Idiot Digest, Vol. 1 Issue. 1
August 25, 2005 · By Peter Rempel
Werner Patels reflects upon yesterday’s slew of stories and responses to the news that Ontario and Ottawa are eyeing up Alberta’s oil revenues by claiming that we should be grateful for the attention, which can only help to ease western alienation:
“If Vitor is a true-blooded Albertan, as he claims, he should be grateful for the attention. After all, people like him always bellyache about how “alienated” they feel out here in the West.”
I like attention as much as the next guy, but tend to shy away from the “steal your resources, destroy your economy” type of attention.
I suppose that this makes sense if one views Alberta, as Werner apparently does, as a spoilt child, as grateful for negative as for positive attention. But the expressed view that Alberta is a spoilt child who should be grateful for the attention of Ontario and Ottawa will be an…entertaining one when, as Werner claims, he runs as a Liberal candidate in Calgary. Nothing could be more indicative that Liberals in Alberta are becoming an uncompetitive laugh-track party then their attraction of kooks like this as candidates.
I agree. I don’t mind attention but when the only reason we get looked at is because we now have money and power then I think its B.S. Why weren’t we getting this attention 10 years ago? HMM? Because we didn’t have anything to offer Ontario. Now that we do, we get the attention. Its not hard to see the reasons.
M.K.:
“I don’t mind attention but when the only reason we get looked at is because we now have money and power”
It’s called oil. Without oil, Albertans wouldn’t have much. They ended up drawing a pretty sweet card, and it would take massive incompetance NOT to be rolling in money with the sort of oil resources the province has.
This Alberta/Ontario rivallry is ridiculous. We’re all Canadians.
Speaking of sweet cards, Ontario has a sweet card in the way that confederation is rigged in its favor, which enables it to use its power to provide tax incentives to various industries (e.g., auto) to move there. For that matter, it’s got a sweet deal because it’s so close to the US industrial heartland.
Yet, I don’t remember Ontarians clamouring to share their wealth when oil prices hit rock bottom in the 1980s. No, through the NEP they were quite happy to steal what wealth was left in Alberta.
I don’t buy the Ontario canard that Albertans only have it so good because they have oil. Low tax rates, friendly business climate, citizens who are not Nietzschean last-men, all have something to do with it as well.
Besides, Alberta consumers also have to buy expensive oil and gas, as well as electricity.
Oil doesn’t jump out of the ground and magically transform into money. Alberta’s long-term strategy of encouraging investment in exploration alongside drilling, mostly through a low-tax regime, is largely responsible for the government’s current revenues. Albertans paid a price for that, a price that Saskatchewan, for example, didn’t pay when the provincial government there was taxing in order to provide lavish social spending. The result? Under-developed and almost entirely unproductive natural resource, primarily potash, industries. But no matter; irresponsibility in Canada is always subsidized by equalization, which is apparently now a “Canadian value.”
So please don’t tell me that Alberta’s current position is attributable to dumb luck. Convincing one’s self of that is just a way of pushing aside guilt as the rest of Canada contemplates another raid on the revenues that derive from the hard work and sacrifices of Albertans.
“Convincing one’s self of that is just a way of pushing aside guilt as the rest of Canada contemplates another raid on the revenues that derive from the hard work and sacrifices of Albertans.”
I say again: And oil.
Come on now - you’re being escapist if you do not believe that the precense of such a valuable commodity isn’t what’s firing Alberta’s economy right now. Saskatchewan potash is fun and all (or Ontarian nickel and other minerals), but it’s not oil - it’s not skyrocketting in price every time someone blinks in the Middle East.
Albertans love to play the guilt card, and whack away at Ontarians….. well, it’s foolishness.
Spoken like a true Ontarian.
And I say again: There are lots of unproductive oil reserves in the world, that Alberta’s is productive is due almost entirely to a long-term strategy of encouraging exploration and creating an economic atmosphere that is welcoming to investment in the industry. I strategy, I add, that has found itself at odds with the federal government every step of the way.
Does such a long-term strategy come with costs? Oh yes, and Albertans pay for it through a less comprehensive set of social programs and benefits. Albertans don’t enjoy all manners of state protection from life’s hazards, as they do in Saskatchewan. Albertans can’t work in uncompetitive industries content in the knowledge that the federal government will subsidize them well past their best-before dates, as in Ontario. Albertans don’t work four months out of the year and then expect the state to support them for the other eight months, as in the Maritimes. These are the draw-backs; the benefit is a productive and resilient resource economy that is diversifying without the help of government incentives. And yet Ontarians who exist solely on the basis of federal subsidies and who congratulate themselves for their compassion in sustaining seasonal industries in the Maritimes think that Albertans have done nothing, made no sacrifices, to reach their current status.
Does that piss me off a bit, Andrew? A little. Not as much as the fact that my father’s profitable small business closed down, like every other business in Calgary, during the NEP when I was much too small to realize that my family’s life was being thrown into disarray because Ontarians were willing to destroy the Albertan economy and Albertan lives in order to get a discount on their gas prices. But look at me, just being foolish and rather small again.
And as for guilt: If you think that Albertans are going to be victims again, I’d suggest a thorough re-reading of that Western Standard poll on western seperation.
Anyone who doesn’t think that Alberta’s position is due to not just oil but the price of said commodity is delusional.
And Tom illustrates that point perfectly:
“Yet, I don’t remember Ontarians clamouring to share their wealth when oil prices hit rock bottom in the 1980s.”
Alberta’s wealth is largely (but not completely) a factor of the price of oil. The oil sands are only pumping oil because of high prices. At $10/barrel, half the oil patch is laid off, the oil sands shut down and Alberta goes broke.
In the 1980’s Alberta was DEEP in the red (that debt that Klien paid off didn’t pop out of no where.) Oil royalties are based on the price of oil and royalties makes up a HUGE percentage of government receipts.
None of this means that Alberta should be forking over any cash to anyone. It just means that you can’t honestly say that oil royalties (as apposed to the profits of companies and the income of workers) isn’t a windfall. It is. That windfall disappears with low oil prices and Alberta (which has the highest social spending per capita in the country) goes back into the red. It isn’t an insult or a slag on Alberta to point this out. It is fact, just fact.
For those who think that now that Alberta is rich again so the feds should move in: Alberta negotiated resource rights when they joined confederation. A deal’s a deal. The rest of us have to live with it or lose confederation. And Tom’s right, Alberta got sweet bugger all from the rest of the country when they were hurting (although the rest of the country wasn’t doing too well then either.)
I would add that it’s easy to overestimate how much the average Albertan *sees* that oil and gas revenue. Like other Canadians, they have to fork out a lot of money to pump gas into their pickups, heat their homes, pay higher consumer prices because oil products are in everything (e.g., plastics, etc.). Yes, Klein gave a gas rebate of a whopping $150 or so per household a couple of years ago, which is so small in comparison to annual house heating bills as to be a joke. Now he’s talking a tax cut, but hasn’t said how much of one. Even so, Alberta’s taxes aren’t *that* much lower than those found in BC and Ontario.
If Ontario wanted to get its fiscal house in order, they could 1) charge health-care premiums of about $800-$1000 per household per year (that should wipe out any gap in equalization payments that Ontario currently suffers) and 2) cut public spending in areas dominated by annoying public service unions (e.g., the LCBO - what backwater would allow the government to sell booze????).
Pete,
Not to belabour your point but Klein’s Alberta spends more per capita than any other province including Quebec.
The only difference between the socialist provinces of QC,ONT, SK, etc and the socialist province of Alberta is that Alberta can afford it (for now.) Don’t pat yourselves on the head for fiscal prudence. If Klien was half the conservative he claims to be your provincial income taxes would be as low as your non-existent sales tax (although I’d be careful of cutting taxes at high gas prices. High prices may be temporary but tax cuts aren’t.) Ever wonder how you can have high spending and low taxes and still claim it’s all hard work? Klien only cut in the beginning. He’s been spending like a drunken sailor for years.
Also, do you know how huge the tax credits and deductions are for businesses doing Oil & Gas exploration? I would guarantee they’re worth more than any subsidies Ontario’s auto sector has received over the last 20 years. Otherwise we’d have won more than 2 of 30 new plants built in North America. Because the feds and ont. govs have NOT been willing to fork unlimited funds into the auto sector, all the new plants have been going to the southern US (who are willing to put up all kinds of pork.) But Alberta gets nothing.
Ontario has never received more from confederation than it paid out in taxes. Alberta was subsidized before they found oil. Keep that in mind while you Ontario bash.
Alberta has been crapped on more than once for sure. The NEP and crow rate being the two main examples. (although it does sound a bit contradictory to me claiming your economy is about hard work and not just about oil and then claim that the NEP wrecked the economy. It’s either one or the other.)
It really does suck that your family suffered under the NEP but keep in mind that Trudeau drove the entire country’s economy into the toilet. Not just Alberta. Not that all my uncles out in Redcliffe (outside Medicine Hat) will stop complaining about it. They suffered too.
How is bashing Ontario (as if there are no conservatives here) help? Do you think that bickering is going to get rid of the Liberals? How about working with Ontario’s conservatives instead of delusional, paranoid bitching sound?
As for the idiotic regional development subsidies, UI subsidies to seasonal workers, that money does not end up here. It ends up in Quebec, the East and the prairies (outside of AB.)
When you claim “Albertans can’t work in uncompetitive industries content in the knowledge that the federal government will subsidize them well past their best-before dates, as in Ontario” What are you talking about? Put the bottle down.
“And yet Ontarians who exist solely on the basis of federal subsidies” ? You’re on glue. An absolute madman. How is Ontario subsidized if we’re paying out more to the rest of the country than is coming back in? It’s grade one math.
You can certainly say that it’s Ontario’s fault for voting in the Liberals. I’ve said it a thousand times. But to say that Ontario is sucking off Alberto is a special type of stupid.
Right. I suppose that the first thing to grasp is that the federal government bestows favour in ways other than equalization payments. Does Ontario pay into the equalization pot? Yes. But it also finds itself the recipient of massive federal grants and subsidization outside of that program. Alberta doesn’t. It’s not hard to figure out why.
Is this necessary to maintain the auto industry in Ontario in the face of incentives by governments in places like Alabama? Sure, but that doesn’t change the fact that a) Ontario is being subsidized by the national government and b) the federal government is preserving an industry that could never survive on its own. One of the more pathetic spectacles I’ve ever seen was Ontario politicians lining up last year to whine about Harper’s musings on ending business subsidies; they really seemed to think that Ontario’s economy would collapse without artificial propping up by the state. And they’re probably right.
When I hear sensible Conservatives who happen to be Ontarians like you and Andrew talking on this topic, it makes me think that the differences between Alberta and Ottawa are probably already irreconcilable.
warwick: “Also, do you know how huge the tax credits and deductions are for businesses doing Oil & Gas exploration?”
The companies investing in the oilsands receive “royalty holidays” until their investment is paid back. Since the investments are in the billions, it’s huge. However, some of those holidays are ended, which is really why AB’s revenues have skyrocketed (not just the price of oil).
Another 110 billion will be invested in the oilsands over the next 5-10 years. That’s a lot of jobs for a lot of Canadians (Fort McMurray is jokingly referred to as Newfoundland’s second largest city).
I’m not sure how telling Ontario to keep their hands off our cash is Ontario-bashing, though.
It’s not just oil sands that receive preferential tax treatment. If you start up an O&G company, most if not all of that money you invest is tax deductible (depending on the corporate structure.) That is on top of preferential treatment of exploration costs, development R&D that even other resource companies do not get. That adds up. A subsidy is a subsidy. I’m not saying we shouldn’t be doing it, I’m saying it is being done. And it isn’t bashing Alberta to point it out either. Royalty Holidays are a provincial government subsidy as royalties are paid to Ralph. The other subsidies to which I refer are from the feds. And they are worth far more than giving a few auto plants one-time money. This is money being subsidised every year.
Are you willing to stop tax breaks as well as direct subsidies for BOTH the oil patch and the auto sector? That would cripple both sectors. In both cases the amount of money paid from these industries in taxes is far greater than the money extorted from the government in subsidies. Most of the money going to the Auto sector is start up and land development. It’s one time money. It isn’t like they give each plant an allowance. Once it’s built it isn’t going anywhere. It isn’t much difference than a “royalty holiday” and other subsidies given the O&G sector except that it’s direct instead of indirect one. It says something that you think your subsidy deserved and Ontario’s taken from you. Give it a rest. Not everything Ontario does is at your expense.
Do I like the idea of subsidies? Of course not. My method would be to drop taxes across the board. Personal and corporate taxes. It would be a hell of a lot more effective. Do I like that we have to bribe auto plant to come here? No. But we’re dealing with a system that is North American, not just Canadian. The southern states throw many times more money into these plants than Canada has been willing to do (which why they have so many of the new plants.)
The auto sector doesn’t require this money, it is using it’s leverage to maximize shareholder return by having different locations bid for the plants. Until the southern states is forced to stop subsidies, we aren’t going to get any of the plants unless we match it. This may be an issue we might want to address with NAFTA but until we do, we’re stuck with it. Softwood lumber is the same. Our system of stumpage sells a resource on public land to the lumber companies for less than fair value. This is a subsidy that the feds have so far been willing to defend until their dying breath. A subsidy designed to increase jobs in BC and to a lesser extent Alberta. Quebec as usual did a side deal with the US and are not effected.
Ontario pays billions more into the feds than it receives back and that $23 billion per year figure is ALL INCLUSIVE. It isn’t just equalization. Alberta loses every which way and so does Ontario. It isn’t Ontario that would be getting your money, nor is it Ontario that wants it. You can look no further than Quebec for that. It takes the $23 billion Ontario loses then Alberta (with a much, much smaller population) pays for the East Coast and Manitoba.
I’ve also never said Ontario should take Alberta’s money and in fact have said the opposite on many occasions in many places. Hell, I’m the guy referring Ontario conservatives to the western standard for subscriptions. I don’t begrudge Alberta a cent.
In fact, the only people who have mentioned Alberta’s money is some commie professor from Montréal and the G&M. This really is a non-issue. The only thing is your quick-draw reflex to blame Ontario every time some jackass coughs.
Werner Patels and “reflects” in the same sentence? How does that happen?
Last August he was a tried and True Liberal, attacking Alberta, today he is a Tried and True Alberta Conservative attacking Ottawa. My what a difference a few months make for Herr Patels. Flip flop indeed,the term Kookwas used to describe him and not by me.He has managed to tick off everyone equally. Conservatives, Liberals, Progressives and yes this Libertarian Communist. Herr Patels is a one man Flame war not only in the Alberta and Canadian political blogosphere