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June 2015 Alberta Economic Fundamentals

Ally

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Minister says energy industry fears 'us-against-them' outlook in royalty review

Alberta’s energy industry has told the NDP government face-to-face about its fears for the future with the triple threat of higher corporate taxes, potentially higher royalties and a beefed up carbon tax.

Energy Minister Margaret McCuaig-Boyd said she left a meeting with 40 oil company presidents and CEOs Wednesday mindful of concerns that action by her government on three separate fronts could harm the industry.

Read the full article here.
 

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Remember the importance of the Millenials? $1B investment will make Edmonton Canada’s ‘first gigabit society,’

EDMONTON - Telus says its $1-billion fibre-optic Internet build out in Edmonton will give the city a technological and economic upper hand that will boost innovation, education and streamline health care.

The company announced Friday it is expanding its network of high-speed fibre optic cables in Edmonton, connecting 90 per cent of residents to super fast web browsing. The technology uses glass or plastic threads to transmit data as pulses of light rather than signals through metal cable.

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For some market segments in Calgary, it’s still a seller’s market

Despite a pall of negative data that hangs over the Calgary residential real estate market, people looking for homes in the most affordable segment may still find themselves in a seller’s market.

Mike Fotiou, associate broker with First Place Realty, says the oil slump has hobbled sales of homes in the luxury bracket, but short supply of homes at the lower end of the market has propped up prices.

Read the full article here.
 

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What Do 2015, 2008, 1997 & 1982 All Have In Common in oil industry? You may have mis-guessed

You may have guessed one big similarity; that they were each years of big oilfield downturns. But you might not have guessed this next commonality - it certainly surprised us. In each of the downturns these years represent, the US land rig count declined by almost exactly the same percentage from peak to trough - approximately 57%.

In the chart below, we've tracked the percentage change in the rig count in each of the six major downcycles the US market has undergone. If we have truly reached the trough in the US this cycle (and it is still an "if"), then four of the six major drilling downturns will have bottomed at exactly the same percentage decline. Kind of eerie, especially when you consider the rig counts coming in to the decline have varied quite a lot - anywhere from 881 rigs in 1997 to 4,088 in 1982. But in each case, the trough was achieved after the same percentage decline. Indulging in some personification here, we might go so far as to say the US land drilling market has defined its pain threshold.

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Albertans, get ready for more borrowing

David Dodge, the former governor of the Bank of Canada, has probably never thought of himself as a gun for hire.

But that’s what he is — at least for the purposes of Alberta’s new NDP government.

Premier Rachel Notley has hired the distinguished economist as a political mercenary to help the province develop a long-term plan to build billions of dollars worth of infrastructure projects, most notably schools, hospitals and roads.

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Once again proving that hand wringing about things that don't exist is a waste of energy and takes an investor's eye off of what matters: NDP government states clearly that rent controls are not on the table

Despite average apartment rents in Calgary rising at nearly three times the rate of inflation, Premier Rachel Notley’s new government will not limit how much Alberta landlords can hike rents.

This stands in sharp contrast to Notley’s position before the election was called, when the then-Opposition MLA labelled former premier Jim Prentice’s suggestion the market would deal with Calgary’s affordable housing crisis as “profoundly irresponsible.


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Even with the increase in people leaving Alberta, this province still leads the country in population growth with 15,365 people added in the first three months of the year. But the headline screams people running away from Alberta. Stay strategic!

The latest statistics show the number of people leaving Alberta for other provinces is on the rise.

Statistics Canada says nearly 17,600 Albertans moved elsewhere in Canada in the first three months of this year. That's up from 14,700 at the start of 2014 and 10,000 during the same time period in 2013.

One moving company is reporting customers moving to B.C., Ontario and the East Coast.

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Calgary to build first 'diverging diamond interchange' with traffic on left side

Motorists will drive on the left side of a new overpass set to open in 2017, as Calgary has opted to replace a busy south-end intersection with a “diverging diamond interchange” that has never before been tried in the city.

“My understanding is it’s a first for Canada,” said Coun. Peter Demong, whose Ward 14 includes the new interchange that will connect 162 Avenue and Sun Valley Boulevard with Macleod Trail SE.

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Within every "Market" there are "sub-markets." A strategic investor sees these markets. Such as in #Calgary

Despite a pall of negative data that hangs over the Calgary residential real estate market, people looking for homes in the most affordable segment may still find themselves in a seller’s market.

Mike Fotiou, associate broker with First Place Realty, says the oil slump has hobbled sales of homes in the luxury bracket, but short supply of homes at the lower end of the market has propped up prices.

Read the full article here.
 

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Political labels aside, Alberta Premier Notley should learn lessons from other NDP premiers

CALGARY—Faced with a faltering economy and a large budget deficit, Alberta’s recently-elected New Democratic government would be better off emulating the fiscal prudence of Roy Romanow’s NDP government in Saskatchewan — rather than the tax and spend policies implemented by Bob Rae’s NDP in Ontario — concludes a new study published by the Fraser Institute, an independent, non-partisan think-tank.

“Canadians too often make the assumption that a new government’s approach to fiscal policy can accurately be predicted simply by looking at its political label. But historically, that hasn’t been the case,” said Ben Eisen, senior policy analyst with the Fraser Institute and co-author of Fiscal Policy Lessons for Alberta’s New Government from other NDP governments.

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Giving broader taxation powers to Alberta cities a no-win solution for taxpayers

They are well-worn clichés.

Dozens of taxes, but only one taxpayer.

Too many hands, but only one pocket.

Now, the province is toying with the idea of adding one more hand to the mix.

We are the first to admit cities and towns get shafted when it comes to funding.

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CTV's AlbertaPrimetime dropped in to the Edmonton Real Estate Investment Network Workshop last week to check out the real goods on what is going on in Alberta's real estate market.

Reality vs speculation

Watch the extended version of the shoot here.
 

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It's time we put a stop to the Norwailing

I think the year 2015 will be remembered for the frenzy of thrift that suddenly descended upon Alberta – largely from outside her borders, I should add. I refer, of course, to the sudden passion for stowing away oil and gas royalties in a Norwegian-style wealth fund. Alberta, we are told, has been foolish to exhaust its hydrocarbon money on current program spending; this is money that belongs rightly to the future, money that should be socked away for the benefit of the children. (It would be awkward to call them the unborn.)

People are always pointing out that Norway’s wealth fund took inspiration from our own Heritage Fund, to which the Alberta government basically stopped contributing in 1987. Here’s the thing: like many of you, I grew up with the Heritage Fund. From the beginning, much of the revenue was used in the moment. It was used to build infrastructure in small towns; to send young people to university, and to staff and build those universities; to fund research into cancer and other ailments.

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