Repeat after me: Alberta isn’t Greece

Last week it was Andrew Coyne; this week it’s Jack Mintz. Seems all the National Post’s favourite conservative commentators have suddenly decided to offer their Very Serious Advice™ to Alberta’s new government. While Coyne made a spurious comparison between raising the minimum wage and instituting a minimum income, Mintz outdoes him with an even more spurious comparison between Alberta and Greece.

Simply put, it is completely disingenuous to compare Greece to Alberta. Greece has seen its economy lose a quarter of its GDP since 2008 – a level of economic crisis unseen since the Great Depression. Unemployment has spiked to over 25%, youth unemployment is over 50% and poverty is widespread. While private creditors who participated in the pre-crisis boom have been bailed out, Greece has been forced into a vicious spiral of austerity driven by an unsustainable debt.

What’s the situation in Alberta? Alberta is still expected to grow, albeit very slowly, in 2015 according to most economists. Unemployment is up by 1% from a year ago, before the oil price crash. In part this is due to firms trying desperately to find efficiencies and cut costs to maintain profits. The picture is not rosy to be sure, but Alberta is in a wholly different category from Greece.

However, not only are Alberta’s problems completely unlike those of Greece, Mintz is wrong about Greece itself. Mintz joins the chorus of mystification that presents Greece as profligate rather than insolvent. It’s not the flow of “unsustainable deficits” but the stock of crushing debt and insolvency that is driving Greece deeper and deeper into crisis–one openly abetted by creditors hoping to make it an example for anyone else in Europe hoping to free themselves from the yoke of austerity. (more…)

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With NDP win, what’s next for Alberta?

This episode focuses on what else but the recent Alberta provincial election that saw the social democratic NDP sweep into power after 44 consecutive years of Conservative rule. To gain some perspective on this rather remarkable result in Canada’s oil and gas heartland and see what lies ahead for Alberta, I speak with an NDP campaign insider as well as a long-time analyst of Alberta’s political economy.

My first guest, Adrienne King, was Rachel Notley’s Chief of Staff during the campaign and was just announced as the new premier’s Deputy Chief of Staff. She’s worked for the Alberta NDP since before the 2012 election and offer her point of view on the future from within the NDP. My second guest is Ricardo Acuna. Ricardo is the Executive Director of the Parkland Institute, Alberta’s major political and economic research institute. We spoke about the economic situation in Alberta, the role of the oil industry as well as the challenges facing the new government.

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Calling the business bluff in Alberta

The votes had barely been counted in Alberta when stories purporting to herald capital flight, particularly from the oil sands, were already appearing in venues like the Financial Post. As if on cue, the TSX fell 2%,the day after the Alberta election. What are we to make of this? Is Notley’s Alberta in the position of Rae’s Ontario 25 years ago, already being undermined?

An assessment of the NDP’s victory in Alberta grounded in reality has to account for the fact that the place of the oil industry in the province is, for the moment, being left largely unchallenged. This is no value judgment: support for the industry is the default position of most Albertans, not just elites. Given the economic importance of the oil industry and relative lack of economic diversification combined with the absence of a mass movement pushing against oil extraction and dependency, this should not be surprising.

The Alberta NDP’s program seeks to redistribute the gains from a resource economy largely left untouched. This general tendency is moderated by commitments to greater consultation with First Nations and an end to active lobbying for the Keystone XL and Northern Gateway pipelines. The latter, however, is a practical decision based on the small likelihood of these being built. All the while, for example, oil by rail continues to gather pace. The flip side of greater spending on social welfare are policies to recapture more of the proceeds of the oil boom while leaving its fundamentals intact: moderate tax increases and a planned royalty review.

For now, it seems the warnings of capital flight are thus a first salvo with a blank round. The dire words from parts of the business press and business elites are mostly bluster. Many business figures are actually taking a conciliatory tone; even the infamous “five CEOs” have taken it back. Fear-mongering is mixed with courting favour. (more…)

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Let’s not be too quick to cheer for the market as oil prices slump

Another title for this piece could be oil prices and politics. The last few weeks have been full of worries about the fate of Canada’s oil sector. Global oil prices are falling, pipelines are stalled and a few prominent tar sands investments have been canceled. All of these stories have been accompanied by cheering from the barricades representing those who want to Canada ween itself off its high-carbon fossil fuel industry as quickly as possible.

I, too, won’t be shedding any tears for the tar sands but it is good to keep things in perspective. Questioning the market for allocation of investment towards more fossil fuel development and more climate change, the lesson of the week is not to cheer too quickly for the market’s changing fortunes. Here’s a few charts that provide some of that perspective. (more…)

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The outsize (un)importance of the tarsands

It’s easy to overestimate the importance of the tar sands to the Canadian economy. Tar sands and their pipelines are after all hailed by the ruling Conservatives, sections of the business press and the ever-present oil lobby as this young century’s “nation-building” project. Yet, a survey recently making the rounds highlights the relative unimportance of the tar sands to Canada’s overall economy: while most Canadians overestimate the importance of the tar sands and 41% are guess that the tar sands account for 12 %to 48% of Canada’s GDP, the reality is that they directly contribute a mere 2% to our domestic output.
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