STATSCAN - The Daily, Friday, November 4, 2011. Labour Force Survey


It's fairly obvious that these new positions are coming from fossil fuels. For now, they can fill them, but as oilsands production ramps up, you will see a flood of people moving to Alberta to try and keep up with the demand.

Manufacturing is down right now, precisely because natural resources extraction is shooting up so high. It's called the dutch disease, and it's actually happening to us on a national scale.