Alberta Politics

They did what?! Reaction to the NDP Royalty Review from across the political spectrum

Here is what energy industry executives, progressive advocates and opposition politicians had to say about the Royalty Review panel report released on Friday, Jan. 29, 2016:

“Our new royalty framework recognizes the economic context of Alberta’s energy industry and the need to protect and promote good jobs. Our new system will gradually deliver greater revenue to Albertans while building a more competitive energy sector enhanced by greater transparency and performance measurements to allow Albertans to hold government and industry to our commitments.” – Rachel Notley, Premier of Alberta (press release)

“Our history of innovation has made Alberta into one of the world’s top energy producers. With the changing world we face today, it’s even more important to encourage innovation and ensure Alberta can compete. That way, everyone benefits. Our panel is proud to deliver these recommendations to improve our energy industry’s future.” – Dave Mowat, Royalty Review Advisory Panel Chair  (press release)

“Virtually none of our concerns or suggestions are reflected in the royalty report… Those ideas were passed over in favour of a plan that could have been introduced by a PC or Wildrose government… We had high hopes at least some of those progressive alternatives would have found their way into the final report. But they didn’t.” – Gil McGowan, President of the Alberta Federation of Labour (reported in the Calgary Sun and

“Together, we created a meaningful dialogue around the energy issues both in Alberta and across Canada. I believe that together, we have developed an enduring framework and set of recommendations that will contribute to Alberta’s future prosperity.” – Leona Hanson, Panel member and Mayor of Beaverlodge  (press release)

“The most glaring omission is the complete absence of any kind of incentive for environmental improvement by industry. Under this new royalty system the government is rewarding the environmental status quo. Alberta’s energy industry is innovative and they deserve the opportunity to be rewarded for improved environmental practices. This is particularly prevalent in the decision to ignore the oilsands royalty process completely.” – David Swann, MLA for Calgary-Mountain View and interim leader of the Liberal Party (press release)

“The new royalty framework is principle-based and provides a foundation to build the predictability industry needs for future investment… The report recognizes royalties are just one part of the competitiveness equation for Alberta. With today’s economic situation, now is the time for industry and the Alberta government to work together on solutions that will make Alberta a world-class province to do business… Today’s announcement has been the result of a fair and credible process, one Albertans can trust.” – Tim McMillan, president and chief executive officer of the Canadian Association of Petroleum Producers (press release)

“They’ve done some good things that were laudable, but that keeping the royalty rates and structure was disappointing. There was a lot of room for improvement to capture a greater share of the resource generated by the industry in a high-price environment; holding the line doesn’t accomplish that.” – Ricardo Acuna, executive director of the Parkland Institute (Globe & Mail)

“I was impressed with the efforts of the Panel to understand and balance the interests of the public, the Province and the industry, but I was particularly impressed with how all of the input was considered and integrated to the Modernized Royalty Framework report. I believe the Panel’s recommendations significantly update and improve the Alberta royalty framework which should ultimately encourage investment in Alberta’s resources.” – Kevin ‎Neveu, President and CEO of Precision Drilling Corp.  (press release)

“Just like in our royalty plan, the panel has found that Albertans are getting a fair share from oil and gas royalties, and that our royalties today are globally competitive. As well, they also agreed with our plan that oil sands royalties are fair as-is, and that further transparency is needed. I urge them to take this one step further by compiling and issuing an annual Resource Owners Report, both to inform and educate Albertans as to the many ways we benefit from our energy industry.” – Greg Clark, MLA for Calgary-Elbow and leader of the Alberta Party (press release)

“We see this as a good start on increasing competitiveness and enhancing the province’s financial strength. We look forward to seeing the final details, but at this stage, we commend the Panel on delivering what looks to be a thorough and credible framework that can help Alberta companies compete in difficult market circumstances while providing a more transparent and suitable royalty system.” – Pat Carlson, CEO of Seven Generations Energy Ltd.  (press release)

“Our heart goes out to the Albertans who suffered job losses because of the instability caused by calling the royalty review. The next step is to recover from the damage done by this review and the series of poorly thought out policies that are harming our energy sector. Alberta needs to start seriously evaluating how to restore our competitiveness on the world stage.” – Brian Jean, MLA for Fort McMurray-Conklin and leader of the Wildrose Party (press release)

“We are pleased the government has concluded that the oil sands royalty framework provides the appropriate share of value to Albertans. Completion of the royalty review provides certainty, predictability and helps increase investor confidence in the Province. Industry and government can now focus on initiatives to lower costs, improve efficiencies and enhance environmental performance—all with the goal of getting Albertans working again.” – Bill McCaffrey, President and CEO of MEG Energy Corp.  (press release)

“It is no surprise to see that the Panel found the existing royalty structure to be fair and equitable for Albertans. It’s sad that this government had to create such havoc within the industry only to find out that the regime created by the Progressive Conservatives gives Albertans their fair share of resource revenues.” – Richard Gotfried, Progressive Conservative MLA for Calgary-Fish Creek

7 replies on “They did what?! Reaction to the NDP Royalty Review from across the political spectrum”

What AB political scientists have to say about the NDP royalty review will be quite interesting.

Will they note? how Stelmach and now NDP have been disciplined/constrained by markets and in AB, by oil/gas/tar RW political and media cheerleaders, as described by Charles Lindblom…

excerpt: In his best known work, Politics And Markets (1977), Lindblom notes the “Privileged position of business in Polyarchy”. He also introduces the concept of “circularity”, or “controlled volitions” where “even in the democracies, masses are persuaded to ask from elites only what elites wish to give them.” Thus any real choices and competition are limited. Worse still, any development of alternative choices or even any serious discussion and consideration of them is effectively discouraged.

This panel was very different from the climate change strategy committee. Two members were from the financial sector, one was a business management consultant, and the fourth was a former Conservative deputy minister. The committee was stacked by the NDP government to produce the result they did. Maybe it was politically pragmatic, but the total lack of effort to reach a compromise that would take into account the interests of Albertans is disappointing.

Reversal of Fortune.

Duane Bratt, the chair of Policy Studies at Mount Royal University in Calgary said, “The royalty review decision marked the first major reversal from the NDP”.

Gil McGowan, President of the Alberta Federation of Labour also said the NDP has now been “captured by industry”. True. This is what columnist Jeffrey Simpson calls the Discipline of Power. When industry sectors become bigger than governments, industry calls the shots. Investigative journalist Andrew Nikiforuk has noticed this as well, two years ago naming Alberta an official ‘Petro State’.

If naive voters in Alberta thought they were going to change things by electing an NDP government, they had better understand how power really works.

Reading Anielski’s report at the link in this article…ABs are still not getting a fair share.

‘Critics Slam Alberta’s New Royalty Review as Policy Disaster’


That ‘policy disaster’ headline captures the gist of the analysis by Jim Roy, Mark Anielski, Reagan Boychuk, Barry Rodgers in this article.
excerpt: ‘Alberta’s royalty policy, said Rodgers, is not consistent with the fundamental resource and environmental management notion of “In-Trust.”

That notion, long abandoned by the Tory party, reflects the principle “that current generations have a moral obligation to not leave future generations worse off.”

Missing comparisons

Although the review claimed that Alberta’s royalty rates are comparable to other jurisdictions, it failed to compare Alberta to the jurisdictions that matter most such as Saudi Arabia or Venezuela. The review, for example, makes but one mention of Norway.

Boychuk also said that the review failed to provide true comparisons that took a critical look at real government pricing around the world.

To gauge the appropriateness of bitumen royalty rates, for example, the review hired Wood Mackenzie, a firm that advises oil and gas companies.’

Now is not the time for government ownership of a part of the oil industry, but the only way to get oil companies to agree with higher royalty fees may be for the government to own a part of the oil extraction business. By owning a small part, Albertans will finally be able to get a better return on this resource. And after finding that this works it may not be necessary to change royalty rates at all.

If the government can’t find a way to increase the public share of the oil resource (neither Stelmach nor Notley could do it without some ownership), ownership of a share can accomplish that goal.

This was tried by both Lougheed (Alberta Energy Co, AEC, which eventually merged into Encana) and Trudeau Senior (Petro-Canada, now part of Suncor). Both were essentially the same as their private sector competitors. They offered nothing essentially different than what private companies had been doing. The financial dividends produced and jobs created would have been the same if they had been private companies to begin with (Petro-Canada actually was just a take-over of Dome Petroleum and Gulf Canada).

I can’t see how creating a new NDP Petroleum Corp would help in any way.

It may not have matched the campaign promise of the NDP, but I think most voters also want pragmatic government that is concerned about jobs and the economy, in addition to being concerned about other things.

The NDP still needs to convince a lot of regular Albertans they are not a bunch of wild eyed ideologues, but a competent and pragmatic government. If they don’t, they will end up being a one term phenomena like the NDP in Ontario. The reality is in the last election, voters were tired of the PC’s and only picked the NDP because they thought they were more competent and less kooky than the Wildrose.

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