The News Rundown
- As the province celebrates Alberta Day this weekend, it’s time to have a look at how the fiscal house is doing.
- Alberta’s spring budget forecast a surplus of around $500m but the most recent fiscal update puts that figure up to $13.2b.
- The story surrounding Alberta’s fiscal turnaround is remarkable which is in large part due to natural resources revenue but our story also has been impacted by fake news.
- Before getting into the cautions that everyone should be aware of, let’s look at what this fiscal update contains.
- The government will pay back $13.4b in provincial debt and put away another $3b for the Heritage Savings Trust Fund. The Heritage Savings Trust fund is valued at about $18.7b.
- The Heritage Savings Trust Fund puts money away and invests it with the hope of making a profit for Albertans.
- The government will also reindex personal income tax brackets to inflation which should save Albertans $304m on taxes in 2022-23 and save the average taxpayer about $300, this will be retroactive to the 2022 tax year.
- There have also been calls to reindex social programs like AISH to inflation as well but the government has been quiet on this.
- On this, Finance Minister Jason Nixon said, “For too long, governments in Alberta refused to exercise fiscal discipline during boom times. Those days are over. Alberta’s government is making the prudent decision to save and invest surplus revenues so future generations can benefit from the prosperity of today.”
- And Jason Kenney who will be leaving as Premier in October said, "Alberta's commitment to fiscal discipline and our unrelenting focus on economic growth has helped bring about an extraordinary turnaround in our financial situation. We promised Albertans we would get our fiscal house in order and that's exactly what we've done. Now, we're paying down debt so future generations won't have to, saving more for a rainy day, and putting more money in Albertans' pockets."
- The fiscal situation Alberta finds itself in is a once in a generation opportunity to plan for the future.
- The next provincial election in May means everything and Albertans are going to have a choice to make.
- In any other world there would be no question that the UCP has fulfilled their mandate and would be on the path to another majority as has happened in Saskatchewan and Ontario recently.
- But fake news, sensationalism, and the misrepresentation of facts has shaken this foundation resulting in the ouster of Jason Kenney by the party base.
- The central question of course became one about COVID restrictions and in the leadership race a question about autonomy and sovereignty.
- The discussion in recent days has again turned to Danielle Smith’s Sovereignty Act and whether or not the Lieutenant Governor would grant Royal Assent to such a Bill.
- The Lieutenant Governor, Salma Lakhani said she’d consult Constitutional experts before granting Royal Assent and Jason Kenney said that the Bill could come down to the Lieutenant Governor and shake investor confidence in the province.
- But if we go back through the dark times of the past two years, we’ll find that it was often the media, both left and right, mainstream and independent that sensationalized news and divided people within the province.
- This led to the push to remove Jason Kenney and provided an avenue for discussions on autonomy and sovereignty.
- We need to be clear that Albertans are allowed to have their own opinions on the role Ottawa should have in governing provinces but these lightning rod discussions are happening at a time in place when the discussion should be focused on the Alberta Advantage and the fortunate position the province is in.
- NDP supporters are smiling at the discourse happening in the province because a fractured right focused on selling ideas to themselves rather than everyday Albertans only helps the NDP.
- The fiscal update and surrounding situation Alberta finds itself in should be the sole focus of any government and leadership campaign presently.
- Distractions and diversions due to media sensationalism are a problem and that’s why the fiscal update is the story of the week for Alberta.
- Pierre Poilievre has been in the news a lot this summer, during a time when there is not normally a lot of news. That's partially due to his leadership election campaign strategy of releasing daily or almost daily videos on social media, and always keeping the conversation current on something that his audience is interested in. This is something that his opponents in the Conservative leadership race have not done, and it's one reason why he's considered the runaway frontrunner to win when the race wraps up on September 10th.
- On Thursday, Poilievre released a video decrying the overly complicated 'bureaucratese' used by the federal government as he calls it, meaning unnecessarily wordy language used by the government in laws and press releases. In a video posted to social media on Thursday, he promises to enact a "Plain Language Law" that he said would bring an end to government jargon, including in legislative documents.
- Poilievre began his announcement by invoking the words of Antoine de Saint-Exupery, the famous French author of "The Little Prince," who once wrote a line about perfection: "Perfection is achieved not when there is nothing left to add, but when there is nothing left to subtract. Unfortunately, our governments do nothing but add and add and add paperwork and forms and endless red tape."
- Poilievre said his new law would ensure government publications are written in simple, straightforward sentences. He didn't explain how such a law would work — or how the bill itself would be written without using jargon.
- The law would also empower the auditor general to scan government publications for the presence of ‘bureaucratese’, he said, and provide Canadians with a government website where they can report any gibberish.
- He said the law would also require the government to hire writers who can write plainly and adapt bilingual language training for public servants to ensure they learn the most easy-to-understand words.
- Poilievre argues government documents, including forms, are needlessly complicated because the bureaucrats who write them use overly technical language, which creates hurdles for small businesses that have to read them. All that time spent trying to understand what the documents say adds up, he said.
- Poilievre's fight for fewer words appears to be one he takes personally. He complained about politicians' use of jargon in a speech given more than a decade ago.
- Back in 2009, when the prominent Tory only had five years as a member of Parliament under his belt, he advised young conservatives on the value of learning to communicate as a way to advance their political careers.
- Poilievre, who now boasts one of the largest social media followings in Canadian politics, complained then about how few people on Parliament Hill knew how to write and speak in a way that everyday Canadians could understand, saying that "It is not their responsibility to decipher excessively verbose language."
- Poilievre told his 2009 audience that the best way to learn to communicate plainly is to write for newspapers — which take complex ideas and use simple language to explain them to readers — and to knock on doors.
- Language is not the only policy of the government that Poilievre wants to simplify. He appears determined to change this with the first broad tax reform Canada’s seen in decades. His solutions: simplify the tax system, reduce income taxes and cut clawbacks of income-tested government benefits.
- In a recent video, he compares marginal effective tax rates (METR) to actual parking meters, except while parking meters charge for time used, “work METRs charge you more, the more you work.”
- This can happen when clawbacks on income-tested government benefits combine with income and payroll taxes to consume large portions of each additional dollar a worker earns. Taking on extra work, or even receiving a raise for a job well done, is effectively punished when upwards of 50 cents of every new dollar disappears.
- METRs are essentially a hidden tax on upwardly mobile, but economically vulnerable Canadians. Those in more comfortable income brackets, like politicians, aren’t typically impacted by this problem, which perhaps explains why, despite being long acknowledged by accountants, tax lawyers and the Department of Finance itself, it continues to go unsolved.
- Poilievre shares an example of a single mother with three children who earns $55,000 a year. If she earned an extra dollar, she would lose 80 cents of it to METRs. This is because, in addition to extra taxes, she would face clawbacks on government benefits like social assistance and the Canada Child Benefit.
- This is where things could get politically interesting down the line. As of now, most voters likely aren’t aware Poilievre previously attempted to address METRs. In 2018, he put forward the Opportunity for Workers with Disabilities Act, which sought to ensure those who receive disability support don’t lose more than they gain through additional work. Notably, the NDP fully supported Poilievre in this effort, with NDP MP Alexandre Boulerice acknowledging, “it is rare for me to agree with the member for Carleton, the bill’s sponsor.”
- But the Opportunity Act did not pass. This is because it was opposed by the Liberals. At the time, Boulerice also said, “It is a shame to hear the Liberals tell the House that they will not be following our lead and supporting people with disabilities and their integration into the workforce. This is a concrete measure to correct a situation that is unfair to people with disabilities.”
- It's bipartisan measures like this that have raised his popularity amongst age groups that do not traditionally vote Conservative, something that the party will need if it hopes to dethrone the Trudeau Liberals in the next election, whenever that may be.
- Poilievre’s growing popularity among young voters is likely due to how he’s seized upon an opening by providing coherent messaging that addresses the general state of dissatisfaction and the economic anxieties that are weighing on young Canadians. That includes continuing frustrations about the inaccessibility of home ownership, income instability and inflation.
- The continuing detrimental economic consequences of the COVID-19 pandemic have also affected this demographic the most, contributing to perceptions of a growing divide between older, economically established generations and younger adults. This has also created a popular feeling among many young voters that the Trudeau government needs to be replaced. In addition to a series of missteps and scandals that have eroded Trudeau’s personal popularity, the government is also perceived as being unable to deal with these growing economic concerns.
- Because the NDP entered into an agreement with the Liberals allowing them to deliver on beneficial policies like dental-care coverage, the party is now limited in its ability to craft and convey a coherent alternative to the Liberal government.
- This is even though New Democrats have, along with Poilievre, been engaging in populist attacks about economic elites for not “paying their fair share.” The NDP’s ongoing support for the Liberals has come at the cost of credibly tapping into a growing anti-Liberal sentiment by compromising their position as a principled adversary — giving Poilievre yet another opening to electoral success. In contrast, Poilievre offers a coherent, semi-populist appeal that prioritizes these problems, provides a common cause or enemy and proposes solutions within Conservative policies.
- Poilievre has identified a set of “gatekeepers” that include all-powerful interests and established voices in Canadian public life as the source of these problems, including progressive urbanites, government bureaucrats and financial elites. In working to maintain their privilege, says Poilievre, these gatekeepers have compromised the opportunities available to ordinary Canadians.
- His platform’s appeal lies in the fact that it’s simultaneously coherent enough to appeal to Conservative partisans and, at the same time, vague enough to allow young voters to apply their own dissatisfaction or economic anxiety through this gatekeeper/freedom narrative.
- Poilievre’s momentum among younger people, if maintained, could bring the CPC a notable electoral advantage in the next election. But given the fact it’s derived from an anti-Liberal sentiment, it’s difficult to determine if it will have a long-term impact.
- The party may struggle to retain young voters in the years ahead, likely because younger Canadians care about issues that the Conservatives perform poorly on, like climate change and social equity. But it’s also possible a much deeper and structural change among younger voters is afoot that is making them more conservative, both economically and socially.
- As scholars of populism have argued, the significant economic, social, demographic and technological changes of the last decade have produced a state of displacement and uncertainty that’s pushing emerging adults into conservative politics. If so, it’s good news for Poilievre.
- The fallout from the cancellation of the Keystone XL pipeline continues.
- This project was going to be one of the secure energy options as it went through one of our biggest allies, the US, but it was cancelled by the Biden administration.
- Now an Indigenous backed company (Natural Law Energy) is seeking $50m from TC Energy after a falling out between partners on the Keystone XL project.
- Natural Law Energy Inc represents a number of Indigenous communities in Western Canada and is asking for “financial compensation for all the losses of income and the lost opportunities for future income.”
- Natural Law agreed to invest as much as $1b in Keystone XL and also had a memorandum of understanding with TC Energy for possible equity stakes in other projects. Now there are no deals going forward.
- TC Energy and others like Suncor have turned to similar equity partnerships to try to overcome opposition to building new energy projects.
- The Alberta government has filed a suit requesting $15b in compensation from the US government back in November.
- Natural Law was excluded from participating in the case.
- Chief Alvin Francis who is president and co-founder of Natural Law did not return a comment for the story and an email to Chief Leonard Standing On The Road who is director and co-founder of Natural Law wasn’t responded to.
- Going forward Natural Law is seeking a 100% stake in TransMountain which the federal government intends to sell once active. Natural Law is competing with four other groups for a stake in the project.
- The media talks about the initial discussions when an energy project is proposed or when there are protests against said energy project but rarely do they show what the fallout of a failed energy project looks like.
- This is just one angle of several cancelled energy projects in the country over the last 7 years with just a couple of companies.
- When expanded out to other companies involved in Keystone, individuals involved in Keystone, it’s easy to start to imagine the true impact of the cancellation of just one of these projects.
- Expanding out to other projects we start to see billions lost and thousands of affected people.
- These projects were shelved because the government outright cancelled them in the case of Keystone or the projects were made not viable by the government in the case of Energy East, just to name two.
- The reason for the projects being stopped was the environment but what the government and media doesn’t say is that we can and still should go green in other ways but oil by pipe is one of the safest ways of transporting the product and energy produced in Canada and the US meets some of the strictest standards in the world.
- There is a time and place for talking about how much new oil and gas is needed but today’s discussion is to show you, our listeners, what happens in just one of the cases when a project is cancelled.
- The federal government's new luxury tax on higher priced cars, boats and planes came into effect on Thursday, and many in the media have been saying that it will backfire and actually hurt the economy, even from left leaning publications like the Toronto Star and CBC. Let's look into it and see if the government's actions will do further damage to Canada.
- As of Thursday, the tax will apply to cars and personal aircraft with sale prices of over $100,000 and boats for personal use with price tags of more than $250,000. The one time sales tax will be either 20% of the value of the vehicle above that threshold, or 10% of the total value, whatever is lower. For example, on a car that costs $150,000, the tax on that would be a whopping $10,000. The measure received final approval this past June and is expected to raise $163 million in new revenue per year.
- Deputy Prime Minister and Finance Minister Chrystia Freeland defended the tax Wednesday on the eve of its launch after touring a transportation facility in Calgary. She said: "I think it is entirely reasonable to say to someone who has $100,000 to spend on a car or a plane, or $250,000 to spend on a boat, 'You need to pay a 10% tax to help everybody else'. I think it is great for Canadians to be successful. It is great for Canadians to be prosperous. I also think that people who are doing really, really well should feel comfortable supporting everybody else."
- Business owners who sell luxury transport vehicles are baffled by what is included in the tax, and what isn't. For instance, RVs are not included in the tax, despite many of them costing hundreds of thousands of dollars. Floating homes, fishing boats, ferries and cruise ships are also not included in the tax, while yachts, sailboats, deck boats, waterskiing boats and houseboats are. Your guess is as good as mine as to the difference between a houseboat and a floating home.
- Mark Delaney is director of sales and marketing at a Vernon, B.C., company that manufactures boats worth up to $500,000. He said the tax will undermine a boom in boat sales that began when people were stuck at home during the COVID-19 lockdowns. Delaney said the tax is coming at a time when inflation is driving up the cost of parts for boats. He warned that the measure will harm tourism businesses and could make purchasers, many of whom are business owners themselves, think twice about buying.
- Delaney said: "They feel like they've paid more than their fair share in payroll taxes and everything else they do in their businesses every day. And so to be hit ... with this tax is certainly not putting us in a very good light with the customer."
- Economic theory says that you want to give tax breaks on activities that you want to encourage and tax those you want to discourage, like smoking. Unfortunately the Trudeau Liberals want to tax people for spending their money in an inflation crushed economy, and increase taxes on people who work more to get that money as well.
- There is never a good time to apply a bad tax, but a luxury tax when the Canadian economy is grappling with high gas prices, consumer confidence remains low and inflation is hitting 30-year highs, seems particularly ill-timed and ill-advised. The Canadian automotive industry has been hit hard by the pandemic, as new vehicle sales plunged in 2020 and 2021. As our industry gains momentum, a new tax threatens to put the brakes on that recovery.
- The new luxury tax doesn’t just include taxing the sale of a vehicle at the time of purchase. Doubling down, the government has added a provision to Bill C-19 that would see motorists additionally taxed on any improvements they make to their new vehicles. If a purchaser wants to add a stereo system, vehicle wrap or remote starter, they would be taxed at 10% on the cost of those additional items (up to $5,000). Plus, buried in the fine print of the bill is a provision that says any improvements or add-on items purchased during the first year of ownership will also be taxed at — you guessed it — 10%.
- Many people will be unaffected by this new tax, and some might argue that if anyone can afford to pay it, it’s the rich. But that’s missing the point. Fewer sales and fewer cars coming in for service means less commission for salespeople and less hours paid for technicians and auto body repairers. That’s bad news for workers trying to make a living.
- The luxury vehicle tax is nothing short of a gratuitous tax grab. It’s a tax that is punitive in nature, and it will wind up hurting the automotive industry, as well as the Canadian economy.
Quote of the Week
"Alberta's commitment to fiscal discipline and our unrelenting focus on economic growth has helped bring about an extraordinary turnaround in our financial situation. We promised Albertans we would get our fiscal house in order and that's exactly what we've done. Now, we're paying down debt so future generations won't have to, saving more for a rainy day, and putting more money in Albertans' pockets." - Alberta Premier Jason Kenney on the province’s expected $13.2b surplus.
Word of the Week
Jargon - special words or expressions that are used by a particular profession or group that are difficult for others to understand.
How to Find Us
Episode Title: Simplifying Discourse
Teaser: Alberta projects a $13.2b surplus, Pierre Poilievre wants to simplify government language, and we discuss the untold economic impacts of cancelled energy projects. Also, the new federal luxury tax may backfire on the Trudeau Liberals.
Recorded Date: September 3, 2022
Release Date: September 4, 2022
Edit Notes: Patreon spot
Podcast Summary Notes