Western Standard - February 27, 2026


Pity about the budget but investors should still love Alberta

Topics
regulatory changes & Alberta economy monetary inflation and debt ratios
Hosted by
Nigel Hannaford
Guests
Peter Piovic peter
Mentioned
Horner
Polls show Alberta independence & UCP gaining Why abolishing the Senate isn't the simple answer

Episode Stats


Length

28 minutes

Words per minute

154.91

Word count

4,344

Sentence count

164

Harmful content

Misogyny

2

sentences flagged

Hate speech

3

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, Peter Pippa Piovic, Senior Portfolio Manager at Wellington Altus Private Wealth Canada joins me to discuss the Alberta government's budget. We discuss the impact of the deficit, the challenges facing Alberta's energy sector, and the potential for growth in the province.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
Topics generated with Qwen2.5-3B-Instruct.
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00 Good evening, Western Standard viewers, and welcome to Hannaford, a weekly politics show.
00:00:22 I'm Nigel Hannaford.
00:00:23 It is Thursday, February the 26th, and in Alberta, it is Budget Day.
00:00:30 My guest today is Peter Piovic, a Calgary-based Senior Portfolio Manager at Wellington Altus Private Wealth Canada.
00:00:39 Welcome back to the show, Peter.
00:00:41 Nigel, thank you very much for having me here again.
00:00:46 Peter, a few hours ago, the Alberta government dropped its budget, and Finance Minister Horner confirmed what we have...
00:00:53 been expecting, a large deficit, $9.3 billion, and quite a lot of other headline news that
00:01:02 we didn't really want to hear, like more deficits in the future. Peter, welcome to
00:01:09 the show. Perhaps you can explain this to us. Thank you. So, what do you think, Nigel?
00:01:16 Does this sound like a doom and gloom budget? Well, that was my question for you, because
00:01:22 anytime there's a deficit I you know perhaps I'm just projecting from my own finances onto the
00:01:27 province but it always feels terrible when the outgoings exceed the incomings but government
00:01:33 financing is a different kind of thing so does this really change anything about the fundamental
00:01:40 strengths or weaknesses of the Alberta economy you're advising people on where to invest their
00:01:46 money is alberta still good very much so i did listen to the beginning of the um the budget
00:01:54 address of by minister horner he did seem a little bit conciliatory you know in his in his tone um
00:02:01 but the reality of it is is there's a lot to look forward to i mean myself i moved to alberta for a
00:02:06 reason four years ago you were in winnipeg yes i was in winnipeg janitoba and um you know i moved
00:02:14 to alberta for many of the same reasons that many others moved to uh to alberta um that it's one of
00:02:20 the best if not the best place in the country really uh if you're seeking um what would you
00:02:26 call it uh economic prosperity or opportunities in general and i don't really see anything changing
00:02:32 uh from that in this in this budget so just look at a few few things first of all deregulation
00:02:39 both in the United States and Canada, even federally, and in Alberta as well,
00:02:44 we're going through a deregulation cycle where regulations are being looked at
00:02:49 and it's being addressed as to how efficient or inefficient those regulations are
00:02:54 and are they helping or hurting the economy.
00:02:56 And certainly the push right now is to make things better and run smoother.
00:03:01 And it's quite well known that many projects have not gotten off the ground,
00:03:06 uh both in alberta and many other parts of canada uh due to uh basically an overly heavy regulatory
00:03:12 environment and i think there's a consciousness right now that that needs to change and alberta
00:03:17 is probably at the spearhead of that so that's maybe just to ask you about that regulatory
00:03:21 environment much of it has to do with imposing a green orthodoxy on the energy industry yes so
00:03:30 you can make the case of some of these things like containing methane leaks are just a good
00:03:34 thing to do anyway but when it becomes such a burden to the industry that is starting to affect
00:03:40 production and people's willingness to invest what have you seen into regulation that gives you hope
00:03:48 well first of all there's a bit of order if you look at the mou that was recently signed
00:03:52 um there's a lot more clarity in terms of the direction that they're going with respect to say
00:03:57 carbon capture and also industrial carbon taxes so while we may not all like what we heard there
00:04:06 at least we have some certainty and some clarity in terms of the direction that they're going for
00:04:11 starters and um and there's been like i said before multiple examples of projects just simply
00:04:17 not getting off the ground due to excessive regulation or approvals that just took you know
00:04:22 essentially way too long you know for them to come to fruition and some of those projects ended up
00:04:28 going to the U.S. so at least we have an awareness of that right now and I do believe change is
00:04:32 coming but it's not really just you know regulations like there's opportunities here
00:04:38 you know for the federal government with respect to tariff negotiations and negotiating a new trade
00:04:42 deal in the U.S. that if done correctly you know could could end up helping things in the next year
00:04:48 or two years. With respect to Alberta, we're in the middle of bringing up discussions on, say,
00:04:56 equalization payments, for example, and federal transfer payments, which again, no guarantees,
00:05:02 but there's an opportunity there for possibly Alberta to negotiate a more favorable deal. 0.99
00:05:11 Put another way, you know, we saw that $9 billion plus deficit right now, but
00:05:16 But what would the deficit be if we weren't paying so much in equalization payments as a collective society, not the government?
00:05:29 Of course, the government doesn't pay directly to the federal government for transfers, but the people of Alberta and the business of Alberta do.
00:05:36 So I would hazard a guess that it may not be $9 billion plus.
00:05:41 It'd be something less than that, if not even zero.
00:05:44 So there's opportunities there.
00:05:45 Well, what is considered to be a reasonable guess at the cost of equalization to Alberta?
00:05:54 I think it's pretty high.
00:05:55 It's quite high.
00:05:56 So it depends if you're looking at just equalization or total, let's call it transfers,
00:06:01 or transfers of wealth outside of Alberta.
00:06:04 And, of course, these estimates can vary year by year.
00:06:07 They're not the same every year, and they're always a moving target.
00:06:10 But if you look at, say, total transfers or total wealth net that are leaving Alberta,
00:06:15 per year, probably in the neighborhood of $12, $13, $14 billion a year.
00:06:20 And again, that comes from people and Alberta businesses.
00:06:24 If you look at specifics to how much of that goes to equalization, of which the majority
00:06:30 of that will go to Quebec, but not just Quebec, other Eastern provinces and so forth, it's
00:06:36 probably in that $4 to $5 billion range.
00:06:39 So that's a net loss of wealth leaving the province that's going elsewhere.
00:06:43 And I think the intent is good. You know, you want to share in the wealth to some degree across Canada, but some problems can arise from that. So for example, if certain provinces are receiving equalization for free, essentially, and that now disincentivizes them to develop their own natural gas resources.
00:07:05 So for example, Quebec, you know, has tremendous ability to generate resource extraction.
00:07:14 So does New Brunswick.
00:07:16 There's shale gas opportunities there and many other provinces, but maybe the incentive
00:07:21 is not quite there if they're receiving Alberta equalization.
00:07:24 So these are things that are hopeful.
00:07:28 We're not baked in.
00:07:30 No.
00:07:31 But they are opportunities.
00:07:32 They are opportunities.
00:07:34 is um the fundamentals of alberta like where we make our money the size of the skills of our
00:07:41 workforce uh they haven't changed but they're not but there's not enough so if what what are
00:07:52 the opportunities on the cost cutting side when you have massive increases in immigration into
00:07:58 the province okay so the cost cutting would be uh let's call it a controversial topic you know
00:08:05 because um there's a percentage of government spending that's actually attributed to gdp
00:08:13 okay and this is actually a good news story for alberta um you can measure province by province
00:08:18 you know across the country and basically ask the question it's like okay you know that province has
00:08:22 you know x amount of gdp how much of that gdp is directly attributed to government spending
00:08:29 and in the case of alberta it's the lowest in the country by far really yeah really yeah you
00:08:36 know it's still by there there are some provinces where that number uh could be 30 percent 40 percent
00:08:44 or even more than 40 percent you know without naming the provinces of course um and you know
00:08:49 In Alberta, I think I have the number here somewhere, but I believe it's in that 20 percentile range.
00:08:59 It's low.
00:09:00 It's substantially lower than other provinces.
00:09:03 So we're already pretty lean with respect to that as a percentage of GDP.
00:09:10 And then, but keep in mind, when you cost cut, there is also a hit to GDP.
00:09:16 In the case of Alberta, that hit is lower because it has a lower attribution of government spending
00:09:22 to GDP. I think a province such as Alberta would be more attractive to investors if they have a low
00:09:29 government investment in the economy. I mean, you don't want to invest in a private sector economy.
00:09:36 Private sector economy. Not a public sector economy. Alberta is a private sector economy
00:09:41 predominantly more than other provinces. Amen, and long may it last.
00:09:49 I am prepared to accept at base value the finance minister's line that the difficulties they face
00:09:57 this year are a consequence of low oil prices and of very high levels of in-migration.
00:10:06 Saying in-migration rather than immigration because it can be people like you who are 0.55
00:10:11 moving in yeah and you bring all your children with you and now we need a new school in northwest
00:10:17 calvary um so now seriously peter um if that's uh if we have a growing economy why do we not have a
00:10:29 growing tax base how much of this is really immigration how much is that oil is depressed
00:10:35 i would say the majority is i mean without looking at the details of the numbers uh you and i both
00:10:40 just, you know, they have a close, pretty short look at the budget.
00:10:44 Um, I, I'd say mostly it's oil prices.
00:10:46 I mean, they're, they're sure some could be attributed to, um, immigration,
00:10:51 whatever you want to call it, but it, but it's an offset again.
00:10:55 You know, uh, I moved here, you know, four years ago from Manitoba.
00:10:59 Um, a lot of, uh, immigrants, immigrants that come to Alberta are paying taxes. 1.00
00:11:04 Some are not.
00:11:06 So it really comes down to the proportion of, uh, the immigration
00:11:09 that's coming in? Are they economic migrants or the other types of migrants? So it might
00:11:16 come down to, you call it a quality over quantity argument.
00:11:21 So I guess what people want to know, what I want to know is how big a problem is this?
00:11:26 I mean, we have got inflation locked into the economy. So if we say we've got a $9 billion
00:11:31 dollar deficit today that's probably like a six billion dollar deficit ten years ago well not to
00:11:41 be quoted but uh these things do matter and sixty dollar oil today what uh what would that have been
00:11:49 ten years ago in terms of real purchasing power yeah so if you you know when i look at my bank
00:11:56 kind of see what you're saying investments are are higher numbers but they don't buy what they
00:12:01 what they uh bought 10 years ago so are we in as is this as bad as it looks no it's not um so again
00:12:09 uh so what you're referring to is is specifically monetary inflation as opposed to uh necessarily
00:12:15 just looking at cpi cpi is part of it but it's definitely more of a monetary inflation argument
00:12:20 so so to your to your point uh nine billion dollars today if you look at it 10 years ago
00:12:25 it's not 9 billion it's something less than that you know not to do the math in terms of what the
00:12:30 exact numbers are but you're probably not far off you know in in your in your estimates so
00:12:35 so you know but that also is attributable to um uh to gdp as well so gdp over time part of that
00:12:43 increase in gdp is actually also attributed to uh to monetary inflation so it kind of goes both ways
00:12:49 that's why it's really important to look at um gdp ratios whether it's net to gdp ratios
00:12:54 or um or or uh net gdp ratios or gross gdp ratios and in either case actually alberta
00:13:01 you know by far has the lowest um debt to gdp ratios in canada so despite the budget that we
00:13:11 just seen uh we are still far ahead of any other province in the country in terms of either net
00:13:18 debt to GDP ratio or even gross debt to GDP ratio. So what roughly would be our gross debt to GDP
00:13:26 ratio? It's in the budget documents. It's in that eight percentile. Sorry, not the gross. They quote
00:13:32 the net in the budget. It's in that, let's call it eight and a half, 8.7 range. The one thing I did
00:13:40 see briefly in the budget document that just got released a short time ago is they are projecting
00:13:47 that net debt to GDP ratio to rise over the next three years from in that eight percentile range
00:13:54 up to 10, 11, and 12. So what would be the GDP to deficit ratio for the federal government?
00:14:02 It's higher. Yeah, I think it's vastly higher. It's vastly higher. It's significantly higher,
00:14:08 but just also just to compare it to other provinces. So Saskatchewan is around 15%,
00:14:14 percent you know currently now that would be the next closest one um british columbia is around 26
00:14:21 percent a little bit over ontario's around 37 quebec's around 40 percent so you know once again
00:14:30 you know we're not really in a uh in a bad place and if you look at gross um uh gross ratios debt
00:14:36 to gdp uh alberta is again the lowest at around 30 percent nova scotia is closer to 40 british
00:14:43 columbia is about 40 quebec's at 83 and manitoba is also at 83. so your old home well yes all right
00:14:52 yes it is um so when when you advise clients and looking at enough investment in alberta
00:15:02 i say well you guys are are running deficits uh is any who's running the show there you know
00:15:10 do these people have a sure they have a low debt to gdp ratio today what was it 10 years ago are
00:15:18 they getting worse are they getting better cannot confidently place my money in alberta with the
00:15:25 expectation that the place is not going to go broke yes we are nowhere near the debt to gdp
00:15:32 ratios whether it's net or gross um to to the point where there's any discussion whatsoever
00:15:38 about going broke and far, far away from that. While nobody, including myself, likes the fact
00:15:46 that let's just say we might be going in the wrong direction somewhat in terms of both the net debt
00:15:53 to GDP ratio and also net debt and the deficit arising, nobody really wants to see that
00:16:01 necessarily, but we're still financially in a better position relatively than other Canadian
00:16:06 provinces and on top of that as well like just looking into the future um if you think it through
00:16:13 you know we're going through there's different names from some people might call it a fourth
00:16:16 turning or some people might want to call it um let's just say a lot of change that's happening
00:16:22 in the economy uh whether it's uh due to artificial intelligence uh that's coming to the forefront or
00:16:29 whether it's oh um deglobalization let's just say and reshoring and manufacturing to north america
00:16:37 All those things are happening.
00:16:38 AI is happening.
00:16:39 The reshoring is happening.
00:16:41 A focus on manufacturing is happening.
00:16:43 But with that, you know, that manufacturing needs energy.
00:16:47 Lots and lots and lots of energy.
00:16:49 And look where we live.
00:16:53 We have lots and lots of energy, you know, natural gas and oil.
00:16:57 And in the budget as well, there were provisions for the development of nuclear as well on top of that.
00:17:03 And so we could play a pivotal role in this shift towards having,
00:17:11 let's just say, more industrial capacity and manufacturing within North America.
00:17:15 We can play a pivotal role for that transition, call it de-globalization, 0.67
00:17:21 given the amount of energy and natural resources that we have
00:17:24 to the point that could really make this a wonderful place to live for decades to come.
00:17:29 Strange thing, you know, for decades we've been talking about globalization as a good thing,
00:17:34 and now you can casually drop into a sentence the word deglobalization
00:17:40 with confident expectation that everybody's, you know, good idea.
00:17:44 That's how we did that.
00:17:45 Yeah, well, it's complicated, but things are changing.
00:17:49 You know what can change that is a few wars.
00:17:52 So if you have a few wars where all of a sudden, let's just say that we're running out of ammunition
00:17:58 in those wars to the point, and the reason we're running out
00:18:02 is because we can't produce enough on our own
00:18:06 without asking others, you know, for that production
00:18:10 who may not want to give it to us.
00:18:12 Okay, well, that is a harder thing to predict,
00:18:16 and heaven help us.
00:18:17 I hope it stays that way.
00:18:23 So Alberta, the fundamentals in Alberta remain strong.
00:18:27 They remain very strong.
00:18:28 and you would advise uh people to continue to put their money here um i was i was struck by
00:18:40 the fact that there's no reported contributions to the heritage fund yes um i can sort of see
00:18:47 that you don't put money into your tfsa when you're struggling to pay your visa bill yes uh
00:18:53 if I can use that as an analogy, but are there any costs to breaking step in that policy?
00:19:01 Wouldn't it have been more biased to keep it going?
00:19:04 So potentially, I did read a quick excerpt in the budget document that the rationale there is that
00:19:13 the rate of return of the Heritage Fund on its own, so with no additional contributions to the
00:19:18 the head to the Heritage Fund, that they will, that the
00:19:22 province of Alberta will reach their targets for the Heritage
00:19:25 Fund by 2050. So in a way that you know, you might just do one
00:19:28 of these saying you have to do anything, we can just let it
00:19:30 grow, and it'll get there. However, and it is a however,
00:19:34 what that is, there's a risk in that too, as well. You're now
00:19:37 relying on that rate of return to continue being what it
00:19:42 currently is. And if it isn't for whatever reason, then that
00:19:48 may not hold true. But that's even just looking at it from a financial perspective. The fund,
00:19:54 from what I can tell, is invested primarily in financial assets. Another thing I may want to
00:19:58 bring up is other reserve funds in other parts of the world, including down in the United States.
00:20:04 It's not just a financial fund, so to speak. In these reserve funds, they hold assets,
00:20:12 call it minerals. It could be gold, it could be silver, it could be copper, it could be uranium,
00:20:16 It could be, basically think of it this way, things that the economy may need in the future, whether it's for industrial output, manufacturing, or some sort of a monetary base.
00:20:28 It doesn't necessarily all have to revolve around, you know, like looking at it just like an investment fund.
00:20:35 Of course, we look at the projected goal of 200, I think it's $250 billion.
00:20:40 I believe that's what it was.
00:20:41 Yeah, I have a sense around there.
00:20:43 what what 250 billion dollars is going to look like in 25 years 24 years time you've got the same
00:20:51 confidence out of that big number that you have have today it's like when you're planning
00:20:56 retirement when you're 25. right let's see just for inflation how much is that really yeah yeah
00:21:03 oh well i mean if you if you had the premiers there would you say maybe maybe expand the
00:21:09 the targets a little? I would say, if I had the premiums here to, and obviously it's not wrong
00:21:15 the way it's being done now necessarily, but there is an argument to be had or discussion to be had,
00:21:23 let's just say, of what does Alberta need in the next 20, 30 years? What does the economy of Alberta
00:21:28 need? And what of that that they need might, for whatever reason, come into shortage.
00:21:34 and if it does come into shortage you know uh you know should we not let's stockpile some of it or
00:21:42 at least have that available uh to the economy of Alberta in the future um or another argument would
00:21:48 be you know what happens to the to money let's just see or how or how money is valued uh over
00:21:55 the next you know 20-25 years and it's it's it's uncertain uh so possibly diversifying a bit away
00:22:02 from, uh, simply financial assets might be something you want to think about.
00:22:06 Yes.
00:22:07 Um, how, I mean, what does that actually look like?
00:22:10 Could you actually find an old reservoir and pump it, pump all the oil back into it?
00:22:15 Is that the sort of strategic reserve you're talking about?
00:22:18 Uh, I believe the United States has, uh, I don't know the exact number, but it's something
00:22:23 north of 20, uh, commodities that they classify as a strategic reserve.
00:22:28 Um, a lot of people don't really know that, but they do.
00:22:31 So they're thinking ahead in terms of what the economy might need, but it could be something as simple as, I guess, stockpiling potentially gold and silver as monetary assets, in addition to financial assets that are already there, and also industrial metals, you know, copper, you know, other industrial metals, possibly uranium, especially if we're thinking of, you know, incorporating nuclear reactors into our energy base in the next 10, 15, 20 years.
00:22:58 maybe having some uranium in storage to fuel those reactors would reduce the risk let's just
00:23:08 say of having to buy it at a higher price 10 years from now one of the um i'm picturing these
00:23:14 warehouses full of copper ingots yep um there he is well yes uh until you've refined it you don't
00:23:23 really know what you've got, do you? So I'm picturing this economy that we're building here
00:23:33 that is going to be different in kind. You made the point about the fourth turning and the end
00:23:40 of globalization and so on. Are we right to think then that in 10, 15 years' time, Alberta is going
00:23:49 to be doing the same things as it is now we once we did cows that's why we all you know have the
00:23:56 have the cowboy hats in july then we did oil are you gonna be doing oil forever
00:24:04 i could imagine we'd be doing oil for a very long time okay you know well into the next century
00:24:10 however that doesn't mean that that's the only thing we would do uh i can i can foresee a future
00:24:16 where we still have lots of oil, lots of natural gas,
00:24:20 but we have other sources of energy as well, including nuclear.
00:24:25 And who knows what's going to be invented in the next 50 to 75 years.
00:24:29 Who saw AI coming?
00:24:33 So we keep doing what we're doing,
00:24:35 Yep. And we keep trying to resist the higher wages in, I guess, let's face it, 80% of what they spend is in wages, and most of it is in education and health.
00:24:53 at the same time as we have an expanding population
00:24:57 and fulling oil prices.
00:25:00 Stay the course and tough it out.
00:25:04 Times will change and times will get better.
00:25:07 Times will get better.
00:25:08 They're really not that bad at the end of the day, even today.
00:25:11 But of course, I believe there's,
00:25:14 and this is one of the things that makes Alberta great. 0.66
00:25:16 There's this wonderful attitude in Alberta where
00:25:20 because things have been so well due to um let's call it the entrepreneurial and hard-working
00:25:26 appetite of of albertans our expectation level is so much higher than it is in other other places
00:25:33 and as soon as we just misstep a little bit um you know it's it's uh there's there's questions
00:25:39 about is this the end so to speak uh but that's although i'll look at that as a positive rather
00:25:44 than a negative. What about a sales tax? Oh, that's a complicated one. So I'll answer
00:25:50 really quickly this way. So a sales tax without a commensurate reduction in income tax, I would
00:25:57 say is a very bad idea. At the end of the day, you're removing wealth from Albertans and you're
00:26:01 removing their ability to spend that wealth into the economy. And you're also creating issues to
00:26:08 attract capital to Alberta, you know, from that. If the sales tax is commensurate with a tax
00:26:13 deduction uh so that it's either net neutral or a net benefit then that's something that could be
00:26:18 discussed um but uh but it shouldn't be just looked at as a as a quick um smash and grab let's say
00:26:25 i cannot imagine a government that would be faithful to any promise to well just this is
00:26:32 just a straight switch pretty soon this one will be back up again that's a concern and it's pick
00:26:39 politicians carefully but pick your province and alberta is the place that's on that note i think
00:26:44 we should wrap it up i would agree yes and i'm and i like the no sales tax you know here in alberta
00:26:50 by the way yes yes it's uh it was one of the reasons maybe come here exactly only one anyway
00:26:58 peter thank you so much for coming in today it's been really good to get yours because
00:27:02 But the investment advisor's perspective on a provincial budget as we go through uncertain times.
00:27:11 Yes.
00:27:12 Easy to panic.
00:27:13 It takes a little more discipline to just see the thing through.
00:27:17 Thanks, Nigel.
00:27:18 Peter, thank you.
00:27:19 Thank you.
00:27:19 For the Western Standard, I'm Nigel Hannaford.
00:27:32 Thank you.