This presentation looks at both economy and fiscal management cycle for Alberta

1. Alberta – Fiscal and
Economic Mess
Paul Young CPA, CGA
April 11, 2019

2. Paul Young - Bio
• CPA, CGA
• Financial Solutions – FOPM and FPM
• SME – Business Process Changes
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
• Academia – Advance Accounting, Public
Finance and Advanced Management
Systems
Contact information:
Paul_Young_CGA@Hotmail.com

3. Agenda
• Fiscal Plan
• Debt Rating
• Healthcare
• Education
• Expense Management
• Red Tape
• Mining Ranking
• Economy – Manufacturing
• GDP
• Provincial Forecast
• Poverty

4. Alberta Fiscal Management Plan
• Source - https://economics.bmocapitalmarkets.com/economics/budget/2018ab/bud2018ab.pdf
Winners
• Parents more money for kindgergarten
• Students will see tuition frozen
• $5.3B or about $1.7B per year for clean
tech initiatives. So, about ¼ deficit is
tied to subsidizing clean technology
Losers:
• More debt and no path to balancing the
budget
Source -
https://globalnews.ca/news/4100361/alb
erta-budget-2018-winners-losers/

5. Kenney Plan / Surplus
Source - https://www.canadianmanufacturing.com/regulation/kenney-and-united-conservatives-promise-714m-budget-surplus-by-2023-230096/
The UCP expects that revenues from oil and gas
royalties will be lower than projected by the
NDP, but by keeping spending hikes to about 0.3
per cent per year, coupled with job creation
incentives such as slashing the corporate tax,
they can get to balance before the end of its
first term in government.
The UCP projects that if it wins the election,
the budget for 2019-20 would show a $7.4
billion deficit, including borrowing to pay for
operations.
It says that would be followed by a $6.6-billion
deficit the following year, then $4 billion in the
red, before finally the $714-million surplus in
the 2022-23 fiscal year.

6. Debt / Alberta
Source -
https://www.moodys.com/research/Moody
s-affirms-Albertas-Aa1-rating-maintains-
negative-outlook--PR_386357

7. Healthcare - AB
Source – Federal Government and Alberta Government
• Alberta spending on healthcare is very
high -
http://www.cbc.ca/news/canada/calga
ry/alberta-healthcare-spending-canada-
cihi-1.4390555
• Money spent on healthcare does appear
to have reduced wait times -
https://globalnews.ca/news/3572118/a
lberta-continuing-care-wait-times-the-
worst-in-5-years-report/
• AB nurses are feeling the pinch -
http://www.cbc.ca/news/canada/edmo
nton/alberta-nurses-ratify-deal-wage-
freeze-job-security-1.4539454
• Money appears to be tied up in the
system

8. Alberta / Healthcare Ranking
Source - https://www.conferenceboard.ca/hcp/provincial/health.aspx

9. Education – AB
Source – Stats Canada, AB Government
• Notley signed a deal that pay increase would be granted in the future -
https://www.fraserinstitute.org/article/teacher-union-me-too-clause-would-make-alberta-fiscal-
situation-even-worse
• AB has solid education system - http://www.conferenceboard.ca/hcp/provincial/education.aspx or
http://www.bbc.com/news/business-40708421
•

10. Alberta Education Ranking
Source - https://www.conferenceboard.ca/hcp/provincial/education.aspx

11. Expense Management
Source – Government of AB
• Total operating expenses are expected
to rise 3.0% in FY18/19, then run around
2.6% in the following two years. This is
not overly aggressive restraint, but will
bend the real per-capita spending curve
down somewhat in the near term.
• The capital plan sees the most
significant reduction, with total spending
falling to $6.4 billion in FY18/19, from a
hefty $9.2 billion in FY17/18. Spending
fades further in the subsequent two years,
and three-year total capital spending
(FY18/19 through FY20/21) is now
tracking $5.3 billion lower than projected a
year ago. This is a prudent shift with the
recession now behind the province.
Source – BMO Economics

12. Red Tape /
CFIB
Source - https://www.cfib-
fcei.ca/en/advocacy/red-
tape-report-card

13. Alberta –
Mining
Ranking
Source -
https://www.fraserinstitute.or
g/studies/annual-survey-of-
mining-companies-2017

14. Oil / Canada
Source – Stats Canada, Baker Hughes and BMO

15. MFG Sales / Employment - AB
Source – Stats Canada
• “What about the return of jobs to Alberta? The NDP recently bragged that “nearly 49,000 jobs were created here
over the last year,” which refers to the increase of 48,500 jobs for the 12 months ending June 2017. But it turns
out — even if we ignore the decrease of 14,400 jobs in July — that this employment “recovery” is actually just a
mirage: 41,900 of the 48,500 jobs were in the public sector, financed by deficits of over $10 billion at the
provincial level and of nearly $30 billion in Ottawa.” http://business.financialpost.com/opinion/matthew-lau-
albertas-job-mirage
• Alberta cannot get oil to market - https://globalnews.ca/news/4104087/anti-pipeline-protests-continue-at-b-c-
kinder-morgan-terminals/

16. Alberta Employment
Source – Stats Canada

17. Alberta GDP
Source – Stats Canada
A new report says direct employment in Canada's oil and gas
sector is expected to fall by more than 12,000 jobs this year.
PetroLMI says the workforce is forecast to drop to about
173,300 in 2019, a decline of 23 per cent from 226,500 in
2014. It says the oil and gas labour market shrank quickly in
2015 and 2016 following a commodity price collapse and
remained relatively flat through 2017 and 2018.
Source - https://www.cbc.ca/news/canada/calgary/canada-
alberta-jobs-oil-gas-employment-cuts-losses-1.5089234

18. Provincial Forecast
Source – RBC Economics

19. Poverty / AB
Source - https://globalnews.ca/video/4683561/1-in-6-alberta-children-lives-
below-poverty-line

20. Summary
• Alberta has no path to balance budget
• Alberta’s debt service costs are now close to
$2B/year
• Alberta using the same failed model as Ontario
when incomes to funding clean technology
• AB new jobs have been public sector and not
private sector.
• AB continues to lose oil investment to other
jurisdictions like Texas -
https://www.slideshare.net/paulyoungcga/whats-
up-with-oil-energy-market-march-2019
• Alberta after tax income rate was the lowest in
Canada - https://www150.statcan.gc.ca/n1/daily-
quotidien/180313/dq180313a-eng.htm