The $133 billion is the estimate of the gap between current assets and future pension commitments. It isn’t an “unfunded liability” in any sense that matters for the APP discussion. I’ll try to explain. #ableg
The CPP is funded by contributions of current workers and returns on investments. This is because of a sensible reform in the late-90s to ensure CPP is sustainable in the long run.
If we were to stop *ALL* contributions from workers but still pay out pension benefits that people have accumulated/earned then would current assets be enough? No. Does that mean CPP isn’t funded? No. Worker contributions make up the difference!
Unemployment in Canada rose to 13% in April, but that masks much of the story. Many have zero hours. Many others exited the labour force.
I've put together some alternative measures of the 'effective' unemployment rate in #cdnecon. Now: 32%. (Will explain in this thread.)
This says that unemployment "would have been" 32% if the participation rate and average hours were unchanged between February and April 2020. Usually this doesn't change much from month-to-month. See red line pre-Feb.
And here's the decomposition of the changes. Much of the increase is because of people leaving the labour force (who aren't counted as "unemployed").
Can the Federal govt handle the additional COVID spending? Some are raising debt concerns. Since it's important to think this through. I try to help here (with calculations!). #cdnecon#cdnpoli 1/n
First, interest rates and borrowing costs aren't really the issue in the short-term. Borrowing rates are incredibly low right now. Question is only how soon we return to normal budget balances. bankofcanada.ca/rates/interest…
To explore this, I run some scenarios based on the PBO estimates released this morning. But I project beyond 2020 to give a sense of magnitudes. (Lots of uncertainty, but still helpful!) Note: *these are scenarios, not predictions*.
The govt is saying the savings are being reallocated to COVID response. This is false. Money is fungible and the spending on health during the crisis will be unaffected by this decision. What is affected is Alberta govt’s debt levels.
The govt is shifting to the Feds some of the debt from this crisis. The Feds have an expanded EI program and the province is shifting some of the salary burden up one level. But Feds will almost surely raise transfers soon to accomplish the same end of buffering provincial debt.
That 500k is ~2.6% of employment, which is the first confirmation we've had that March 2020 will be the largest employment drop in recorded Canadian history. Previous record was -2.6% for the whole of July 1932. We've reached that drop now in a single week.
Given the interest in this tweet, I should give a citation: historic employment data is available through the Canada Year Books: www66.statcan.gc.ca/acyb_000-eng.h… It's labour intensive to collect, but it's there. The -2.6% is the change in my own estimate of the seasonally adjusted data.
The “fiscal stabilization” program might soon be changed by the federal government. Reform is long overdue. I wrote a paper through @IRPP that explains the program and lays out options. Released today! irpp.org/research-studi…#cdnpoli#cdnecon
The history of such programs is important. I document that the cap — of $60/person, which is Alberta’s main point of concern — was implemented with little analysis and even less thought. Absent a clear justification for it, the case to scrap the cap is strong.
Also, I believe this is the first time the data behind the stabilization payments has ever been provided. Not only interesting, but necessary to calculate all the reform options. Big thanks to all the dedicated public servants both in Alberta and Federally for providing it.
From today's GDP data, here's how the provinces compare. AB's economy leads with $80k per capita in 2018, followed by SK at $69k. National average of $63k.
When folks say Alberta's economy remains strong, despite the recession, this is what they mean. #cdnecon#ableg
The components of Alberta's GDP change are also interesting. The drop is entirely due to private investment declines (mostly oil and gas). In 2018, there was a slight decline from 2017. Remains ~$50b below 2014 peak.
On the income side, by far the largest drop was in corporate profits. Modest recovery of this continued in 2018. Labour compensation has now recovered ~1/2 of its drop in 2016.
Alberta's Budget 2019 proposes to increase income taxes to help lower the deficit. Have now had time to crunch some numbers. Here's the average cost to AB families, by income category. Equiv to ~0.2% of disposable income (or ~$150 per family per year by 2021). #ableg
And here's the same plot, but in dollars per family by income category. Average increase is ~$150 per year, but it varies across households depending on your income and credit situation.
Note: some are claiming that there are no tax increases. That is incorrect. De-indexing and removing some credits will increase income tax payments: roughly ~$330m in additional revenue (govt estimate is 311m) per year. That comes from taxpayers. What else shall we call it?
@kevinmilligan And here's the average change in family disposable incomes under the CPC and LPC income tax changes. LPC is notably larger % change among lower-income families, and both decline at the top but LPC declines faster. #cdnpoli
Premier @jkenney claimed yesterday that the former NDP govt added 40,000 people to government's payroll. Is this true? No, it's misleading. (A short thread). #ableg
First, public-sector employment in Alberta indeed rose in recent years. During the former governments's tenure in office, public-sector employment rose nearly 50k. But, importantly, this includes all levels (feds, crown corp, muni, etc.).
Second, that data itself is puzzling and inconsistent with other measures of public employment. A great piece on this is from @CBCFletch at cbc.ca/news/canada/ca…
With nearly five-years having passed since the recession started, it's worth reflecting on the changing composition of jobs in Alberta. Big reductions in oil and gas, construction, manufacturing. Big increases in health/education.
Using a proxy for 'public' vs 'private', it still looks like there's been two full years of little to no gains in private-sector payroll job growth. Disappointing.
Today in #abvote there was a suggestion that Alberta push for changes to two major federal transfers programs. Specifically, to change them into "tax point" transfers instead of cash. Let's unpack this a little.
Background: CHT and CST are federal health and social transfers. They're large. Close to $55 billion this coming year. Each province currently receives the same amount per person. They're equal.
Tax point transfers are when the Feds lower its tax rates and the provinces simultaneously raise theirs an equal amount (if they want). They're less "transfers" than a shrinkage in the federal govt. Also, tax points are worth more to high income provinces.
Some nuance here with the January employment changes: the drop is largely self-employment rather than employees. #ableg
But, and this is perhaps the most concerning graph from me this morning... the "gap" between where AB employment is and where it "needs" to be has increased dramatically, and for prime-age/older workers. Now ~60k. Second recession starting? #cdnecon#ableg
Here's a more detailed look at employment rates by age/sex in Alberta. Young men continue to fall, now ~12.5% below Oct 2014 (when recession started).
The big picture problem she raises. There may be two types of inefficiency at work: less research and learning then there could be; and maybe a bad mix. "Massive market failures within the University." #ACEA18
And @franceswoolley talks about her favorite South Park episode and what it tells us about Universities. #ACEA18