Whenever I think about what might happen to the economy in the coming year, I remember that I spent the early part of my academic career doing economic forecasting. It took me a while to learn that this is a dishonest game. You can forecast pretty much whatever you would like by fiddling with the underlying parameters of the model that you are using. This is why I have always been skeptical about the climate doom and gloom predictions. No model will consistently accurately predict what is going to happen even 2 years from now.
With this warning in mind, what can we expect to happen to the economy in 2020? The best way to sum this up is that it does not give me a warm fuzzy feeling. As always, the major problems with the Alberta economy come from the poor performance of the oil and gas sector. The world price of oil is only part of the problem. The major problem is the federal government and some provincial governments. The Trudeau government seems content to stumble from one economic bad decision to another, and I do not see any end in sight for this behavior.
There are major ramifications from the fumbling of the TMX file, combined with the blind adherence to some sort of a climate crisis thinking. This is causing investment dollars to go elsewhere, mainly to the United States where, in spite of what you may think about Mr. Trump, there is a much more pro-business and pro-oil atmosphere. This does not bode well for the oil patch in 2020. Further, it may quite possibly be true that Bill C-69 will be the kill the pipeline bill. If this turns out to be true, this is bad news for Alberta. In terms of other provincial governments, Quebec and British Columbia will continue to oppose pipelines in general and the TMX in particular.
On January 1, 2020, the federal government will still start applying its carbon tax on the purchase in Alberta of fuels like gasoline, natural gas, and propane. Under the Rachel Notley dark years, Alberta had a consumer carbon tax on fuel. However, Jason Kenney cancelled it earlier this year. Now we are going to get it back again. I cannot understand how any government can think that introducing a new tax on an economy that is struggling is a good idea.
Mr. Kenney is doing his best to put equalization on the federal agenda. He should be commended for doing this. However, I cannot help but think that this will go nowhere politically. Quebec, being the chief beneficiary of the status quo, will vehemently oppose any change. It continually amazes me that Quebec can publicly demonize oil and yet take transfer payments that come largely from Alberta.
In the face of all of this potential bad news, I suggest is that we heed the words of Han Solo. When everything looked terrible in Return of the Jedi, Han said, “Come on, lets keep as little optimism here”. Maybe the minority Trudeau government will fall.
Frank Atkins is a Senior Fellow at the Frontier Centre for Public Policy.