Dutch Disease: Alberta Canada vs. Norway

The term ‘Dutch Disease‘ refers to an increase in natural resource based economy crowding out manufacturing and other sectors. It’s also a stand in descriptor for taking all your winnings in a booming market and re-investing them in the same market.

When Oil prices were high, both the province of Alberta and the country of Norway benefited from a petroleum based economy, but they approached the future in different ways.

Brian Ripley over at CHPC summarizes Bruce Campbells take-away of the differences between these two economies approach to oil wealth:

Alberta’s so called “progressive” conservative governments; 7 consecutive iterations since 1971, have squandered their provincial energy resources leaving their treasury with a CAD 12 billion dollar debt and a 500 million dollar deficit.

Norway, a county of 5.2 million people (Alberta’s population is similar at 4.2 million), began their first successful North Sea oil drilling in 1971 and by maintaining sovereign control and creating partnerships with the private sector “… now sits on top of a CAD ONE TRILLION DOLLAR pension fund established in 1990 to invest the returns of oil and gas. The capital has been invested in over 9,000 companies worldwide including over 200 in Canada. IT IS NOW THE LARGEST SOVEREIGN WEALTH FUND IN THE WORLD”

Read the full article over at CHPC.

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Oracle
Guest
Oracle

Was at the local park today. Elders talking about TFW and many said that their relatives are not leaving April 1st as visas expire. Said gov or police won’t do anything.

Watch Jason Kenney implement or announce a new program in the next few days.

Oracle
Guest
Oracle

Vancouver is the most corrupt city in North America right now. Huge money laundering going on right now. Gov knows about this.

Surrey detached is on fire right now.

patriotz
Member

@previous: “How this type of policy (property tax deferment for seniors) gets set, who knows?”

It’s another program to cater to the conservative (which includes BC “Liberal”) core constituency. Seniors are more likely to vote than younger people and they are more likely to vote conservative.

Also it subsidizes underutilization of RE since it allows seniors to remain in houses which are much bigger than they need. Although it’s less visible than properties left empty, this accounts for a lot more underutilization in total. Underutilization makes both prices and rents higher than they would be otherwise.

Westside Realtor
Guest
Westside Realtor

Surrey detached on fire due to variable rate mortgages at two percent.

Tis a debt orgy is what it is.

And nothing else.

This pig will get slaughtered.

WSR

left already
Guest
left already
I think we are being blinded by our desire to see the prices fall. By now, it is clear that this market is driven by foreign money. No other government in the world makes it easier than Canada for foreigners to fuel money here. Looks like Surrey will go the West Van way too. There are more than billion people in China and India respectively. India’s rich people are on the move, and where can you find a better place than Surrey, where while feeling at home, you have all the conveniences of a modern western state? I expect the trend to continue and houses in Surrey to go way higher. Not much can be done about this. The only thing is for CRA to go after the rich husbands and tax them in their world wide income as deemed… Read more »
Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

*snort*

yeah, deferred property taxes are a conservative conspiracy.

patriotz, how much has your house appreciated since you bought it? probably not as much as it would have if you bought in vancouver, huh?

VanRant
Member
VanRant

About time! This morning News 1130 have a segment about Quebec accepting wealthy immigrants then moving to Vancouver. I hope the government is listening and plug up the hole!

Corrupt in Canada
Guest
Corrupt in Canada

After many outbids by you know who, we just got news that the sellers have accepted our offer for this place.
http://tinyurl.com/m5nuxpd

Who knows we may be the last of the greater fools but we are taking a chance and rolling the dice. We finally get to put down some roots and the kids can have a yard. The place is livable and we plan to put some sweat equity in.

See everyone on the other side.

vangrl
Member
vangrl

http://www.bnn.ca/Video/player.aspx?vid=582499

“Vikram Mansharamani, Author, BOOMBUSTOLOGY: Spotting Financial Bubbles Before They Burst, and Senior Fellow, Harvard Kennedy School, joins BNN to explain why he’s shorting Canada.”

vangrl
Member
vangrl

#8

How did you get it if you were out bided? did it just keep going back and forth until you finally bid the most?

Anyway, congrats! if you’re telling the truth 🙂

vangrl
Member
vangrl

I think I just got suckered

space889
Guest
space889
Alberta does have a Heritage Fund but it only has like $3B or so. Frankly the electorate here would rather spend any windfall in the name of investments, help the poor, reduce taxes, better whatever, etc, rather save it. It seems like saving and deferred gratification is simply not in the Canadian genes. The best we ever got was balanced budget when it was the rage back in the 90s. Paying down the debt is pretty much a non-starter. Paul Martin had to resort to various tricks to save the money to pay down the debt and the Cons blasted them for it in the elections as stealing. They won and rest is history as our Fed debt is $200B higher now. Same with BC Liberals, all those balanced budgets and yet our total debt is much higher than when… Read more »
space889
Guest
space889

I always thought the property tax deferral has quite a high interest rate attached to it and that’s gov’t allow it and not many people take up the offer. But if it is simply 1% with no compounding then it is definitely a big steal for the seniors, especially with core inflation at 2% and overall inflation much higher than that.

patriotz
Member

@12:

When it was started under Lougheed the HF was a real fund with actual cash in it, but later money was taken out to fund “economic development” projects and pay for infrastructure.

Since 1980 the NRR (natural resource revenue) in Alberta, has generated almost $190 billion, but the value of the Heritage Fund was only $17.3 billion in 2014. After 1987 NRR was no longer added to the Heritage Fund

I’m not sure how much of that value is liquid assets compared to infrastructure which is nominally owned by the HF at some book value.

http://en.wikipedia.org/wiki/Alberta_Investment_Management_Corporation

Yunak
Guest
Yunak

@2

Vancouver is the most corrupt city in North America right now.

At the same time Vancouver is the most ‘Chinese’ city outside Asia. Could these things be related?

http://en.wikipedia.org/wiki/Corruption_in_China

VanRant
Member
VanRant

From 1130 News about Quebec IIP:

You can’t keep funneling thousands and thousands of millionaires into a very small area (Vancouver Area) and expect that there is not going to be some kind of impact on real estate prices. That’s probably the main impact,” he says.

Young feels it’s “grossly unfair” that Quebec reaps the monetary benefits of its program while BC deals with the after-effects.

“It’s effectively a scam. Quebec knows they have no intention of settling in the province when they fill out their immigration forms.”

http://www.news1130.com/2015/04/01/investor-immigrants-using-quebec-as-back-door-to-vancouver/

Zero Down Forty
Guest
Zero Down Forty

@#16 Should read;

“You can’t keep funnelling hundred of thousands of dollars in cheap money mortgages into a nation and expect that there is not going to be some kind of impact on real estate prices.”

VanRant
Member
VanRant

Re: VanRant 16

Just wrote an email to Chris Alexander, Minister of Immigration. This Quebec IIP has to stop!

vangrl
Member
vangrl

but I thought it did stop?

vangrl
Member
vangrl

oh i see, Quebec has their own version of the same thing that was not cancelled. Well that’s just fantastic.

Corrupt in Canada
Guest
Corrupt in Canada

Welcome to VancouverFools.info, no fuckn sense of humour haha.

Why so serious? Can’t take a joke?

Corrupt in Canada
Guest
Corrupt in Canada

Please remember this is a country wide bubble. Sure HAM is in Vancouver but how does that explain prices in Victoria,TO ,Calgary, etc.

They are all at elevated levels compared to norm.

YES HAM is but one factor in Vancouver, but you cannot discount that country-wide, low interest rates and lax lending rules have been the main factor in this bubble.

Steep increases in every city.
http://www.torontocondobubble.com/p/canadas-housing-bubble.html

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
nufio
Guest
nufio
to all these people who think that the rich indians are going to immigrate to canada. get a fcking clue. All my really wealthy indian friends did an undergrad in vancouver and promptly went back to indian to manage the familyl business. They enjoy a ridiculous standard of living in india with an army or servants for their every need. The Indian political system is very similar to the US/canadian system where political campaign contributions or bribes gets asset protections for the rich no matter who is in power. Its more of business controlling politics and not the other way round like I suspect it is in china or russia. They all vacation in various european countries or exotic islands and have zero intention of settling in a city where there is no business opportunity. Please dont project your own… Read more »
VanRant
Member
VanRant

@ 24 nufio
Same for the Mainlanders and Hongers, they live like a king back home with army of maids to clean up and chauffeur to drive them around. Thousands of services and restaurants catering to their special needs. A home here is just a two weeker vacation or temp dorm for their kids while studing. Vancouver is a sad sad place, especially if you have to live and work here.

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