GOVERNMENT FINANCE OFFICERS

ASSOCIATION, ALBERTA CHAPTER

"It all comes back to the

basics. Serve customers

the best-tasting food at a

good value in a clean,

comfortable restaurant,

and they'll keep coming

back."

Author: Dave Thomas

In This Issue

• 2018 Conference Registration..……….Page 1

• Professional Development 2018…Page(s)2-3

• Membership Renewal……….…..……..Page 4

• Conference Sponsorship………………Page 5

• Economic Update Q4……………..Page(s) 6-7

• CAGFO Update…………………………Page 8

• NEW GFOA Members………………....Page 9

GFOA Newsletter WINTER 2018

2018 Conference Early Bird Register Below May 4th– Deadline!

June 3-6, 2018 Delta Lodge Kananaskis

“Back to basics...public consultation and engagement”

A reminder first time attendees and finance interns receive

50% off the conference registration. To qualify please

contact Candace regarding eligibility via email at:

candace.coambs@gfoa.ab.ca

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Typically, our workshop locations are found along the Highway 2 corridor for ease of travel and convenience.

We are currently looking for locations and dates for some workshops. Additional new workshops for 2018 are nearly ready for registrations. Watch for announcements for locations and dates for two Treasury Risk Management workshops, one Leadership workshop and one Capital Planning workshop. A second location for the Long Term Financial Planning workshop also needs to be confirmed

Should a municipality desire to have one of our workshops held at their location and can find enough interest in the area, please candace.coambs@gfoa.ab.ca for consideration.

For all the Professional Development details or to register today, please go to the website: GFOA homepage and click on the Events tab. Please contact candace.coambs@gfoa.ab.ca with any questions.

Professional Development for 2018

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Workshops/Dates/Links Locations/Links Member Non-Member

Tax & Assessment February 28, 2018 Register by emailing Candace Coambs

Lac Ste. Anne County

(sponsored/ presented by AMA)

N/C N/C

Tax & Assessment March 7, 2018 Register by emailing Candace Coambs

Cochrane RanchHouse

(sponsored/presented by AMA)

N/C N/C

Stakeholder Relations: Apr 27, 2018

NEW

Best Western Plus, Leduc Frank Saccucci, Presenter $ 350 $ 450

Capital Planning: May 2-4, 2018

NEW

Delta Edmonton Centre Tim Duhamel, Presenter $1,200 $1,500

Municipal Fundamentals: May 2-4, 2018 Best Western Plus, Leduc Frank Saccucci, Presenter $975 $1,275

Leadership: May 9-11, 2018

NEW

Double Tree by Hilton, Edmonton Tim Duhamel, Presenter $1,275 $1,575

Stakeholder Relations: May 11/18

NEW

Cochrane RanchHouse Frank Saccucci, Presenter $ 350 $ 450

Long Term Financial Planning:

May 16-18, 2018

Cochrane RanchHouse Tim Duhamel, Presenter $1,275 $1,575

Municipal Fundamentals:

May 23-25, 2018

Deerfoot Inn & Casino, Calgary Frank Saccucci, Presenter $975 $1,275

Budget Analyst Academy:

September 12-14, 2018

Best Western Plus, Leduc Mindy Smith, Presenter $1,200 $1,500

Long Term Financial Planning:

2nd workshop - TBD

Dates and Locations TBD Tim Duhamel, Presenter $1,275 $1,575

Preparing Audit Working Papers:

September 28, 2018

Webinar format (BDO Canada LLP, Presenter) $250 $300

Leadership – 2nd workshop:

NEW TBD

Dates and Locations TBD Tim Duhamel, Presenter $1,200 $1,500

Treasury and Risk Management:

NEW TBD

Dates and Locations TBD Tim Duhamel, Presenter $1,200 $1,500

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Provincial Outlook

After the recession suffered by Alberta in 2015 and 2016, this year should see a return to expansion and a return to

positive economic growth rates. Growth will be driven by an increase in

exports, supported by a combination of a weak Canadian dollar and an

increase in capital spending in the energy sector.

The real growth forecast looks sustainable in many areas and energy

provinces should continue adding to nominal GDP, as higher resource

prices help support growth going forward; Alberta is projected to lead all

provinces with growth forecast to remain amongst the top performers

through 2019.

Our population growth remains in positive territory due to the strong natural

increases and net positive international migration, but we did dip below the

national average for the first time since 1989 (y/y basis). Going forward, we

expect net interprovincial outflows to taper as Alberta’s economy and

employment prospects continue to improve.

Key Rates and Inflation Forecast

During the fourth quarter of 2017 the Bank of Canada (BoC) eased off the

gas pedal and left overnight rates unchanged having already increased

rates 25 basis points for two consecutive quarters. The BoC wants a data

driven approach and stresses caution even with the economy projecting

to operate close to its potential. Governor Poloz also stressed the lack of

wage growth as an indication of remaining slack in the labour market, and

the “substantial” uncertainties around NAFTA re-negotiation as a key

geopolitical risk. A few other key risk factors that the BoC will be

watching before making any rate decisions will be interest rates, local

housing markets and the recent OSFI mortgage rule changes.

• Interest rates: The start of a multi-year hiking cycle

has sparked a material increase in mortgage rates

and presents a moderate risk to the housing

market. Any further increase could cause

affordability issues.

• Local housing market risks: Recent policy

measures have significantly cooled the Toronto

market. Extremely poor affordability still a major

vulnerability in Vancouver and elevated unsold

inventories also provides some downside risks to the Calgary market.

• OSFI tightening: Rule changes on non-insured mortgages effective January 1, 2018 have marginally increased the

risk of a housing downturn. With household debt rising, each rate hike puts greater pressure on consumers and

affordability.

At the time of writing this update the BoC raised overnight rates to 1.25%. This was a rear-view mirror move as the Cana-

dian market did so well in 2017, leaving labour markets with little room for growth. We share the BoC's view that higher

rates will be needed over time to stay on that path, but they won’t come quite as fast and furious as people think. This

rate hike should serve to calm expectations for follow-up hikes.

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With so many factors being considered, where does Alberta fit in to the forecast? As we mentioned, Alberta should

continue on its path to expansion in 2018, confirmed by the BoC’s ‘inflationary growth’ outlook. With Alberta so heavily

commodity driven, higher inflation should help support our positive provincial outlook.

NAFTA

The focus over the last quarter has been, and will remain, NAFTA negotiations. The President has been very vocal on his displeasure with the current NAFTA agreement claiming “Tremendous, tremendous trade deficits with Canada”; the market however paints a different picture. The President’s comments focus only on goods, which is an incomplete picture. When we step back and take a look at the entire picture, goods and services, the U.S. actually has an overall trade surplus with Canada. This is why, when we look at the data, we believe that the primary target for the NAFTA negotiations is Mexico, to which the U.S. has large trade deficits. Negotiations were recently stalled on five key U.S. policy proposals that Canada and Mexico both rejected. They include U.S. calls for a sunset clause, an overhaul of auto manufacturing, the dismantling of Canada’s dairy sector, the gutting of dispute panels and for restricted access to U.S. government procurement contracts. • Auto manufacturing overhaul: The U.S. wants all cars to comprise

50 percent U.S. content in order to avoid tariffs. The U.S. wants this policy to be phased in within one year, which automakers have deemed impossible.

• Dispute-resolution: The U.S. wants to gut the NAFTA legal dispute tribunals. • Buy American: The U.S. wants to severely curb other countries' access to public works contracts. • Sunset clause: The U.S. has requested a termination clause that would end NAFTA after five years, unless all

parties agree to extend the agreement. • Dairy: The U.S has requested an end to Canada’s supply management system for dairy, poultry, eggs, and turkey

within a decade. The big take away from the NAFTA negotiations is the lack of reference to energy commodities. We don’t believe that commodities are a focus for the U.S. in relation to trade with Canada; our view is that the U.S. remains focused on Mex-ican trade deficits. So even if the NAFTA negotiations go poorly, Alberta should maintain its growth outlook and over the long-term the NAFTA negotiations should be a ‘nonevent’ for our energy province in our opinion.

Market Update Oil has broken $60 as expected and we forecast a gradual grind higher, as the market expects a global supply/demand balance by mid-2018. In addition, natural gas broke above $3.00, as a result of colder-than-expected temperatures across North America. The combined impact of higher oil and gas prices is helping the Alberta economy and Canadian stocks as a whole. The Dow Jones Industrial Average broke above 25,000 for the first time ever this morning, illustrating the robust outperformance of stocks which we expect will continue. Similarly, The TSX also broke above 16,000 to new all-time highs, which should continue to be supported by higher energy prices.

Sources: Bloomberg, Daily Oil Bulletin, Statistics Canada, U.S. Census Bureau, BCA Research, CREB, EREB, CHBA, Alberta Treasury Board of Finance, CMHC, CIBC World Markets Inc.

Todd Poland, CIM, PM, First Vice-President, and Investment Advisor at 403-260-0412, James Hobson, CFA, PM, Investment Advisor at 403-260-0574 or 1 (800) 665-6864,

Charet Chahal, CIM, Investment Advisor at 403-260-0440

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We are happy to announce that the GFOA of Western Canada will be henceforth known as the Canadian Association of Government Finance Officers. Over 100 members gathered at the AGM in Regina in September and overwhelmingly voted for the change.

Because of the national focus taken by the organization over the last few years, the use of the word “Western” was confusing. It was getting in the way of signing up more members in the East: even though there never has been a GFOA of Eastern Canada. As we wish to maintain a close relationship with the GFOA of United States and Canada, the board decided not to simply drop the word “Western. That may have caused a different sort of confusion.

While we move forward in serving our nearly 1,200 members across the country, we will still be doing the same things as before: holding conferences, providing networking opportunities, using our newsletter and website to tell our members about PSAB changes and job opportunities.

Our 2018 conference will be held in Winnipeg from September 12th to 14th and feature some great speakers including Tim Beauchamp, Janice Baker and Gail Stephens. Apart from the regular PSAB update, we will focus on risk management and financial leadership issues.

We truly value our close relationship with Government Finance Officers – Alberta chapter and will be working closely with your board and staff. Please check out our website at: http://cagfo.ca/

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