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[LINK] “The last of Danielle Smith”

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Colby Cosh of MacLean’s writes about the apparent end of the political career of Alberta’s Danielle Smith, who took the bulk of her Wildrose Party into a previously-unthinkable merger with the governing Progressive Conservatives only to fail to capture her new party’s nomination.

In reporting on Danielle Smith’s defeat in the Highwood Progressive Conservative nomination contest on Saturday, the Edmonton Journal quotes her former Wildrose caucus colleague Pat Stier as saying, “She was the princess of Alberta in terms of politics.” In fact, he has sort of stumbled backward over the problem: She wasn’t a “princess.” Smith does not—speaking here in smug retrospect about something I basically got wrong at the time—really have the folk-hero quality that allows a politician to get away with the sort of thing she tried in dropping the Wildrose leadership and crossing the floor to join Jim Prentice’s PCs.

Smith is attractive and articulate, even intermittently funny. People who are thrilled to see the back of her are being forced to admit that she ran Alberta’s best opposition in generations. And many Albertans seem to have figured, at one time or another, judging by the polls, that she personally would make a quite plausible premier.

It is not as though the disruptive folk-hero type of politician—one in the mould of Churchill, who could be forgiven by the public not only for “ratting” but “re-ratting”—is ever common. But it’s clear that Smith had won the temporary allegiance of the disaffected more than she ever won anybody’s heart. Her background was in school-board politics and media, career interludes that might as well have been designed to inspire dislike and suspicion. She does not have the born politician’s gifts of dominating any room into which she walks, or of making you think you’re the most important person in the world when you’re in conversation with her.

Her style in fending off attacks was detached: She never wanted you to sense that her opposition to the PC government was either personal or intensely passionate. She conducted the job of opposition as a civilized disagreement with a group of people that had lost its ethical and ideological way. She worked for a long time to throw the bums out, but you can’t easily imagine her bringing an audience to its feet by shouting, “Throw the bums out!”

And yet the effect of her presence in Alberta politics was arguably to throw the bums out—to force the governing party to bring in new blood at the top, as it has every so often during its four-decade dominance, and to purge or sideline the leading figures of the Alison Redford regime. Everything suggests she lost her appetite for the work—and she may never have had much appetite for power as such—after that happened. Being a minister in a PC government would have suited her abilities perfectly, and the clock was arguably ticking on her leadership of the Wildrose Party, some of whose movers and shakers never came to terms with her libertarian coup. Her campaign for the Highwood nomination seems to have been a little phoned-in. Jim Prentice started out sending help, in the form of cabinet visitors and paper endorsements, but that effort dwindled, and she couldn’t afford to count on it to save her. Smith seems to have laid pretty low throughout, knowing that any half-respectable opponent would be able to get out a thousand or more revenge-minded supporters.

Written by Randy McDonald

March 31, 2015 at 10:20 pm

[LINK] “Norway’s sovereign wealth holds lessons for Canada”

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CBC News’ Susan Ormiston describes how resource-wealthy provinces like Alberta, and perhaps Canada as a whole, should learn from the example of Norwegian prudence.

Norway today sits on top of a $1-trillion Cdn pension fund established in 1990 to invest the returns of oil and gas. The capital has been invested in over 9,000 companies worldwide, including over 200 in Canada. It is now the largest sovereign wealth fund in the world.

By contrast, Alberta’s Heritage Savings Fund, established in 1976 by premier Peter Lougheed, sits at only $17 billion Cdn and has been raided by governments and starved of contributions for years.

“For the last 10 years, when nothing went into the Alberta fund, and we put a lot of money aside, the profit went out of Canada,” says Rolf Wiborg, a petroleum engineer who recently retired from Norway’s public service.

Wiborg, who studied at the University of Alberta and worked for a Norwegian oil company before joining Norway’s Petroleum Directorate, says the key to success has been Norway’s ethos of sharing and a commitment to never waver from that goal.

“We don’t change our policies in Norway, with changes in the oil price – you can’t do that,” he says. “Lougheed’s government in Alberta knew that, they made policies and then they left them behind.”

Oil and gas make up 25 per cent of Norway’s GDP, so the recent plunge in oil prices should have set off alarm bells in Oslo. Thousands of workers have indeed been laid off, but parliament is not painting a dire forecast for 2015.

Much more at the link.

Written by Randy McDonald

March 26, 2015 at 10:31 pm

[URBAN NOTE] “Al-Shabaab and the lure of West Edmonton Mall”

Colby Cosh at MacLean’s writes about the lure of the West Edmonton Mall, for everyone.

When I was a young man, there were two things you would expect people to mention when you were travelling abroad and you told people you were from Edmonton: the glorious Stanley Cup-winning Edmonton Oilers and West Edmonton Mall. Nowadays, of course, everything’s totally different. Now when you travel and mention Edmonton, you expect to hear about the comically rancid Edmonton Oilers and West Edmonton Mall.

WEM was named in a video released on Feb. 23 by the struggling Somali terror group al-Shabaab, which has an unstable affiliation with al-Qaeda. The group is best known for masterminding the September 2013 four-man swarm attack on the Westgate Mall in Nairobi, Kenya. Those killers took at least 63 lives, including those of two Canadians. The new video suggests, rather in the manner of mafiosi, that the Westgate attack could be reproduced at Western megamalls like WEM and the Mall of America—both of which are owned by Edmonton’s Ghermezian family, and both of which are in communities that have attracted significant numbers of Somali refugees.

This last part is probably not a coincidence. Big shopping malls and refugees are attracted to a place by some of the same factors. If you have to flee your home and start over in a new language, with your credentials almost irretrievably left behind, you’re looking for a resource-extraction economy that’s slightly inhospitable—a place with structurally tight labour markets that will reward the will to work hard with a high disposable income—i.e., the kind of income people will spend in a nice, cozy, winter-proof megamall.

I have worried a little about the mall—if you’re from Edmonton, that’s all you need to say to specify it—during the period of trendy freelance Muslim terror. Naturally, I wouldn’t let this stop me from visiting the mall with the usual frequency. Which, meaning no disrespect, is darn near never. Like a lot of people from the Edmonton suburbs, I got my fill of it, and then some, in adolescence. But nobody should be afraid to visit: You are surely taking a bigger risk using a stepladder to change a light bulb.

Written by Randy McDonald

February 26, 2015 at 11:23 pm

[LINK] “Alberta squandered oil wealth with big spending, Fraser Institute says”

CBC’s Tracy Johnson described how, at least judging by the examples of Alaska and Norway, Alberta squandered its oil wealth.

In the next week, Alberta will release its third-quarter fiscal update. It’s not going to be pretty.

Premier Jim Prentice says the drop in energy prices, particularly for oil, has drained $7 billion from government revenues. This fiscal update is widely expected to show the province sliding into a deficit for the current fiscal year.

A report from the Fraser Institute says it didn’t have to be this way, and that with some restraint, Alberta could still be in surplus and have saved billions in the Heritage Savings Trust Fund.

Ten years ago, before the boom started in earnest, Alberta spent $8,965 (in 2013 dollars) per person in program spending. This does not include capital spending on items like hospitals, schools and roads.

The report argues that had the province increased program spending in the following years at the rate of inflation plus population growth, it would have spent $295 billion on programs over the next nine years.

Instead it spent $345 billion, a $49-billion difference. Last year alone it spent $8 billion, a little more than the expected hole in next year’s provincial budget.

Written by Randy McDonald

February 20, 2015 at 11:04 pm

[LINK] “The A to Z of the oil crash”

Jason Kirby of MacLean’s introduces an A-to-Z encyclopedia of the consequences of the crash in oil prices on Alberta, and on Canada as a whole.

It wasn’t supposed to happen like this. In the months and years immediately after the end of the Great Recession, Canada’s economy was the envy of the world. Our banks were safer. Our house prices were higher (and rising!). Global investors couldn’t get enough of Canadian stocks. And people were lined up at Canadian job fairs across Europe and the U.S., hoping for a chance to come and experience Canada’s economic exceptionalism for themselves. Good times.

Good times, it’s now clear, that were too good to last. The speed with which the cracks in Canada’s economy have spread and broken apart is remarkable. Economists have been left scrambling to downgrade their forecasts for GDP growth, the job market has showed troubling signs of deterioration, and exports have continued to slide. When the Bank of Canada cut its overnight lending rate by 25 basis points to 0.75 per cent last week, a move that stunned markets, it was a tacit admission of how bad the outlook for Canada’s economy has become.

There are many reasons why this is happening now, but the key factor that has set everything else in motion is the stunning 60 per cent plunge in the price of oil in just seven months. The oil crash is—to borrow a phrase from Bank of Canada governor Stephen Poloz, which may become a signature of his tenure—“unambiguously negative” for the Canadian economy.

True, there are benefits for certain segments of the economy. Ontario exports are smiling, as are drivers at the gas pumps. But oil’s wild ride has exposed fissures that have been deepening for years, such as Canada’s overreliance on household debt and real estate for growth, as well as imbalances in trade and the labour market.

The factors driving down the price of oil are complex, as are the repercussions, some of which are being felt now. Some may only take recognizable shape years from now.

Written by Randy McDonald

February 12, 2015 at 11:29 pm

Posted in Canada, Economics

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[LINK] “Oil’s swoon sparks Alberta schadenfreude in rest of Canada”

CBC’s Paul Haavardsrud wrote recently about Canadian schadenfreude directed towards Alberta, now that its oil-driven economic boom has come to a halt. The questions this raises about Canadian identities and Canadian national unity and Canada’s prospects are tiresomely familiar. Good essay, though.

Right now, the same low oil prices that are knocking Alberta from its economic perch are also once again waking up the familiar call-and-response of inter-regional rivalry. For Exhibit A, Anastakis says, just listen to a call-in radio show or scroll to the comments section of nearly any newspaper or web story that touches on oil.

If lower oil prices mean petro-rich Alberta gets served with a little comeuppance and gasoline prices fall at the same time, then, a common line of thinking goes, what’s not to like?

As a Globe and Mail reader recently offered: “I guess we can start calling Alberta ‘Detroit West’ now. Where did all that oil money go over the last few decades anyway? Didn’t the Conservatives put some aside for a rainy day? Get your umbrellas out in Alberta!”

A commenter on a recent story on CBC.ca was even more direct: “Everybody here, let’s all raise our hands in the air and cheer. It’s about time that Alberta suffered.”

The rebuttals from the Alberta side of the border often make for a smart match: “Hows [sic] Nova Scotia been doing these last few decades? Not so hot economically according to all the Nova Scotianers [sic] I talk to that have been supporting families back home with the money they make right here, in Alberta.”

As might be expected, Albertans are starting to circle the wagons against attacks from other parts of the country that seem just a shade too gleeful. While the keyboard stylings of a few commenters, as well as the odd internet troll, are certainly not a robust gauge of the mood of the entire country, the renewed visibility of both camps raises any number of questions.

Written by Randy McDonald

February 12, 2015 at 8:44 pm

[LINK] “How Oily Is Canada’s Housing Bubble?”

Bloomberg’s Megan McArdle suggested that the bursting of Alberta’s oil boom is not likely to lead to a general collapse in the Canadian housing market. I’m skeptical of her assumptions that Alberta’s shock won’t be transmitted elsewhere in Canada, and not only on account of the dependence of economies and labour markets elsewhere in Canada on Albertan prosperity. You?

If you watch any amount of HGTV — which is to say, if you are a middle-aged married person — then you’ve probably noticed something funny: A lot of the people on shows such as “Property Brothers” seem to have Canadian accents. And you’ve probably noticed something else a bit funny: Those people are paying a heck of a lot for claustrophobic rowhouses on so-so streets.

Canada is one of the few Western nations that survived the financial crisis nearly unscathed. My working theory has long been that this is because the Canadian banking system is run by Canadians, a very sensible people. But it’s reasonable to ask whether Canada’s relative stability might not have something to do with the price of oil, because Canada is sitting on a large supply of “nontraditional” (read: “expensive to extract”) petroleum, mostly in Alberta. And as David Parkinson, economics reporter at the Globe and Mail, has written, their economic growth has been substantially goosed by those deposits[.]

How much does Alberta matter? Well, as with any good native Albertan (full disclosure – born and raised), my knee-jerk tendency is to say “way more than the rest of you bastards combined.” But in the current Canadian economy, that’s alarmingly close to accurate. Alberta contributed one-third of Canada’s economic growth last year, and is by far the fastest-growing province in the country again this year. Since the beginning of 2013, nearly half the jobs created in the country were in Alberta. . . .

The oil sector has not only been leading the way in Canada’s export recovery, it has also been the big driver in business capital investment in the country. That means the sector has been leading the way in the two key areas that the Bank of Canada has repeatedly identified as critical to sustaining Canada’s recovery. Lower prices could stifle energy’s contribution on both fronts; they are not only an automatic drag on the value of exports, they are also a notorious capital-spending killer.

Canadians have been worrying more and more about a housing bubble. In that context, it’s worth examining whether the fall in oil prices will be what finally causes the bubble to burst.

Written by Randy McDonald

January 29, 2015 at 11:48 pm

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