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Alberta

Norad, Haiti, migration, critical minerals to top agenda for Trudeau and Biden

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WASHINGTON — U.S. President Joe Biden is embarking on a 27-hour whirwind visit to Ottawa, where he will meet Friday with Prime Minister Justin Trudeau and speak to a joint session of Parliament — his first bilateral sojourn north as commander-in-chief. 

Here are some of the issues the two leaders are likely to discuss:

Migration breakthrough: The two countries are already close to an agreement to expand the 2004 migration treaty known as the Safe Third County Agreement, which is designed to limit asylum claims in both countries but currently only applies to official entry points. As a result, critics say it encourages asylum seekers to enter Canada at unofficial border crossings, which allows them to make a claim. Sources familiar with the details say the two sides have been working on extending the agreement to cover the length of the Canada-U.S. border since the Summit of the Americas in Los Angeles last June. Such an agreement would help resolve a major political headache for Trudeau, while giving Biden the political cover he would need to devote more spending to northern border security. 

Modernizing Norad: Until last month, the binational early-warning system known as the North American Aerospace Defence Command might have been best known for tracking Santa Claus on Christmas Eve. But a February flurry of unidentified flying objects drifting through North American airspace, most notably what U.S. officials insist was a Chinese surveillance balloon, exposed what Norad commander Gen. Glen VanHerck described as a “domain awareness gap”: the archaic, Cold War-era system’s ability to track small, high-flying, slow-moving objects. Coupled with the brazen ambitions of Russian President Vladimir Putin, the ongoing but largely opaque joint effort to upgrade Norad — rarely mentioned in past Trudeau-Biden readouts — is suddenly front and centre for both governments. Media reports suggest Canada could agree to an accelerated timeline. 

Helping Haiti: The list of foreign-policy hotspots around the world that instantly bring Canada to mind is a short one, but Haiti is surely near the top. And as Haiti has descended ever deeper into lawlessness in the wake of the 2021 assassination of president Jovenel Moise, the need for military intervention has been growing — and some senior U.S. officials have expressly name-checked Canada as the perfect country to lead the effort. Trudeau’s response has been diplomatic but firm: the crisis is best addressed from a distance. “Canada is elbows deep in terms of trying to help,” he said last month. “But we know from difficult experience that the best thing we can do to help is enable the Haitian leadership … to be driving their pathway out of this crisis.” Military experts in Canada say the Canadian Armed Forces are in no state to be able to lead any sort of intervention. U.S. officials said Wednesday they are pursuing a solution with urgency, but insist the discussions are multilateral in nature and will have to involve Haiti itself, and perhaps even the United Nations. 

Mission-critical minerals: No high-level conversation between the U.S. and Canada these days would be complete without talking about critical minerals, the 21st-century rocket fuel for the electric-vehicle revolution that Trudeau calls the “building blocks for the clean economy.” Canada has the minerals — cobalt, lithium, magnesium and rare earth elements, among others — and a strategy to develop them, but the industry is still in its infancy and the U.S. wants those minerals now. The issue has profound foreign-policy implications: China has long dominated the critical minerals supply chain, something the Biden administration is determined to change. “This really is one of the most transformative moments since the Industrial Revolution,” said Helaina Matza, the State Department’s deputy special co-ordinator for the G7’s Partnership for Global Infrastructure and Investment. “We understand that we can’t do it alone.”

Water, water everywhere: Canada and the U.S. have been negotiating since 2018 to modernize the Columbia River Treaty, a 1961 agreement designed to protect a key cross-border watershed the size of Texas in the Pacific Northwest. Despite 15 separate rounds of talks, progress has been middling at best. Meanwhile, Canada is under U.S. pressure to allow the International Joint Commission — the investigative arm of a separate 1909 boundary waters agreement — to investigate toxic mining runoff in the B.C. Interior that Indigenous communities on both sides of the border say has been poisoning their lands and waters for years. Add to all of that the mounting pressure on Canada to supercharge efforts to extract and process critical minerals, and the plot promises to thicken.

Border blues: The flow of irregular migration isn’t the only bilateral issue focused on the border. Critics on both sides say travel between the two countries hasn’t been the same since the COVID-19 pandemic. The Nexus trusted-traveller program, a popular fast-tracking system in Canada, broke down last year amid a dispute over U.S. border agents working on Canadian soil; the fix is widely seen as less streamlined than the old system. Many of those same critical voices are taking issue with Canada’s imposed new tax measures to discourage foreigners from owning real estate north of the border; some on Capitol Hill have been vociferous in pressing the Biden administration to demand an exemption.

A trade deal by any other name: Regardless of what the two leaders end up talking about, it will happen within the framework of the U.S.-Mexico-Canada Agreement, known in Canada as CUSMA. The USMCA era of continental trade, which began in earnest in 2020, has not been without its hiccups, including disputes over U.S. access to Canada’s dairy market and the way the U.S. defines foreign automotive content. The Biden administration is also staunchly opposed to Canada’s plans for a digital services tax, which it considers a violation. The agreement is due to be reviewed in 2026, and a lot could happen — especially on Capitol Hill and in the White House — between now and then. It’s also worth noting that while it’s not covered by the trade deal, the softwood lumber dispute remains a perennial irritant. International Trade Minister Mary Ng met earlier this month with industry leaders to discuss “unwarranted and illegal U.S. duties” on softwood lumber, vowing that a solution that protects Canadian jobs “is the only resolution that we will accept.” In other words, don’t hold your breath for a breakthrough on a dispute “that’s been going on since Adam and Eve,” said Tony Wayne, a former U.S. ambassador to Mexico and the former U.S. assistant secretary of state for economic and business affairs. 

This report by The Canadian Press was first published March 23, 2023.

James McCarten, The Canadian Press

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Alberta

Alberta’s fiscal update projects budget surplus, but fiscal fortunes could quickly turn

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From the Fraser Institute

By Tegan Hill

According to the recent mid-year update tabled Thursday, the Smith government projects a $4.6 billion surplus in 2024/25, up from the $2.9 billion surplus projected just a few months ago. Despite the good news, Premier Smith must reduce spending to avoid budget deficits.

The fiscal update projects resource revenue of $20.3 billion in 2024/25. Today’s relatively high—but very volatile—resource revenue (including oil and gas royalties) is helping finance today’s spending and maintain a balanced budget. But it will not last forever.

For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).

And while the resource revenue rollercoaster is currently in Alberta’s favor, Finance Minister Nate Horner acknowledges that “risks are on the rise” as oil prices have dropped considerably and forecasters are projecting downward pressure on prices—all of which impacts resource revenue.

In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.

This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.

Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.

Consider this: If this fiscal year the Smith government received an average level of resource revenue (based on levels over the last 10 years), it would receive approximately $13,000 per Albertan. Yet the government plans to spend nearly $15,000 per Albertan this fiscal year (after adjusting for inflation). That’s a huge gap of roughly $2,000—and it means the government is continuing to take big risks with the provincial budget.

Of course, if the government falls back into deficit there are implications for everyday Albertans.

When the government runs a deficit, it accumulates debt, which Albertans must pay to service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $650. That’s largely because, despite running surpluses over the last few years, Albertans are still paying for debt accumulated during the most recent string of deficits from 2008/09 to 2020/21 (excluding 2014/15), which only ended when the government enjoyed an unexpected windfall in resource revenue in 2021/22.

According to Thursday’s mid-year fiscal update, Alberta’s finances continue to be at risk. To avoid deficits, the Smith government should meaningfully reduce spending so that it’s aligned with more reliable, stable levels of revenue.

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Alberta

Premier Smith says Auto Insurance reforms may still result in a publicly owned system

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Better, faster, more affordable auto insurance

Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.

After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.

Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.

“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”

Danielle Smith, Premier

“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”

Nate Horner, President of Treasury Board and Minister of Finance

Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.

Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.

Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.

In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.

Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.

By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.

“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”

Nathan Neudorf, Minister of Affordability and Utilities

Quick facts

  • Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
  • A 2023 report by MNP shows
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