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Trevor Tombe Profile picture
@trevortombe
May 3 • 3 tweets • 1 min read Twitter logo Read on Twitter
Oil again below $70/bbl. Alberta needs ~$75 to balance and was banking on $80 for the budget.

Hopefully we'll see some serious ideas from both parties around how to ease our dependence on this volatile revenue source. #abvotes Image
Tip: if a candidate or leader uses the words "economic diversification" in any statement about our reliance on resource revenues, that's a clue that they have no idea what's going on.
* correction: budget 2023 was based on 79 for the 2023/24 year, not 80

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More from @trevortombe

Trevor Tombe Profile picture
Mar 1
Alberta's budget featured a large increase in spending, funded by royalties. The level of resource revenues required to balance is 16b (!) this year. Image
Also interesting is the reversal not only in the government's spending restraint but also in its debt reduction plans. Basically holding the line now. Image
The increase in spending (however valid it may be!) is wild. The politics is going to be interesting. It's a complete reversal in the govt's fiscal policy, yet the budget speech pretended it was restrained. Image
Read 4 tweets
Trevor Tombe Profile picture
Dec 16, 2022
Still figuring out the details (lots of variables) but ON receiving payments appears largely due to developments in other provinces (esp. high mining revenues in QC).

'adjustment payments' are interesting again!! 🤓
I can finally update my EQ assignment for the @policy_school public finance students! They've been stuck in 2018/19 for years now... 2023/24 makes the calculation interesting again!!

Fun for me for sure. I don't know about the students.
Important correction: mining+hydro:
Read 4 tweets
Trevor Tombe Profile picture
Dec 9, 2022
Why is the Bank of Canada owned by the government? Because Alberta Premier William Aberhart invaded Saskatchewan.

A nerdy thread about the Bank and Bible Bill for #cdnecon, #ableg, and #cdnpoli. 🤓🧵
First, some background. The Bank of Canada was established in 1934 and began operations in early 1935. (Brief history here: bankofcanada.ca/about/our-hist…)

But it was a fully private entity, with roughly 12k shareholders across the country. Government owned no shares.
The govt had influence, to be clear. Govt appointed the first Governor + the Governor could veto any board decision.

And dividends to shareholders were capped at 4.5%. All excess went to the government. So, it wasn't really a profit maximizing corporation in the normal sense.
Read 26 tweets
Trevor Tombe Profile picture
Nov 29, 2022
A widely anticipated, and interesting, development. What is going on? Should taxpayers be concerned? I'll explain. 🧵 #cdnecon #cdnpoli

First, here's the full picture of the Bank of Canada's finances for 2021 before all the fun started.

The Bank earns revenue from interest earnings on bonds that it holds. Expenses are (1) normal stuff, staff, etc., and (2) interest expenses, which I'll explain next. Image
Commercial banks hold much of their reserves at the central bank. They earn interest on these deposits. Recently those holdings have grown significantly as a result of quantitative easing during the pandemic. Now ~$200 billion earn interest at 3.75%. Image
Read 16 tweets
Trevor Tombe Profile picture
Nov 3, 2022
The federal deficit this year is projected to fall to $36b from Budget 2022's projection of $53b. Here's the breakdown of what caused the change. #cdnecon #cdnpoli
Hard to be precise, but it looks like the overwhelming majority of the increase in income taxes is due to high oil prices.

Corp income taxes up nearly $23b. That's almost two-thirds of the change. Oil & gas, mining, petroleum products dominate the increase in corp profits.
Interestingly, total GST revenues are projected to come in lower than Budget 2022 expected. I anticipated an increase due to inflation (higher prices --> higher GST payments). Likely due to the slowdown in economic growth currently happening (and reflected in the projections).
Read 4 tweets
Trevor Tombe Profile picture
Oct 26, 2022
The Bank of Canada's communication challenges will grow in the coming months. In the rate announcement, for example, they say 'no meaningful evidence of price pressures easing'. Yet, in the MPR, they provide clear and unambiguous evidence that price pressures are easing. ImageImage
This isn't just nitpicking, it's an important head scratcher. They say clearly that rates will need to rise further *because* inflation is persistently high (sorta). But their own projections are for it to fall back below 3 percent by Q4 2023. Image
Since monetary policy takes time (18-24 months even), there's already a lot working its way through now. Are the inflation projections based on internal projections of future policy rates? Or just current policy? I've always been curious (the Fed implicitly reports this).
Read 9 tweets

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