[bootlegga]

I don't know of anyone who is happy about the current state of affairs.

[Jabberwalker]

Unsound Unsound:

Not to mention, Ontario is hardly innocent on that score anyways. Remember how the manufacturing problems are all Alberta's fault because petro-dollar and Dutch disease?

You know, you hardly heard a peep like that here, ever, and I manufacture for a living. It just never happened. What did happen and we all watched it happen is that the U.S. dollar collapsed against all sorts of currencies including our own. Since we measure our performance against the Americans, it never occured to any of us that little Alberta was pushing buttons and pulling levers to bring the value of the looney up. Flatter yourselves but we swim in a much bigger ocean than that comparatively little aquarium. I suspect that you guys are "projecting" a tad.

p.s. Alberta IS NOT the sole source of petroleum and natural gas in Canada. The only provinces that seem to have neither are New Brunswick and PEI. Even Quebec has (at least) shale gas and probably petroleum in the Gulf where there is currently a drilling moratorium.

[Thanos]

The dollar didn't rise because of anything Alberta was doing. It only 'rose' because the US dollar collapsed in the wake of the Wall Street-created sub-prime mortgage debacle of 2007/2008. This is just another bit of mythology and blame that comes from something that Alberta had absolutely nothing to do with.

[andyt]

Jabberwalker Jabberwalker:

Unsound Unsound:

Not to mention, Ontario is hardly innocent on that score anyways. Remember how the manufacturing problems are all Alberta's fault because petro-dollar and Dutch disease?

You know, you hardly heard a peep like that here, ever, and I manufacture for a living. It just never happened. What did happen and we all watched it happen is that the U.S. dollar collapsed against all sorts of currencies including our own. Since we measure our performance against the Americans, it never occured to any of us that little Alberta was pushing buttons and pulling levers to bring the value of the looney up. Flatter yourselves but we swim in a much bigger ocean than that comparatively little aquarium. I suspect that you guys are "projecting" a tad.

p.s. Alberta IS NOT the sole source of petroleum and natural gas in Canada. The only provinces that seem to have neither are New Brunswick and PEI. Even Quebec has (at least) shale gas and probably petroleum in the Gulf where there is currently a drilling moratorium.

What people are taking as complaining are just news stories, rather than huge masses of people in the streets. It was definitively established that Canada's high dollar was in part the effect of Alberta oil being so high. And it shows in the fact that our dollar took a tumble as soon as oil prices dropped.

$1:

Obviously, the loonie is largely “weighted toward” the price of oil, given Canada is one of the world’s major producers, she said. But at the same time, foreign central banks and private investors alike are looking to Canada as an island of relatively strong economic and fiscal fundamentals, compared with troubled regions like the euro zone.

But that's not the main driver that gutted Ontario manufacturing. One was what's happening all over the world, shifting labor to low wage, low labor rights, low environmental protection states, and that the US, our biggest customer collapsed.


And Alberta didn't do anything wrong as far as the dollar is concerned. Their job is to get as much revenue as they can out of their resources (they could certainly do something different there). It's Harper putting all his focus on the energy sector instead of looking at what can be do to help the whole Canadian economy. Unlike Alberta, Canada does have other strengths besides oil or even just natural resources. Harper bet it all on the oil boom and now is caught with his pants down, so he's going for the politics of fear with C51 and life means life.

[Jabberwalker]

What was "established" may have been that the abundance Canadian resources represented long term value and petroleum from places like Hibernia and Alberta gave our currency strength when other Western currencies were in a dive. Yes Alberta's, Saskatchewan's, Newfoundland's, Manitoba's, British Columbia's, Nova Scotia's and Ontario's petroleum reserves (along with a whole host of other commodities) gave our currency some bacbone for a time.

[Khar]

andyt andyt:

Khar Khar:

Considering my own stance is that diversification comes from us not putting onerous restrictions on new industry while at the same time significantly reducing the tax put into it, I'd argue with two of your sentences; a) that Albertans were going against their stance on your own two feet stance, and b) that socialist policies are a viable option (especially when popularly suggested ones have already failed).

So your contention is that the Alberta govt put onerous restrictions on new industry? Why would they do that? I very much doubt that the conservative govt of Alberta would do so? Then you seem to be calling for tax breaks, usually called subsidies, for this new industry. I thought the whole credo of conservatism is to let the market pick winners and losers, not govts with subsidies.

Fact is, what exactly are these new industries that Alberta could attract without just subsidizing them. What advantages does it have that would just naturally allow capitalism to decide that Alberta is the place for these new industries? And if that advantage exists, why has no other industry taken advantage of it? Without subsidization, I don't think Alberta is in a position to diversify - it just doesn't have anything to offer in that regard.

So that leaves managing the oil resource and the income it brings intelligently, not spending all the income during good times and having nothing left during bad. And maybe there's an economic case to be made for going in with industry on building some refineries - keeping more jobs at home. Maybe this is viable if the extra income to govt from the jobs created is considered. I don't know, but I sure don't see some magic wand that Alberta can wave to create new industries, especially without govt subsidies. And taxing new industry less than established ones would be such a subsidy.

It isn't really a contention, actually. If you remove companies from context, a lot don't deal with necessarily onerous regulation and taxation in Alberta. If, however, you put it in context of having to compete for labour and economic power with an energy Goliath next door, actions taken by governments on those companies are going to be significantly more onerous than they otherwise would have been. It's why I support cutting the corporate tax on a lot of industry here. Especially since the "Alberta Advantage," as I linked, was the only real policy than lead to definable gains.

It takes a significant amount of effort to say tax cuts are unacceptable to conservatives because they are definable as subsidies, andyt. Sure, we subsidize industry everywhere. The preferred method of subsidy from conservatives is a reduction for industry in tax rates, and their disliked version is direct monetary support (the latter of which laymen call subsidies). If you choose to use the technical definition of subsidy, pretty much every reduction or even increase of tax (even the difference between corporate and personal) is considered a subsidy for some sector. It doesn't break nor argue the conservative world view to reduce an aspect of their stance to semantics. Nor does it make much sense to me to say that the conservative credo must be reduced to the most simplistic form that exists (differential taxation is broadly popular in Canada). Frankly, the conservative credo would be served anyway because taxes are being reduced, allowing businesses more flexibility in how they operate.

Nor is it particularly helpful to take policies that have existed/do exist and try to pigeonhole them into a definition of socialism or conservatism, so as to attack Albertans with, especially when you are choosing to define Albertan stances are odd absolutes that, as I've mentioned, don't exist really within Alberta. Simply put, policies you described as socialist have consistently failed to show results. Arguing that there is an Albertan failure to wander from economic conservatism and that we need to be more like Norway with socialist policies with regards to diversification ignores historical reality where efforts recommended by others for diversification have routinely and consistently failed when implemented. It also presumes Norway hasn't got their own oil based problems (they do, hence their job cuts and rate cuts with another incoming to keep their economy afloat) and that they don't already have a mechanism unavailable to Alberta (full 100% ownership of their revenue that they've saved away and can fund 4% of their expenditures with). Frankly, they haven't had much luck with diversification either.

As for your second paragraph, essentially I agree. It's why I posted what I did. Diversification in Alberta is inherently going to be a crap shoot. We have limited industries that we can grow and those that are here, a small tech sector, a small bio-medical sector, renewables and so forth are growing at a rate far slower than energy normally does. We have been able to attract some industry but unless any of those industries experience explosive growth they won't be able to shave down that pie. Cutting corporate taxes on those industries at least lets them have a better chance of growing and collecting labour from our limited pool as it is, providing broader opportunities to Albertans. It also at least slows the growth of energy in that pie slice until Alberta grows large enough to expand beyond our current dependency on resource extraction. We also can't expect to depend on corporate tax income when it can drop off significantly due to volatility, hence why I also want it reduced. The suggestion that it's a good thing we depend on corporate taxes also presupposes it's a good thing we're dependant on energy volatility. Frankly, I view that as the wrong strategy.

Your final paragraph is, again, something I agree with. We have to divorce our dependency on that tax income rather than try to re-engineer an entire economy and the society it's attached to. For me, that means getting rid of as much of that volatility component with corporate taxes as possible, depending more on individual contributions, and using excess revenue brought in during the good years to fund something like the Heritage Fund. The problem with simply raising taxes on resources is that it doesn't guarantee we bring enough in the bad years to make ends meet, and makes us, at the end of the day, even more dependent on oil and gas when we don't assist that sector in choking out competition for labour and economic capacity.

Jabberwalker Jabberwalker:

Unsound Unsound:

Not to mention, Ontario is hardly innocent on that score anyways. Remember how the manufacturing problems are all Alberta's fault because petro-dollar and Dutch disease?

You know, you hardly heard a peep like that here, ever, and I manufacture for a living. It just never happened. What did happen and we all watched it happen is that the U.S. dollar collapsed against all sorts of currencies including our own. Since we measure our performance against the Americans, it never occured to any of us that little Alberta was pushing buttons and pulling levers to bring the value of the looney up. Flatter yourselves but we swim in a much bigger ocean than that comparatively little aquarium. I suspect that you guys are "projecting" a tad.

p.s. Alberta IS NOT the sole source of petroleum and natural gas in Canada. The only provinces that seem to have neither are New Brunswick and PEI. Even Quebec has (at least) shale gas and probably petroleum in the Gulf where there is currently a drilling moratorium.

Sure, many provinces produce oil. However, the "East" is only accountable for around a very small percentage of production (save for 7% from Newfoundland), whereas Alberta (77%), Saskatchewan (14%), Manitoba (2%) and BC (1%) are accountable for far more. Not to mention most of the headquarters are located out here in Calgary. When people look for oil or oil producing companies, they look to Alberta. And when they look for proven reserves, they also look to Alberta. 95% of Canada's reserves are in the Albertan oilsands alone, not even comparing to other plays. In context, what Alberta does and how Alberta acts has significant, outsized impacts in what happens to the oil industry and what the oil industry does.



Also, as andyt says, there was a lot of blame for Albertans, but it was mostly coming from politicians. I'd like to know where it was definitively established, however. Especially given no shortage of papers have demonstrated problems with using the USD/CAD exchange rate as a measure to identify dutch disease. The USD is not perfectly stable, and most dutch disease discussion occurred when the world economy, inclusive of the USD, was undergoing a collapse.

[Jabberwalker]

That chart will probably change dramatically when exploration in the Arctic gets going.
Also, there are some constraints in the East, such as a moratorium on drilling in the Guff of St. Lawrence that will almost certainly lift. Alberta is obviously a biggie but not the only biggie.

[Thanos]

Khar Khar:

.....there was a lot of blame for Albertans, but it was mostly coming from politicians. I'd like to know where it was definitively established, however. Especially given no shortage of papers have demonstrated problems with using the USD/CAD exchange rate as a measure to identify dutch disease. The USD is not perfectly stable, and most dutch disease discussion occurred when the world economy, inclusive of the USD, was undergoing a collapse.

It was generated and promoted several years ago by Tom Mulcair, whose idea of making himself into PM one day is by bring back the halcyon days of the 1970's, when Ontario/Quebec Uber Alles was all that mattered to the politicians of the left. Going by Mulcair's general demeanour, and that of the entire NDP, and of a good portion of the Liberals, that kind of policy and attitude is something that they've never shied away from or even bothered to get rid of.

[andyt]

@Khar: US corporate taxes federally are much higher than in Canada. I don't know the Alberta corporate tax rate, but doubt it's on the high end for Canada. I think an argument can be made for having no corporate taxes at all, as long as capital gains are then taxed at a sufficient rate.

But no corporate taxes means the govt can't play favorites with different industries by putting in loopholes or setting the tax rate differently for different industries, and govts, left or right, certainly enjoy playing that game. What I'm not clear on is if you are arguing for preferential tax rates for some industries the govt wants to prop up - I think that's clearly a subsidy, an uneven playing field, vs just setting a low overall corporate tax rate. As I said, the latter, as long as the govt is in good fiscal shape, can make sense.

Norway: Two things they did was put aside a shitload of cash for hard times, because they knew at the least the oil would run out at some time. And they invested that cash outside the country, so it would not cause Dutch disease. As for Norway going in partners with the oil companies, I see no problems they have had as a result of that. The problems they have is because of the drop in oil prices, but I've never heard a peep their system of partial nationalization made their industry inefficient.

As for Dutch disease - why did our dollar drop so fast, right in line with the drop in oil prices? Seems to suggest to me that a good part of the dollar's former high value was due to high oil prices. And that high dollar certainly took a toll on Ontario's manufacturing or BC's forestry.

AS you say, Canada is a small country trying to play with the big boys - so I think adding socialist elements to our resource industries, where necessary, is a good idea. The first place would be to build a pipeline east, even if some govt ownership is required, the next is to build refining capacity to that all the oil products we use in Canada are refined here. Possibly some other industries or infrastructure projects as well. We shouldn't let the bogeyman of socialism scare from doing what's best for Canada. WAC Bennett showed how well that works in BC during his reign, and he was a conservative (note the small c) thru and thru. WE're still living off his legacy, now being destroyed by the new type of conservative, low tax, no investment in the province, sell off the family silver, in power here.

[Jabberwalker]

Our dollar value relative to the US$ is back down to normal. Petroleum appears to have given it a push but the current exchange rate has been with us for a few decades now, most of the time.

[Khar]

@andyt

In general, no major disagreements.

Yeah, US taxes do trend towards being higher, but are balanced out by having direct access to the American economy, as well as the benefits of working, predominantly, in a much nicer area to do business. An American company tends to have better access to labour, producers, suppliers and buyers than Canadian companies, and they tend to have an easier time getting regulations to swing their way, among other benefits. Moreover, the climate in the states is warmer and it's filled with transport hubs. The reason Americans can keep their's higher is largely because of the inherent benefits of the population and scope of the American economy in contrast to the Canadian one as well. Even then, I wouldn't argue it's been the best system for them. Likewise, Alberta hasn't got a lot other than agriculture and resource development. We're a frozen wasteland with crappy highways and a population spread across hundreds of kilometers in every direction already engaged in employment. We are near no ports, we are not near suppliers, and people we'd sell to are still miles away. Most of the products on our shelves that are Canadian made you'd have to drive over 14 hours (usually 40) to see. The northern border is irrelevant, BC hates our guts, Saskatchewan is even more barren and to our south is the one part of the USA no one wants to live in. Our workers are the highest paid in the country and our economy is geared towards resource development. Of course our corporate taxes are lower; the conditions of working in the Albertan economy otherwise aren't that great.

As for Canada, yeah, it is an argument to get rid of corporate taxes entirely as well. The reason I typically don't argue for that is that such a thing isn't politically viable. Other methods exist that could effectively cover up the gap that corporate tax leaves (especially since it's small), and doesn't scare away things like investment. The more we divorce the well-being of Albertans with the well-being of international oil prices, profit motive, or market volatility, the better. Personally, I'm not against structural subsidies of some industry. My problem with your comments on subsidization was just that it was characterized as a breach of conservative belief in previous posts, which I disagreed with.

On Norway, initially the arguments made in this thread were relating to the amount of money they saved. I wanted to point out we can do that too, but without falling into completely turning our economy into what Norway has. I also wanted to point out that for all the benefits of their plan, Norway still is receptive to the same problems we go through, and that the differences of result in our economies isn't as severe as one would think. I don't buy nationalization as a great thing, especially when the oil sands is attracting investment from around the world. As long as it happens in Alberta, we still have sovereign power through regulation to handle the industry for the good of Canada.

As for dutch disease, our dollar dropped with the American dollar, which also dropped in line with oil prices. As did the pound, yen, and a dozen other major currencies. With international oil prices traded in USD and with our own currency closely tied to the success of the American economy, there exists a plethora of other explanations for why our currency drops and rises not purely tied to the oil field, at least not to the degree to cause dutch disease. Oil is tied to development and growth, and hence when there isn't much of that, not only does our oil collapse, but so does our forestry, mining, and even our agriculture. The drop in our dollar also followed drops in copper, lumber, bauxite, uranium, soy beans, silver and even gold. A lot of those goods go to one other country. During a time of international economic turbulence, we cannot effectively expect our currency to relate to any one factor like oil prices, especially as a nation with an economy so chiefly tied to one other state in the world who buys our goods. If I was to guess what the major motivator was of our price drop, it was that the guys who buy all our oil and resources were in the midst of dragging us down like a guy with concrete shoes.

As for the impact on our industry, I again don't buy it was the fault of oil prices, in large part at the very least, or in a part worthy of going after Alberta for. Manufacturing had been in decline for years. Local electricity prices and taxation aside, a lot of our goods went south of the border, meaning a lot of plants went there to save time or energy, or were cheap to make, so we sent that overseas. As I linked in my first post, the expected boost to our manufacturing during this drop hasn't happened. Our current accounts haven't been rebalanced towards exporting manufactured goods. If a healthy Canadian manufacturing sector really requires us to go back to how it was in the nineties or eighties, especially when it came to buying American goods with an extremely low Canadian currency, I'm not sure I want the manufacturing sector back.

I'd love to see pipelines or refining. I don't think it'll stop us being dependent on energy, but it would make our industry less dependent on the whims of the USA. It would also become a more national project, something that stops Canadians from othering each other, as Mulcair tried to other Alberta in that situation. I can understand why people want to blame Alberta for woes, because it gives them a workable, fixable solution in line with their other beliefs, but it also allows people to ignore other struggles facing their economies and industries while driving the same national disunity and divides that angered Alberta in the first place. When Alberta was hurt, nobody seemed to gain, and I think that's a lesson for Canadians in general and our politicians especially to get when dealing with other provinces.

Jabberwalker Jabberwalker:

That chart will probably change dramatically when exploration in the Arctic gets going.
Also, there are some constraints in the East, such as a moratorium on drilling in the Guff of St. Lawrence that will almost certainly lift. Alberta is obviously a biggie but not the only biggie.

I think the chart will change, but not where the headquarters of the companies doing the exploration are, or where the workers with the expertise will be from. I also think that, given the size of reserves and the dwindling of the remaining conventional sources, we will see more centralization in the west. As much as I would like to see oil production out of more provinces, I think that sadly Alberta will continue to be the centre for oil production and business in Canada until the industry itself becomes irrelevant. Trust me, as the son of Canadian petroleum geologist who tried to make a living in Ontario for decades before coming out to Alberta, I personally wish my opinion was a very different one.

[Jabberwalker]

I'm not hoping for any more oil, here. The old oilfields are pretty well played out but we have a whole bag of other tricks to draw on in order to earn a living.

I wish that the natural wealth of the nation were spread out a bit more evenly.

Alberta would probably be better off in the long run if they weren't so intensely reliant on the one resource.

The husband of a cousin is a laid off Alberta rigger. We were talking about it on the phone last night and it's going to be a long one.

[BRAH]

MILF Christy Clark acknowledged Canada needs Alberta to be economically strong.

[Gunnair]

BRAH BRAH:

MILF Christy Clark acknowledged Canada needs Alberta to be economically strong.

Fortunately that's not the case.

[BRAH]

Gunnair Gunnair:

BRAH BRAH:

MILF Christy Clark acknowledged Canada needs Alberta to be economically strong.

Fortunately that's not the case.

Are you saying she's not a MILF?