Certain big credit agencies get a lot of attention for the credit ratings they give to various companies, organizations, even provinces or nations. Moody’s is one such.
Very recently, they announced a downgrade of Alberta’s credit, based on their opinion of “structural weakness in the provincial economy that remains concentrated and dependant on non-renewable resources – primarily oil – which causes volatility in financial performance, and remains pressured by a lack of pipeline capacity …”
They also point out, however, that’s what keeping it at Aa2 (still one of the best ratings possible) is “very strong liquidity, significant fiscal capacity and a very strong institutional framework”
Or in other words, we’ve got the room we need to improve, we just are refusing to use it.
The response from our government was immediate. This is obviously the fault of the NDP for not magically forcing the supreme courts to allow our pipelines to be built over other provinces, regardless of their opinions, while they were in power.
And in fact, despite the agency pointing out absolutely directly that part of the problem is how our province remains concentrated and dependant on non-renewable resources, our Alberta Finance Minister, Travis Toews, recently stated that diversification is something for the government to worry about in the long term, not now.
We see that evidenced in the budget, with the U of A president recently releasing a blog where he notes that the advice currently is that Campus Alberta will see a 5% cut across the board, and that this is coupled with their base grant cut of 6.9% for a total cut of over 10% of their budget. It’s currently not known (or at least not yet publicized) how much of a cut Athabasca University will be forced to take in their base grant, but we can probably assume it will be something similar, possibly more since AU has more difficulty with student retention and the MacKinnon report was all about prioritizing institutions that have better numbers to start with. Obviously if any diversification is going to happen, it’s not going to be in the near future, as truly diversifying requires an educated populace. Which means when Minister Toews says it’s a long term goal, he means a very long term. Perhaps even beyond his own lifetime, if he or Mr. Kenney has the final say.
But why should we expect anything different? This is exactly what they promised us when they were campaigning. That they would be all about helping Alberta’s oil industry for the future. No matter what the cost. If we double down on oil, then obviously the federal government will have to help us when the demand for it dries up, and that’ll end our problems with constantly paying more to equalization than we receive, something else the UCP campaigned on.
I mean, okay, it’s not the way I would have liked to see it done, but I guess they are doing what they said. Enjoy the read!
