This column is an opinion from Graham Thomson, an award-winning journalist who has covered Alberta politics for more than 30 years.
Alberta might be sweltering through a brutally hot and blindingly sunny week but there’s a cloud hanging over the provincial government that keeps raining on Premier Jason Kenney’s parade.
We got a good look at the ominous spectre Wednesday morning when Finance Minister Travis Toews released the province’s final fiscal report on the 2020-21 budget.
This was the overly optimistic budget the government unveiled at the end of February last year that predicted solid economic growth, higher employment and a balanced budget by 2023. It was unrealistic even by pre-pandemic standards.
This was the budget that forecast a $7-billion deficit and $88-billion accumulated debt – but also predicted rosy economic growth in 2020 that would help the government to wipe out the annual deficit in a few years and start to pay down the debt.
Well, according to the final accounting, that deficit turned out to be almost $17 billion and the debt hit $93 billion. Plans to balance the budget were tossed out the window.
The 2020-21 fiscal year will go down as the worst in Alberta history, so far.
Of course, the pandemic was responsible for shredding the Alberta economy, at one point helping drive oil prices into negative territory and forcing the government to spend $5-billion on various pandemic safety nets for individuals and businesses.
However, the government added to the fiscal wreckage by reducing revenue thanks to fast tracking a multi-billion corporate tax cut and increasing spending by losing $1.3 billion on the Keystone XL pipeline gamble.
The government would dearly love to put 2020 behind it or at least manipulate the miserable numbers to its advantage.
And that process started Wednesday with a fiscal sleight of hand by Toews.
Instead of comparing the final 2020-21 budget numbers to last year’s original budget numbers — as is the normal measurement — Toews is comparing the final numbers to those in a third-quarter budget update last November.
Those November numbers projected a $20-billion deficit and almost $100 billion in debt.
But by slyly using those dismal figures as his baseline, Toews can say the budget actually ended up better than expected.
Here’s how it works.
The original budget deficit of $7-billion, for example, ended up being $17 billion, an increase of $10 billion.
However, by using that $20-billion deficit number forecast in November’s update as his baseline, Toews can say the final $17-billion deficit number is actually good news because it’s a $3-billion drop.
That allowed the government to issue a news release Wednesday touting a “smaller deficit” than forecast.
The numbers are undergoing such deep manipulation under Toews, the final 2020-21 budget document should have been issued with massage oil.
Predictably, Toews also tried to blur the past by focusing on a more rosy future bolstered by a steep rise in oil prices and by strong economic growth anticipated to lead the country.
“Last year was very difficult for many Albertans, but the province is emerging stronger than expected,” said Toews.
But it’s all relative.
This year’s budget numbers are as troubling in some ways as last year’s. The 2021-22 budget forecast a $20-billion deficit and $110-billion debt. Those numbers will likely drop thanks to a recovering economy but they have created a nightmare for Kenney and the UCP government that promised Albertans a balanced budget in their first term.
Another awkward bit of fiscal reality for Kenney is just how much the federal Liberal government did to help Alberta deal with the pandemic.
Not only did Ottawa deliver $10.5 billion in direct transfers to the Alberta treasury last year, it sent an estimated $23 billion to individual Albertans and businesses via programs such as the Canada Emergency Response Benefit and the Canada Emergency Wage Subsidy.
That might be good news for Alberta but it’s not good political news for the Alberta government that is cranking up the anti-Ottawa rhetoric in advance of the provincial referendum this fall against the federal equalization program.
Kenney wants to get Albertans riled up at the federal government instead of being chronically riled up at him.
And perhaps he can deflect attention away from the fact that even with higher oil prices, Alberta’s fiscal picture is so dismal that Albertans are still facing the “fiscal reckoning” that Kenney kept warning them about last year.
The reckoning has apparently been postponed for now. Toews sidestepped questions about it during a news conference on Wednesday.
It’s not something he wants to discuss now, not while he’s trying to paint an optimistic picture of Alberta’s future that isn’t all in red ink.
Interestingly, he did suggest once again the government will be looking at its revenue options in the next few years. Translation: higher taxes.
Not that Toews would dare be that blunt but introducing tax hikes, even going as far as implementing a provincial sales tax, is something the government will have to consider if it truly wants a sustainable budget.
Toews wants to convince Albertans that better days are ahead — and no doubt they are if the pandemic is truly beaten – but the province’s precarious fiscal situation is a cloud that hovers over Alberta today with a “fiscal reckoning” storm cloud awaiting just over the horizon.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
