An economic analysis released by the Alberta NDP suggests a more substantive investment in the federal wage top-up program could have led to a GDP increase worth hundreds of millions and created nearly 2,000 jobs.
Prime Minister Justin Trudeau announced last May that the provinces had agreed to collectively pitch in $1 billion to bolster $3 billion in federal funds that would boost the pay of essential workers.
While other provinces accessed all or half of the matching federal funds by September, Alberta was the sole exception, having accessed just $47 million of its $347-million allocation.
The NDP’s recent analysis used a fiscal multiplier model that indicated an investment of $100.3 million in 2020 could have generated a sustained GDP increase of $401.3 million, and job growth of 1,706, by the fourth quarter of 2021.
The NDP’s modelling indicated that by the fourth quarter of 2021, the $100.3 million expenditure would have seen a return that included a sustained GDP increase of $401.3 million and job growth of 1,706. (NDP)
Leader Rachel Notley presented the findings of the analysis in Calgary on Tuesday, and questioned why the UCP had not taken full advantage of the eligible funding for Alberta.
“Essential workers have been working on the front lines of this pandemic. They risk their health every single day,” Notley said.
“The federal program is put in place to ensure that essential workers are properly compensated for the risk that they take to do their job … and for some reason, [Premier] Jason Kenney has been dragging his feet.”
‘300% return on our investment’
Alberta Finance Minister Travis Toews told a legislature committee in November that the province had received the $47 million in federal funding with no strings attached.
The remaining funds would have been cost-shared at a 3:1 ratio, and could be used to pay top-up wages to health-care workers, correctional officers, first responders and other essential workers on the front lines of the COVID-19 pandemic.
“This was good for workers, and it was a good deal for the provinces — for every one dollar they spent on topping up essential worker wages, the federal government paid another three dollars,” Notley said Tuesday.
“From an economic perspective, in the most simplistic of terms, this is a 300 per cent rate of return on our investment.”
In its analysis, the NDP stated that it used the same methodology as Prime Minister Stephen Harper’s finance ministry when creating its 2009 economic action plan.
The $100.3-million investment in the federal top-up plan, the analysis said, would have directly increased Alberta wages and been used to stimulate the economy in the short- and medium-term.
Its stimulative effects would have included an increase in spending by households, or increased savings, that encourage a higher level of sustained economic output or investment, according to the analysis.
While Calgary economist Trevor Tombe told CBC News that he does not endorse fiscal multiplier methodology — expressing concern that it can sometimes be used to arrive at whatever effect one wants — he said the NDP used the model sensibly.
“A multiplier of 1.0 is not unreasonable to use within this class of economic impact analysis. So [the NDP’s] numbers are sound,” Tombe said.
“I have serious critiques with the method as a whole, but the NDP in this case appears to be using the tool the way that one should.”
‘Political game-playing’
The province’s seeming reluctance to invest robustly in the program has also drawn the ire of unions across the province.
“Alberta is an outlier, a gross outlier, in regards to doing what’s necessary to make sure that these low-paid, front-line workers get the so-called hero pay that they’ve been promised,” Alberta Federation of Labour president Gil McGowan said in November.
Notley acknowledged Kenney has suggested the UCP would be providing an update about the wage top-up soon, but still reserved strong words for the party.
“This would have been money that we saw flowing into our economy almost immediately, and there would have been job creation,” Notley said.
“I struggle to comprehend what the delay is, I’m left to wonder if maybe it really was about … political game-playing.”
CBC News contacted the finance minister’s office, seeking comment, but had not received a response prior to publication.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
