Caution – Gnomes at Work

So deep in the Ottawa bureaucracy are 34 economists who work for the Parliamentary Budget Office (PBO). These elves churn out reports for members of Parliament and the public so we can better understand public finances without the government spin.  

Yves Giroux, Head Gnome

They re-examine government programs plans mostly looking into the future. What have they been studying over the past year that might interest severely normal Albertans?  Here a sample:

Future Equalization Payments

Even at – 30 Celsius, some Albertans can get over-heated thinking about the federal equalization program. The program is designed to ‘spread the peanut butter out to the edges’; that is; make sure that all Canadians have roughly the same level of government services.  Under the program Alberta doesn’t get any money and Quebec gets around $13 billion this year.  

The gnomes stared off into the future (to 2091) to calculate the GDP percentage that provinces would receive. This assumes the program remains as is. The charts below tell the story:

Parliamentary Budget Office 2018
Parliamentary Budget Office 2018

Yes, you are reading this correctly, Alberta never benefits and Quebec counts on equalization for an ever-increasing share of its GDP.

TransMountain Pipeline

Recently, they dug into the purchase of the TransMountain pipeline.  They estimated that the value of the existing pipeline was between $3.6 to 4.6 billion. The purchase price was $4.3 billion – so no real bargain!  

As for the expansion portion of the project, they concluded the cost of a year’s delay reduces the value of the expansion project by $690 million when government tries to sell it. And if construction costs escalate by 10%, tack on a further reduction of $453 million. So, all, it seems there are a couple of billion tax dollars at risk!

Carbon Tax

The Leprechauns also took a look at the impact to GDP of the Canada-wide tax on carbon. The federal “backstop” tax is slated to rise from $10 in $50 per tonne of CO2 over the next 4 years.  A key feature is that the pot of gold would be returned to provincial governments and then homeowners get rebated their tax costs. 

In that scenario, the economy doesn’t take a huge hit. GDP would be lower in 2022 by half a percent; about $10 billion.

Illegal Border Crossing

The sprites crunched the math on illegal border crossings.  The numbers:

  • If the migrant is granted asylum at the first hearing it costs about $10,000. 
  • It costs $33,000 for a migrant who is denied, appeals and then is ultimately removed. 
  • The system can handle about 24,000 claims annually but in 2017-18, 52,000 migrants crossed the border, of which 23,000 were illegal. 
  • And the backlog of claims has now reached 65,000 (of which 28,000 are illegal border crossers). 

The Parliamentary Budget office performs a valuable service analyzing the decisions and programs of the federal government. Maybe Alberta needs a few elves too.