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 higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
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.
