Liberal Election Strategy: Destroy Alberta Economy
February 2, 2007 · By Tom Cerber
Charles Adler (via Bourque) reports his shock at hearing Liberal Natural Resources critic Mark Holland explain what the Liberal government would do about the Alberta oilsands if elected:
If Ajax Pickering MP Mark Holland was telling the truth today on Adler on Line, Canadians ought to be very frightened. When I pressed Holland to get beyond the plattitudes about how sincere Mr Dion is about his love of the environment, the Liberal MP blew my audience away. His rhetoric indicated that a Dion government would get into the face of Canada’s energy producers.
Little doubt was left in the mind of observers that the Holland/Dion strategy was to be as confrontational as possible with Alberta voters and their provincial government.
Holland said a Liberal government would manage Alberta resources responsibly. He said, “We need to stabilize the oils sands. We are not going to allow companies to exploit that resource, to pump it out as fast as you can and give it to the Americans and blow out our emissions targets.”
When I confronted Mr. Holland about serious job losses that would surely be the result of this kind of federal government policy, he talked about a British study that said short term pain was needed in the interests of dealing with climate change. This was necessary, said Mr. Holland, to prevent longer term economic pain.
That is, “short term pain” for Alberta (which is to say, destroy its economy) for “longer term economic” gain, meaning Ontario profits.
Meanwhile, Alberta separatists must be very happy.
You can listen to Adler’s interview with Holland here.
H/t: Jaunque
go in there and pump it out as fast as you can to give it to the Americans and sell out our national interests and blow apart our emissions targets.” He sounds a little off message but his comments hardly warrant the firestorm of accusations that he has faced since then. Don’t get me wrong, Holland is worthy of much criticism, but the barrage of climate-change denial and blind faith in oil industry is making me sick. Apparently, as further evidenced by the
Holland is on Rutherford today sometime b/w 9am-noon MT
http://www.qr77.com
Should be interesting
Jaunque: Thanks, should be fun!
“That is, “short term pain†for Alberta (which is to say, destroy its economy) for “longer term economic†gain, meaning Ontario profits.”
I don’t know where all the westerners get the idea that we in Ontario want anything but the best for Alberta and B.C. I think this is more of a Liberal versus Conservative view of the governing of Canada. Keep in mind that we have many many many more conservatives in Ontario than any two or three provinces put together, unfortunately Toronto,Hamilton,Ottawa,(about half of the population of Ontario) votes heavily Liberal and there for the province goes liberal. Ontario’s profits don’t rely on Alberta any more than Alberta’s rely on Ontario.Ontario is financial and manufacturing etc. Alberta is Oil and cattle etc. They are largely independant of each other. What you are hearing is Liberal MP Sheppard saying what most Liberals believe (socialism), The same would be said from a B.C. Liberal or an Alberta Liberal (if one actually exists,haha) Remember it is a Liberal tactic to break everyone into victom groups and pit them against each other to get them off topic. Don’t fall for the trick.
Wow. I can’t wait to see Dion try to campaign on this.
“If Dion is willing to cripple one province in his march to power, which province is next? Vote Conservative.”
[...] on what Holland and the Liberals want to do to Alberta here. This entry was written by Tom Cerber and posted on Fri Feb 2, 2007 at 11:41 am and filed under [...]
Charles,
You wrote “Ontario’s profits don’t rely on Alberta any more than Alberta’s rely on Ontario.Ontario is financial and manufacturing etc. Alberta is Oil and cattle etc. They are largely independant of each other.”
Last year I read about how much Alberta buys from the ROC for materials and manufactured goods to run the energy industry here. Such things as structural steel, steel pipe, engines, vehicles and on and on. I don’t remember the dollar value of these orders each year but it was a very large amount. If the West’s energy industry gets hit, there will be big layoffs in Ontario’s manufacturing sector. We are much more interdependant than you suggest.
Bill in Calgary
Charles is correct. The average person in Ontario wants the best for Alberta. It’s only the Liberals who pit provinces against each other in order to regain the power they think they are natural inheritors of. The Liberals do not love the country they live in. If they did, they would act differently.
And….one more thing….Dion is a skinny little kid who looks like he got picked on a lot in the schoolyard. No wonder, by the dumb things that come out of his mouth. :-)
Bill I wasn’t suggesting we don’t do business with each other. My point was proven by your statement. My main point is that Ontario doesn’t rely on Alberta doing poorly for our success as the earlier post in the article indicates, (That is, “short term pain†for Alberta (which is to say, destroy its economy) for “longer term economic†gain, meaning Ontario profits.) Just as Alberta doesn’t really want Ontario doing poorly either.I am from the industrial sector and know that Ontario and Alberta buy and sell between each other but don’t forget that Ontario, as much as our Liberal government hates it, does more business with the States than the provinces. For instance we sell more to New York than California does because of our close proximity. Alberta gets its structural steel from Ontario, among other places but the pipe steel you are talking about is the almost exclusive territory of E. Texas, Oklahoma and Louisiana, along with most of the oil patch equipment and services. I was trying to clear up a misconception that we in Ontario somehow hate everyone west of the Manitoba border, and want their economies to do poorly. The interview with Liberal MP Sheppard is indicative of the Liberal mindset from anytown Canada not just Ontario. Ask some of the leftist tree huggers in B.C., champagne socialist in Quebec, or any of the leftists from anywhere in between what should be done in Alberta and they will echo what Sheppard said. It isn’t easterners it is leftists. I am just sorry that we have a surplus of socialist here in the east. Remember don’t fall for the east versus west mind game. The way the Liberals tend to win is to divide the right and come in for the win. Sorry the post is long I ramble sometimes.
Charles, thanks for the response. I don’t fall for the East versus West hate thing. I spent the first 23 years of my life in SW Ontario and the last 26 in Calgary.
I just hope the people in the East don’t fall for the Liberal notion that the West can be hit and it won’t affect anyone else.
I have to add though that over the years I’ve seen lots of truckloads of steel pipe with ‘CANADA’ printed on them. Assumed it was made in this country.
Bill
Well read this sport:
Alberta is already spreading the wealth
Any discussion of ‘redistributing’ the province’s petrodollars to correct fiscal imbalances is misguided
PRESTON MANNING AND FRED KERR
As the premiers and the federal government discuss fiscal imbalances and equalization, one hears increasing references to Alberta’s burgeoning petroleum revenues and suggestions that Ottawa should somehow involve itself in “redistributing” such revenues more equitably across the country.
In 1980 — the last time the federal government acted on such advice after the OPEC-engineered oil price hike — the results were politically and economically disastrous. Confiscatory taxes imposed on the industry in Canada almost killed the goose that was laying the golden egg. Oil-patch investment and jobs fled the country. Western alienation came within a hair of being transformed into full-blown western separatism.
And the Liberal government responsible for the so-called national energy program destroyed its electoral prospects in much of the West for more than two decades.
The Harper government obviously has no intention of repeating such mistakes. And there would be less misguided pressure for it to do so, if the public were to better understand the following facts:
1. Albertans’ per capita contribution to equalization is by far the highest in the country.
The federal government collects consumption, income and other taxes from individuals and corporations across Canada. Naturally, it collects more revenue in provinces whose economies are vigorous than it does in provinces whose economies are weak. Ottawa then redistributes significant revenues to the governments of less affluent provinces through the equalization program, to enable them to provide social services to their people roughly equivalent to those available in the rest of the country.
Ontario Premier Dalton McGuinty cites the $23-billion net federal fiscal contribution made by the people of Ontario, and argues that this is excessive. But, for 40 years (even when oil prices have been low), Albertans’ net federal fiscal contribution per person per year has been more than triple that of Ontarians.
Any suggestion that Albertans have not been contributing their fair share to equalization and should be contributing an even higher percentage is itself unfair.
2. The benefits of the current boom in the petroleum sector are already distributed far more broadly than most people think.
In 2006, $108-billion in revenue will flow into the petroleum sector in Canada as a result of record high oil prices.
The portion of this revenue that is most visible to the public — because it is most frequently mentioned by the media and the politicians — is the portion that flows into the coffers of the Alberta government. In 2006, this will amount to almost $20-billion — about $14-billion in royalties, $3-billion in taxes, and $3-billion from the sale of drilling rights.
But what about the other $88-billion? The Canadian petroleum industry will send about $5-billion to Ottawa in federal income taxes in 2006 and another $2-billion to $3-billion to the treasuries of other hydrocarbon-producing provinces such as British Columbia, Saskatchewan, Nova Scotia and Newfoundland. It will spend $11-billion on debt and equity financing charges, and another $23-billion on administrative and operating expenses.
And then there is the big ticket item — capital expenditures.
Conventional oil and gas wells start declining from the moment they come on stream. Typically, a new gas well’s production declines around 30 per cent in the first year. As a result, the industry must drill an ever-increasing number of wells just to keep production flat, let alone grow it. Oil-sands plants are even more capital intensive. This means that much of the capital generated by conventional and oil-sands production must be reinvested in further development. Thus, in 2006, the industry will commit more than $40-billion to capital expenditures — everything from rigs and mining equipment to chemicals and pipes — much of which is made outside Alberta, notably in Ontario.
Finally, there is the stream of dividends and distributions paid to investors in Canada’s petroleum sector — about $6-billion in 2006. The ownership of today’s industry is structured quite differently than it was in the 1980s — with many energy producers having organized themselves into royalty and income trusts. The majority of these are owned by individuals, mutual funds, and pension funds based in Central Canada. When the Liberal government mused about rejigging the tax rules for royalty and income trusts, it was no coincidence that the loudest and most immediate protests came not from Calgary but from Toronto.
And then there are the capital gains recently enjoyed by Canadian energy investors, most of whom live outside Alberta. The energy sector, which, during the Nortel glory days of the high-tech boom, represented less than 10 per cent of the TSX index, today represents about 30 per cent. That’s a lot of wealth generation for a large number of Canadians right across the country.
The bottom line? While $20-billion of the $108-billion generated by the petroleum industry in 2006 will end up in the hands of the Alberta government, the remaining $88-billion is much more broadly distributed than most media commentators, politicians and Canadians think.
3. The investment of $100-billion in the oil sands will generate more tax dollars for the federal government than the Alberta government, and almost as many person years of employment outside Alberta as within the province.
A recent study by the Canadian Energy Research Institute highlighted the following facts: Conventional oil production in Canada is declining, underscoring the importance of oil sands as a vital source of North American supplies. In 2004, Alberta’s oil sands were recognized by the International Energy Agency, for the first time, as part of global oil reserves. This established Canada’s reserves as second only to Saudi Arabia’s, justifying Prime Minister Stephen Harper’s assertion that Canada is becoming an energy superpower.
But oil-sands development requires massive capital investment before anyone sees a dime of revenue. Producers need to delineate ore bodies, build processing facilities, and buy trucks and loaders or inject steam to coax the gooey stuff out of the ground.
The need for massive capital investment creates opportunities for investors across Canada and around the world. And all this capital investment creates thousands of jobs, for which Alberta alone cannot hope to supply the labour. Trades people, engineers and labourers are flocking to Fort McMurray from across Canada, including a large contingent from Newfoundland. Most of those workers pay Canadian taxes.
Many send a portion of their oil wages home to Corner Brook, Barrie or Moncton.
The CERI study estimated the impacts of $100-billion invested in oil-sands development over a 20-year period through to 2020.
Even if oil prices were to level off at half their current level, this investment will lead to:
6.6-million person years of employment, 44 per cent of it outside of Alberta. Of the 1.7-million person years of employment generated in Canada outside of Alberta, 1 million would be in Ontario alone.
Federal government tax revenues of $51-billion, making Ottawa (not Alberta) the largest recipient of government revenues generated by oil-sands development.
An interesting future study would be to compare the national distribution of benefits, including tax revenues generated for the federal government, from the development of an oil-sands plant in Alberta versus a hydro-power project in Quebec or a nuclear-power plant in Ontario. And if such a study showed — as it would — that the benefits from the hydro and nuclear projects were much more narrowly distributed than those of the oil-sands project, would the political and business establishments of Ontario and Quebec support federal intervention in the name of equalization to ensure a more equitable distribution? Not likely.
The above facts concerning the current and future distribution of benefits from the development of Alberta’s petroleum resources are not widely known. They are rarely even mentioned, let alone taken into account, in the debate on how to correct fiscal imbalances and reform equalization. It is high time they were.
Preston Manning, a former federal leader of the Official Opposition, is president of the Manning Centre for Building Democracy and a senior fellow of the Fraser Institute. Fred Kerr is a Calgary-based commentator and former institutional stockbroker specializing in the energy sector.
Source; Globe & Mail.
Alberta is already spreading the wealth
Any discussion of ‘redistributing’ the province’s petrodollars to correct fiscal imbalances is misguided
PRESTON MANNING AND FRED KERR
As the premiers and the federal government discuss fiscal imbalances and equalization, one hears increasing references to Alberta’s burgeoning petroleum revenues and suggestions that Ottawa should somehow involve itself in “redistributing” such revenues more equitably across the country.
In 1980 — the last time the federal government acted on such advice after the OPEC-engineered oil price hike — the results were politically and economically disastrous. Confiscatory taxes imposed on the industry in Canada almost killed the goose that was laying the golden egg. Oil-patch investment and jobs fled the country. Western alienation came within a hair of being transformed into full-blown western separatism.
And the Liberal government responsible for the so-called national energy program destroyed its electoral prospects in much of the West for more than two decades.
The Harper government obviously has no intention of repeating such mistakes. And there would be less misguided pressure for it to do so, if the public were to better understand the following facts:
1. Albertans’ per capita contribution to equalization is by far the highest in the country.
The federal government collects consumption, income and other taxes from individuals and corporations across Canada. Naturally, it collects more revenue in provinces whose economies are vigorous than it does in provinces whose economies are weak. Ottawa then redistributes significant revenues to the governments of less affluent provinces through the equalization program, to enable them to provide social services to their people roughly equivalent to those available in the rest of the country.
Ontario Premier Dalton McGuinty cites the $23-billion net federal fiscal contribution made by the people of Ontario, and argues that this is excessive. But, for 40 years (even when oil prices have been low), Albertans’ net federal fiscal contribution per person per year has been more than triple that of Ontarians.
Any suggestion that Albertans have not been contributing their fair share to equalization and should be contributing an even higher percentage is itself unfair.
2. The benefits of the current boom in the petroleum sector are already distributed far more broadly than most people think.
In 2006, $108-billion in revenue will flow into the petroleum sector in Canada as a result of record high oil prices.
The portion of this revenue that is most visible to the public — because it is most frequently mentioned by the media and the politicians — is the portion that flows into the coffers of the Alberta government. In 2006, this will amount to almost $20-billion — about $14-billion in royalties, $3-billion in taxes, and $3-billion from the sale of drilling rights.
But what about the other $88-billion? The Canadian petroleum industry will send about $5-billion to Ottawa in federal income taxes in 2006 and another $2-billion to $3-billion to the treasuries of other hydrocarbon-producing provinces such as British Columbia, Saskatchewan, Nova Scotia and Newfoundland. It will spend $11-billion on debt and equity financing charges, and another $23-billion on administrative and operating expenses.
And then there is the big ticket item — capital expenditures.
Conventional oil and gas wells start declining from the moment they come on stream. Typically, a new gas well’s production declines around 30 per cent in the first year. As a result, the industry must drill an ever-increasing number of wells just to keep production flat, let alone grow it. Oil-sands plants are even more capital intensive. This means that much of the capital generated by conventional and oil-sands production must be reinvested in further development. Thus, in 2006, the industry will commit more than $40-billion to capital expenditures — everything from rigs and mining equipment to chemicals and pipes — much of which is made outside Alberta, notably in Ontario.
Finally, there is the stream of dividends and distributions paid to investors in Canada’s petroleum sector — about $6-billion in 2006. The ownership of today’s industry is structured quite differently than it was in the 1980s — with many energy producers having organized themselves into royalty and income trusts. The majority of these are owned by individuals, mutual funds, and pension funds based in Central Canada. When the Liberal government mused about rejigging the tax rules for royalty and income trusts, it was no coincidence that the loudest and most immediate protests came not from Calgary but from Toronto.
And then there are the capital gains recently enjoyed by Canadian energy investors, most of whom live outside Alberta. The energy sector, which, during the Nortel glory days of the high-tech boom, represented less than 10 per cent of the TSX index, today represents about 30 per cent. That’s a lot of wealth generation for a large number of Canadians right across the country.
The bottom line? While $20-billion of the $108-billion generated by the petroleum industry in 2006 will end up in the hands of the Alberta government, the remaining $88-billion is much more broadly distributed than most media commentators, politicians and Canadians think.
3. The investment of $100-billion in the oil sands will generate more tax dollars for the federal government than the Alberta government, and almost as many person years of employment outside Alberta as within the province.
A recent study by the Canadian Energy Research Institute highlighted the following facts: Conventional oil production in Canada is declining, underscoring the importance of oil sands as a vital source of North American supplies. In 2004, Alberta’s oil sands were recognized by the International Energy Agency, for the first time, as part of global oil reserves. This established Canada’s reserves as second only to Saudi Arabia’s, justifying Prime Minister Stephen Harper’s assertion that Canada is becoming an energy superpower.
But oil-sands development requires massive capital investment before anyone sees a dime of revenue. Producers need to delineate ore bodies, build processing facilities, and buy trucks and loaders or inject steam to coax the gooey stuff out of the ground.
The need for massive capital investment creates opportunities for investors across Canada and around the world. And all this capital investment creates thousands of jobs, for which Alberta alone cannot hope to supply the labour. Trades people, engineers and labourers are flocking to Fort McMurray from across Canada, including a large contingent from Newfoundland. Most of those workers pay Canadian taxes.
Many send a portion of their oil wages home to Corner Brook, Barrie or Moncton.
The CERI study estimated the impacts of $100-billion invested in oil-sands development over a 20-year period through to 2020.
Even if oil prices were to level off at half their current level, this investment will lead to:
6.6-million person years of employment, 44 per cent of it outside of Alberta. Of the 1.7-million person years of employment generated in Canada outside of Alberta, 1 million would be in Ontario alone.
Federal government tax revenues of $51-billion, making Ottawa (not Alberta) the largest recipient of government revenues generated by oil-sands development.
An interesting future study would be to compare the national distribution of benefits, including tax revenues generated for the federal government, from the development of an oil-sands plant in Alberta versus a hydro-power project in Quebec or a nuclear-power plant in Ontario. And if such a study showed — as it would — that the benefits from the hydro and nuclear projects were much more narrowly distributed than those of the oil-sands project, would the political and business establishments of Ontario and Quebec support federal intervention in the name of equalization to ensure a more equitable distribution? Not likely.
The above facts concerning the current and future distribution of benefits from the development of Alberta’s petroleum resources are not widely known. They are rarely even mentioned, let alone taken into account, in the debate on how to correct fiscal imbalances and reform equalization. It is high time they were.
Preston Manning, a former federal leader of the Official Opposition, is president of the Manning Centre for Building Democracy and a senior fellow of the Fraser Institute. Fred Kerr is a Calgary-based commentator and former institutional stockbroker specializing in the energy sector.
Source; Globe & Mail.
Funny, I watch Ford truck ads filmed here in ALberta on TV. I drive one, where was it built? Ontario. Just about every second vehicle in the Patch is a Ford if it isn’t a GM or Dodge product. My last truck was a Dodge built where – Ontario. That’s $80,000 of my money paid to buy these vehicles. Your welcome. Oh, and by the way most of the oil & gas products that you burn and plow into your fields as fertilizer, come from out here, refined in Sarnia. As for pipe, try IPSCO in Saskatchewan, from steel ingots poured in Hamilton for starters. You might be surprised to hear that a delegation from Quebec was in Ft McMurray this week to drum up business for Quebec manufactures, probably to beef up the Canadian connection in the wealth being created here. We also have signed a deal with BC to streamline labor and materials transfers between our two provinces and begin to eliminate inter-provincial trade barriers, finally. On the political side, where were all those 100 plus Liberal seats that ran this country the last 13 years. Couldn’t have been Ontario? By the way, I’m also an Ontario/Montreal transplant from 32 years ago. I lived through the NEP, thanks to a Liberal government. Do you wonder why we bring this up when the same brand of political party muses about what they would do to get elected? I also visit family in TO and see the smog still hanging around like it used to years ago. I suggest that before voters in the east scream about what we do here in ALberta, to clean up back home first.
Just one more thing – read garth.ca and read what a lot of Ontario people have to say about our province and tell me to my face that “short term pain for long term gain” isn’t the new NEP II for Alberta.