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Not on vacation, but still Super Lazy

I was though, on vacation, before, but it was a pretty short one. Like the rest of the summer it’s just been a few days here and there. Why does that matter? It doesn’t really. I’m just wondering how I managed to not string together more weeks over the summer of home bound relaxation or summer in the over-priced country rental market, or days at a luxury resort somewhere.

 

Oh wait, I know. We are slammed. Super busy. We actually have more deals in the market at this moment in time than we have ever had. And wouldn’t you know it, deals are much harder to market and close these days, what with the uncertainty of the pandemic and the economic recovery and vaccines and Federal elections and municipal elections and pointless upcoming referendum questions. All of which of course demands more time.

 

So true to form, as a hard-working, entrepreneurial business, we have worked through it. Oh sure, there have been days where we were travelling or located elsewhere than behind a desk, but I can safely say that there hasn’t been a day when I haven’t been available for a client, grinding through spreadsheets and data-rooms or doing some market facing work. Heck, I even wrote blogs.

 

Why do I bring this up?

 

Oh, I don’t know. It might have something to do with the Houdini disappearing act many of Canada’s premiers have pulled in the latter stages in August. I know it’s popular to play Alberta’s favourite current game of “Where’s Jason” (Jasper?), especially with the Best Summer Ever devolving into a rapidly escalating fourth wave. But he’s not alone (in… Banff? High Level?). At various times this summer John Horgan of BC and Doug Ford of Ontario have also been MIA  (with Ford that appears to raise his popularity) – apparently taking weeks at a time (consecutively no less!) on the taxpayer dime, enjoying all a Canadian summer can offer.

 

So I figure if it’s good for them, it’s good for me and in honour of this “mail it in” attitude, instead of writing a new blog, I am going to do something for the environment and recycle an old one.

 

But, as always, since I am a purpose-driven blogger, I like to have a point. So I’m not just going to recycle any old blog.

 

This week, it’s a policy idea for Jason to consider while he plots his triumphant return to Alberta politics, all recharged from relaxing in… Oakville?

 

Again, who knows and I certainly don’t know and don’t care. (Kelowna?) I don’t ever begrudge some vacay for anyone, and even if Erin O’Toole wants him to stay away longer (in Wilcox SK?), I’d just like my premier to maybe be a little more visible (in… Inuvik?). After all, it isn’t all that hard in our newly all-encompassing video chat connected world. Last time I checked, the wifi was excellent in … Mar-a-Lago?

 

I mean, if we (Stormont) can do a video conference from rural Manitoba or take a call from the middle of a lake, surely our premier can do a presser from… the Zama City Campground? Like dude – Where. Are. You?

 

So anyway, enough preamble. The following is a rerun of something that I think would be a fabulous referendum question once JK gets back (from … Hawaii?) and this pesky Federal Election is over (look for my analysis and primer on that two weeks from today).

 

Finally, since I refuse to get drawn into the vaccine passport discussion (I wonder if Jason needed his vaccine passport in… the UK? Oh wait, the UK doesn’t accept our vaccine paper from Alberta, never mind), this is all I have the bandwidth for today.

 

A Proposal to Stabilize our Treasury

 

Or, alternatively, a way to address our Paucity of Savings and Taxes.

 

Sometime soon, Alberta’s provincial government is going to have to deliver a fiscal update and, folks, while energy prices have been a major boost to the big black hole, it’s still grim and Pretty Scary Times.

 

The pandemic, combined with the downturn in the energy sector, has taken a chainsaw to Alberta’s already challenged financial situation. The deficit has exploded from a fairly pedestrian $8 billion (in Canadian terms) to close to $25 billion and counting. Debt is predicted to rise to close to $100 billion before the dust settles. It’s a Prodigiously Startling Total.

 

It’s ugly here, but in fairness, it’s going to be ugly everywhere as economies world-wide experience Pandemic-inducted Systemic Trauma. But here in Alberta, where we used to get fat on surpluses, we have a little bit more bleeding to do because of our reliance on the energy sector to provide a significant portion of our budgetary cushion. With the energy sector in the dumpster since 2015 we have, for want of a better term a Petroleum Subsistence Trouble.

 

What this means is that we are going to be in fiscally challenged times for the foreseeable future and as I celebrate one daughter’s birthday tomorrow and the other’s two weeks from then, I despair at what we, as a society, are bequeathing to them. A Parent’s Shameful Track-record, if you will.

 

Short of asking Jeff Bezos for a loan (hey – wait a second, that’s not such a bad idea), we need to have a frank conversation as a province about the way forward.

 

I believe we are in need of a Pecuniary Shortfall Townhall.

 

The UCP has made a significant effort to reduce our deficits by the usual means – cutting the budget and reducing spending. It has cost them politically across every constituency (whether physical as in districts or philosophically as in cohorts (how I hate that word)) and, quite frankly, these Politically Suicidal Trimmings could cost them re-election in 2023.

 

We can argue all day long whether this cut or that cut was needed and whether a pitched battle with the health sector – the Physician Showdown Tussle – during a pandemic is the smartest thing to do. It is all now water under the bridge.

 

We have addressed the spending side. There ain’t that much left to cut. The UCP fiscal road map on spending is in place. We have wrested the Profligate Spending Trend to the ground. So to speak. Spending cuts alone aren’t going to cut it anymore, we need to look at the top of the P&L.

 

That’s right, now is the time for Alberta to grow up and address revenue. And no, I’m not talking about royalties (although everything should be on the table) and a new Petroleum Sector Tariff regime.

 

And I’m not talking about wishful thinking about a Petroleum Sector Turnaround or a slow moving diversification effort. That is happening. And it is good. But it is just gravy. We need Primerib Served with Tatertots.

 

I’m talking about new sources of revenue and what we can do as a society to reverse the commodity price roller coaster risk to our province and get ourselves back on a more stable, predictable fiscal path. A Price Stabilization Tactic.

 

It’s time for that which we must never name.

 

A Pandemic Savings Trust. A Provincial Scoop on Trade. A Prioritized Salary Tariff. A Province Saving Tithe. A Politician Sacrificing Tribute. A Post-pandemic Sustenance Toll.

 

As a province we aren’t going to see a sustained fiscal lifeline from the oil and gas sector as in previous years, the Petroleum Station no longer has a Train. The commodity price cycle leaves us too vulnerable to the vagaries of a global market. We need to accept we aren’t Price Setters, we are Takers and that tying the fiscal future of this province, my province, our province to the whims of a fickle market is no longer acceptable. We need to break the cycle and admit the Province is too Subject to Traders.

 

So what to do?

 

Is there a Petroleum Strategy That can work? I don’t think so. We have the building blocks in place, but there is limited fiscal room there – even reversing the corporate income tax cut won’t generate the Pre-dividend Surprise Tally that many expect.

 

Don’t get me wrong, there is and always will be opportunity in the oil and gas sector. We just need to break the addiction to the money spigot and treat it as a bonus and not a source.

 

Our fiscal regime for the development of oil and gas is competitive. We have great rocks, an abundance of resources, a still-solid regulatory regime and a store of human capital and ingenuity that is second to none. I have written about this for years. Our Province’s Scope is Transcendent.

 

We have pipeline access to our major markets. We have infrastructure being developed as we speak that will provide incremental access to markets for existing and new up and downstream development for decades to come. We will soon have a wealth of Province Saving Tubes and Petrochemical Shipping Trains.  And we need them and the products they produce and ship, but we need something more.

 

What we don’t have is fiscal stability, because we depend on Pricing, Shipping and Trudeau. And the current pandemic lays this bare. For all to see. Right now. We can’t wait. We are in a Predicament of Severe Temporal concern.

 

I know Jason Kenney has asserted that you shouldn’t raise taxes during a downturn. And I don’t disagree. It’s a Politically Savvy Tactic. But that mindset isn’t predicated on a world with multiple economy altering exogenous shocks. If anything, a Pandemic Subverts Truisms.

 

And if not now, when? When mythical good times return and the will to change is overrun by renewed Partying in Stampede Tents?

 

Based on current data, a Properly-implemented revenue (not Spending) enhancement Tool of say 5% could raise between $5 billion and $8 billion for the Alberta budget and would shift the equalization/fiscal capacity balance in Canada such that the impacts of equalization would be less glaringly slanted one way across the Canadian Shield. Is this not a UCP desired outcome? You can make it Progressive Scrupulous and Tolerable by modelling it after similar programs currently in use by the Federal government. We can Pursue the Same one Trudeau uses. We don’t even need our own administrative overhead, we can just harmonize our efforts with the Generally Stable Treatment used by the Federal government.

 

This is an incredibly challenging moment in our province’s history – a Particularly Stressful Time. We can’t keep doing the same old, same old. We need to diversify our economy and create new revenue sources. We have a budgetary hole that is of our own making that has been exacerbated by events out of our control. It’s time to take that control back and Predictably Source Treasure.

 

I know it’s not a really inspirational rallying cry and sending it out under cover of darkness is a bit weaselly, but here it is.

 

Jason Kenney – I want you to tax me more. I want to pay up to 5% more when I am at the grocery store. I want out of province tourists to pay 5% more to stay in our beautiful hotels and parks and eat our wonderful, creative restaurant fare. I want out of province companies and multinationals to pay us a little more to use our capital and human resources. I want a small coffee at Tim’s to sell for $1.40 instead of $1.33. I want all these other People to Share in the Task ahead of us. I want our finances to no longer be in a Perpetual State of Thin ice.

 

And it’s OK.

 

It’s for the good of the province. It’s for the next generation. It’s a bold move that if implemented properly may actually get you re-elected.

 

It’s Provincial Saviour Time.

 

And if you have a Problem Saying it Thunderously, I’m happy to take the flak and do it for you.

 

Give me a PST.

 

A Provincial Sales Tax.

 

There. I finally said it. And I didn’t get struck by lightning.

 

That’s a Pretty Surprising Turn of events. I think you’d agree.

 

If you have any questions, give me a call. I’ll likely be in hiding, but as always, I will be available. And you know I’m right.

 

 

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