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FILDEBRANDT: Alberta’s budget is shot, and will need a new one entirely

Alberta can now rely on next to zero oil revenue if these prices hold up, and the budget on which it is based, is entirely shot.

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Every Alberta budget since striking it lucky at Leduc Number One in 1947 has been tied to the sweet allure of natural resource revenues. And every five years or so, governments listen to the prognostications of academics and experts warning that this is a bad idea, and promise to do something about it. And then they don’t. It’s just politics, and it’s unlikely to change regardless of the party in government. You don’t have to like it, but you probably have to accept it.

However much government revenues in Alberta may be tied to revenues from oil and gas, Albertans have a reasonable expectation that government’s will make reasonable, conservative projections for prices in their budgets. Sometimes they do; most of the time they don’t.

The dramatic crash in world oil prices caused by Saudi Arabia and Russia’s price war has Alberta’s benchmark oil price (WTI) sitting at US $34.06/bbl as of writing this column. This is no fault of anyone in Alberta, or North America, but it is a crisis that will hit Alberta directly.

Recent Alberta governments of all partisan hues have a less than stellar record in projecting oil prices in their budgets, especially further out than the next fiscal year.

NDP MLA and former Alberta Finance Minister Joe Ceci

Former Alberta NDP Finance Minister Joe Ceci canned the practice of long-term five-year projections, reducing the budget to a mere three years. Long-term projections were always a bit of a crap-shoot, but this was mostly likely done to allow him to claim that the government was headed towards a balanced budget at some point in the distant future, without ever having to show the math about how he would do it.

But even the NDP’s shorter three-year fiscal plans were on average, poor at forecasting oil prices.

WTI Budget Projections (source: Western Standard, Derek Fildebrandt using data from Alberta Budgets)

In Rachel Notley’s four NDP budgets as premier, they overshot WTI prices by an average of US$5.23/bbl, if we use today’s sad WTI spot price as the benchmark for 2020-21. If we are more charitable and leave 2020-21 out of it, they still overshoot by US$3.07.

The first UCP budget undershot oil prices by a modest US$1.00/bbl, but that budget was tabled late in the fiscal year when predictions are always easier to make. That being said, the NDP’s first budget was also late in the year, and still managed to overshoot by US$5.00/bbl.

WTI Budget Projections (source: Western Standard, Derek Fildebrandt using data from Alberta Budgets)

The real test comes in the next three fiscal years, when UCP Finance Minister Travis Toews projected relatively (but not wildly) optimistic oil prices to reach US$62.00/bbl by 2021-22. This was key in their very (quite wildly) optimistic projections of an extra $8 billion in extra annual government revenues over the final two years of the budget.

The budget has only been tabled and the speech read in the legislature. It is currently being debated and is still roughly a month away from being passed into law.

So while the government defends a budget based on oil that was US$49.78/bbl when it was tabled – and projected to reach US$63.00/bbl, it now sits at a paltry US$34.06/bbl.

That, is a very, very big hole.

Let’s put it into more tangible terms. According to the budget’s own “revenue sensitivities” in the fiscal plan, every US$1.00 fluctuation in the price of WTI is worth $355 million to the government coffers.

With WTI now hovering around half of what the Toews projected in his budget, that would mean a theoretical shock of $8.5 billion a year to the government’s balance sheet. That however, is quite impossible for the simple reason that it only expects to net $5.1 billion in all non-renewable resources revenues (combined) in 2021-22.

The government’s “revenue sensitivities” are only useful within a range of relative sanity, after which they have to be rewritten. It goes without saying that if today’s WTI numbers hold anywhere near their current range, they will have to be thrown out entirely.

In fact, the entire Alberta budget may need to be thrown out. The revenue projections when it was tabled on February 27th were already optimistic – now, they are downright delusional, if they hold to them.

Chances of reaching the UCP’s balanced budget platform commitment by 2022-23 were already tenuous enough with the modest $1 billion spending cut spread over four year. They were relying on a thundering economy to do the heavy lifting for them – plus a few (relatively modest) tax increases here and there.

Since the UCP came to power, Ottawa has passed bills C-69 (no more pipelines), C-48 (tanker ban), and killed the Teck Frontier oil sands mine. As of today, global oil prices have fallen through the floor. None of those things are the UCP’s fault, but it is now the hand they are dealt.

If they wish to have a prayer of reaching a balanced budget by 2022-23, they will have to shelve this budget and reintroduce a new one with updated, realistic oil prices, and much more serious spending restraint.

Derek Fildebrandt is Publisher of the Western Standard and the President and CEO of Wildrose Media Corp.

Derek Fildebrandt is the Publisher, President & CEO of Western Standard New Media Corp. He served from 2015-2019 as a Member of the Alberta Legislative Assembly in the Wildrose and Freedom Conservative Parties. From 2009-2012 he was the National Research Director and Alberta Director of the Canadian Taxpayers Federation. dfildebrandt@westernstandardonline.com

Opinion

WAGNER: Coming federal election could drive support for Alberta independence

“The election results may very well convince enough Albertans that independence is the only alternative to a future of continued economic decline and impoverishment.” – Michael Wagner

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Many commentators have speculated that there will be a federal election this year, quite possibly in the spring. Early in February, Bob Hepburn of the Toronto Star wrote a column entitled, Trudeau’s strategic plans aimed at June election. A few days later, Brian Lilley of the Toronto Sun contributed a similarly-themed column, Spring election could still be in Trudeau’s cards. And on March 1, Lilley’s Toronto Sun colleague Lorrie Goldstein added another, Liberals looking for excuses to call an election.  

These columnists are speculating, of course, but they offer strong reasons why an election may not be too distant in the future.

The outcome of the impending election will have a very big impact on Alberta. If Justin Trudeau is re-elected with a majority government – as some polls seem to indicate – his climate change policies designed to phase-out Alberta’s oil industry will be locked in place for at least four more years. Alberta will continue to suffer job losses and other fiscal and economic hardships. The provincial outlook will be truly bleak.

Many Albertans realize that the stakes in the election will be very high. The future of their livelihoods is in jeopardy. For them, a Trudeau majority government would be the last straw. Government-imposed financial suffering will be impossible to endure any longer. A new path forward will be needed. For a growing number of us, that means independence 

In other words, if Justin Trudeau wins the upcoming election, expect to see the Alberta independence movement experience unprecedented growth. Large numbers of people will be desperate and willing to consider previously unthinkable options. 

This kind of thing has happened on a smaller scale before. It was due to widespread anger after the February 1980 re-election of Pierre Trudeau that Elmer Knutson formed West-Fed and began holding large meetings around the province. In the wake of the November 2000 re-election of Jean Chretien’s Liberals, province-wide anger propelled support for Cory Morgan’s Alberta Independence Party, while Stephen Harper and some of his colleagues published the famous “Firewall Letter.” 

More recently, immediately after Justin Trudeau’s Liberals were re-elected with a minority government in October 2019, well-attended Wexit meetings were held around Alberta, including one with 1700 people in Calgary. The Wexit organization formally merged with the Freedom Conservative Party in June 2020 to form the Wildrose Independence Party of Alberta. 

Indeed, the existence and growth of the Wildrose Independence Party and the federal Maverick Party can be attributed in large measure to the outcome of the 2019 federal election. It seems clear then, that federal election results have been a major factor in the development of Alberta’s (and Saskatchewan’s) independence movement.

This pattern is likely to be repeated when the next federal election is held later this year. Unless Erin O’Toole can engineer a miraculous turn-around in Conservative Party support, Trudeau will be back and Alberta will be trapped within a country whose government is determined to destroy its primary industry. In that case, expect many Albertans to fight back. Expect big meetings around the province with impassioned speakers advocating independence to preserve our future. Memberships in Wildrose and the Maverick Party will sell briskly and new volunteers will step forward.

If O’Toole can pull a rabbit out of the hat, the initial response in Alberta will be celebratory. Trudeau would be gone. What could be better than that? But O’Toole’s commitment to implementing the Paris Agreement on climate change would tie his hands and limit his enthusiasm for developing Alberta’s rich energy wealth. 

O’Toole has also been a defender of the current Equalization formula and supply management, policies meant to win votes in other parts of Canada. 

After voting overwhelmingly for the Conservatives, Albertans would justifiably anticipate some payback. If O’Toole didn’t deliver, there would be severe consequences for him and his party. A betrayed electorate would look to its only remaining option: independence.

The upcoming federal election will likely be a key event for Alberta’s future. Another term for Justin Trudeau would be an existential threat to the province. A victory for Erin O’Toole would be somewhat better, but would hold no guarantees for Alberta’s well-being. Pro-fossil fuel policies are very much out-of-favour in Central Canada where both parties are eager to please the voters. 

The election results may very well convince enough Albertans that independence is the only alternative to a future of continued economic decline and impoverishment. For Alberta, it seems that there is no way forward except out. 

Michael Wagner is a Senior Columnist for the Western Standard

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Opinion

PARKER: Kenney is the wolf in sheep’s clothing

“Alberta conservatives were deceived by one of Canada’s greatest political showmen. He bought a new blue truck, put on a cowboy hat, and sang us a Siren’s song.” – David Parker, Guest Columnist

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Guest Column: David Parker was the Regional Organizer for Central Alberta on the 2017 Jason Kenney Leadership Campaign and GOTV Membership Chair of the Wildrose Unity Campaign

In the Book of Matthew, Jesus gives his followers a warning, “Watch out for false prophets. They come to you in sheep’s clothing, but inwardly they are ferocious wolves” (Matthew 7:15). Whether you are a Christian, follow another creed, or simply a person who cares about freedom, we should always pay attention to those who claim to be prophets. Jason Kenney came to Alberta as a kind of secular prophet. He claimed that he would unite the Wildrose and PC parties, restore the Alberta Advantage, defeat Ottawa, and lead his people back to the proverbial Promised Land. 

Now, he puts preachers in jail, destroys small businesses, takes on record levels of debt, and fills our province with fear. 

Even worse, he is not a leader. His true talents lay in being the right-hand man to a leader; but he has proven himself unable to make clear decisions or even adhere to any real comprehensive set of principles. He claims to be a conservative; but he has his government buy up and subsidize private businesses with record levels of corporate welfare. He says he is a man of faith (and he probably is); but he crushes those who wish to practice their faith in a manner that disagrees with his government’s authoritarian policies. 

This is evident from many angles; but the most obvious example of it is how he ran nominations. He is an authoritarian. I was the campaign manager for Rita Reich’s nomination race in Lacombe – Ponoka (one of Kenney’s staunchest supporters during both the PC and UCP leadership races). He disqualified her over a single Facebook post that said Hitler was actually a socialist. That was it, it did not praise Hitler, it just said that Hitler was a socialist based on the fact that he led something called the National Socialist German Workers Party, and repeatedly referred to himself as a “revolutionary socialist”. He did this to a woman who had him to her house for BBQs with hundreds of people and who sold hundreds of memberships in support of him. Why? It was easier for him to simply disqualify her than let her challenge a sitting MLA in a nomination. 

The list of loyal people that Jason Kenney has used and discarded is long and full of many very talented people. The worst case of this is perhaps the story of Caylan Ford, who Kenney praised as his, “political love at first sight” and who the UCP used in much of their campaign digital and visual messaging. When she encountered a targeted and malicious attack from a bad actor within the conservative movement, he dumped her as a candidate and left her to bleed out under the wrath of the SJW mob. Kenney folds to cancel culture like a cheap house of cards. Just like he bows to Rachel Notley when she calls for more lockdowns.

Alberta conservatives were deceived by one of Canada’s greatest political showmen. He bought a new blue truck, put on a cowboy hat, and sang us a Siren’s song. We don’t have to keep believing him. His actions have shown us who he truly is. 

The mask is dropped. We can now see as clearly as day that the sheep is truly a wolf. 

Guest Column: David Parker was the Regional Organizer for Central Alberta on the 2017 Jason Kenney Leadership Campaign and GOTV Membership Chair of the Wildrose Unity Campaign

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Opinion

SCOTT: Supreme Court injustice allows Ottawa to rule all

“In one fell swoop the Supreme Court of Canada has gutted any meaningful provincial jurisdiction, creating an untenable situation that, if left to stand, will add unbearable tension to the federation.” Mike Scott

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Guest Column from Mike Scott, Reform MP for Skeena, BC from 1993-2000.

The recent Supreme Court decision, which provides legal cover for the Trudeau government’s usurpation of provincial jurisdiction on carbon taxes, should be of immense concern to all Canadians.

In essence, the Supreme Court did not take issue with the argument put forward by three provinces that the federal government’s carbon tax is an intrusion into provincial jurisdiction. 

What the majority on the court did accept is the Liberal government’s argument that such an intrusion is justified under the rubric “Peace Order and Good Government (POGG)”.

On the face of it, this is an astounding conclusion.

POGG was never intended to be a substitute for clear, constitutionally delineated jurisdictions, nor a tool for constitutional monkey wrenching.

This is a clear case of an activist court seeking justification – no matter how thin – to endorse a progressive political agenda.

First, the court is clearly taking sides in a public policy debate and the reasons for judgement underscore this. Public policy arbitration was never intended to be the purview of the court and, by venturing into this highly charged political debate, it is signaling a willingness to take ever more activist positions.

Citizens don’t get to vote for judges – the prime minister appoints – but it is vital to the credibility of the institution that the court remains assiduously neutral. Jurisdictional disputes must be weighed against the metric of the constitution and adjudicated based on longstanding principles of law – jurisprudence – not creative or specious arguments.

Secondly, by accepting the federal government’s “POGG” argument, one can see the door has now been swung wide open for future intrusions. This is the slippery slope the Supreme Court’s decision has set us on. Going forward, all the feds need to do is invoke “POGG” – there will be no judicial recourse for the provinces.

This is exceedingly dangerous for confederation. As the provinces come to understand that their constitutional jurisdictions are trumped by POGG – with the collusion of the high Court – what recourse do they have?

There is already far too much political power concentrated in Ontario and Quebec. Adding the Supreme Court to the list of institutions lined up against the country’s regions is exceedingly provocative. When, on this continuum, do we reach a tipping point?

It is worth quoting the dissenting voice of Supreme Court Justice Russel Brown who brilliantly spells out the ramifications.

“It is not possible for a matter formerly under provincial jurisdiction to be transformed, when minimum national standards are invoked…This would open up any area of provincial jurisdiction to unconstitutional fedreral intrusion once parliament decides to legislate uniform treatment”

Supreme Court Justice Malcolm Rowe, also in dissent, cogently adds; 

“Canada’s proposed doctrinal expansion of national concern should be rejected because it departs in a marked and unjustified way from the jurisprudence of the court and, if adopted, it will provide a broad and open pathway for further incursions into what has been exclusive provincial jurisdiction. (the act) is not an exercise in cooperative federalism; rather, it is the means to enforce supervisory federalism”

The Supreme Court’s willingness to allow POGG as a means to justify abrogating a clear provincial jurisdiction, is a threat to the regions of Canada that is unprecedented. It is an egregious assault on one of the very foundational principles of our constitution – the division of powers between the provinces and the federal government. 

In one fell swoop the Supreme Court of Canada has gutted any meaningful provincial jurisdiction, creating an untenable situation that, if left to stand, will add unbearable tension to the federation.

All provinces – particularly those in the West with significant energy resources – should see the writing on the wall.

Guest Column from Mike Scott, Reform MP for Skeena, BC from 1993-2000.

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