You sent us your questions and we answered! In this edition of the annual Alberta politics Q&A episode, Daveberta Podcast host Dave Cournoyer and producer Adam Rozenhart dive into the mailbag to answer listener questions about provincial parks, the Heritage Savings Trust Fund, the reopening of schools in September, political party fundraising, how previous governments might have handled the COVID-19 pandemic differently, how the government could do a better job convincing more Albertans to wear face masks in public, and much more.
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The Royalty Review wraps up the second major review panel launched by the NDP after their win in the 2015 provincial election. The report from Alberta’s Climate Change panel represents a more meaningful shift by the government by phasing out dirty coal fired power plants and introducing a carbon tax. As the Climate Change report represents sweeping change, the royalty review panel embraces the status quo.
“It is not the time to reach out and make a big money grab. That just is not going to help Albertans over-all right now, and so I feel quite confident that this is the right direction to take,” Ms. Notley told the news conference in Calgary yesterday.
The decision to keep royalty rates the same is a 180 degree turn from the feisty NDP opposition we knew ten months ago, which claimed Albertans were not getting their fair share from royalties under the old Progressive Conservative regime.
It was also a sharp contrast from the words we heard from the chairman of the province’s previous royalty review. In 2007, Bill Hunter wrote that “Albertans do not receive their fair share from energy development. Albertans own the resource. The onus is on their government to re-balance the royalty and tax system so that a fair share is collected.”
If you were payingattention to the moderate language Ms. Notley and NDP cabinet ministers have used when discussing royalty rates since forming government and launching this review panel in mid-2015, you might be less surprised.
With the government’s messaging in mind, it is not shocking that the NDP did not choose to ignore the panels recommendations and impose sweeping changes that many Albertans, including myself, felt were needed. It is my belief that our resource royalties should have been raised to ensure that Albertans are actually getting their fair share when oil prices are high. This report does not do that.
While the decision to accept the status quo on royalty rates will certainly be a divisive issue within the NDP caucus and party, it demonstrates that Ms. Notley is not a partisan ideologue.
The NDP would have faced a severe political backlash from its right-wing opponents, the energy industry, and thousands of Albertans nervous about the state of the economy if they had jacked up royalty rates yesterday. In the short-term, with the current economic situation in mind, it is a smart political decision to keep royalty rates the same, but in the long-term it represents a missed opportunity for Albertans.
Closing the door to royalty increases will also not help solve the revenue shortfall caused by the drop in the international price of oil. After enjoying decades of high oil and natural gas prices, the old conservative government became over dependent on resource royalties to fund the province’s operations budget. With international oil price dropping, the new government now faces a significant shortfall in revenue.
By accepting current royalty rates, the government has also rebuked months of hyper-partisan rhetoric and nasty attacks from Wildrose leader Brian Jean, who claimed the review was risky, ideological and would “not be independent or fair.” It is troubling that Mr. Jean and his party are opposed to even the concept of reviewing Alberta’s resource royalty rates, something that should be done by the Alberta government on a regular basis to assess whether our rates are competitive.
Creating mechanisms for increased transparency around royalties is one positive outcome of this review. The report recommends the annual publication of a capital cost index for oil and gas wells and the costs and royalties paid for each oil sands project. The Auditor General has reported numerous times that the old Conservative government was not properly tracking whether Albertans were receiving the royalty rates they were owed.
Significant new investment in the Heritage Fund when oil prices do rise again will pay off for Albertans in the long-term. In their 2015 election platform, the NDP campaigned on the promise that “100% of incremental royalty revenue, above the sums earned by Alberta under the current regime, will be invested into Alberta’s Heritage Fund.”
Many Albertans will disagree with the report’s claim that Albertans are currently receiving our fair share from resource royalties. Others will claim it will limit the government’s options for dealing with the revenue shortfall. But, for better or worse, it does show the evolution of Ms. Notley and her party from leftish opposition into a moderate government. For better or worse, yesterday we saw Rachel Notley boost her credentials as a pragmatic Premier of Alberta.
After forty-four years of Progressive Conservative government in Alberta, it still feels surreal to believe that another party has been elected into government. Two and a half months after the NDP victory, Premier Rachel Notley is putting her stamp on Alberta politics. But Alberta’s new government is left to deal with some of the more unhelpful legacies created by the previous government. Here is a look at a few of the Progressive Conservative scandals that continue to haunt Alberta politics.
CBC reports that it has obtained documents showing how the Alberta Funeral Service Association pressured former minister Jonathan Denisand the Department of Justice to reopen a contract and abandon earlier efforts to control spending. CBC reports the contract was reopened and revised against the advice of a government lawyer and chief medical examiner Dr. Anny Sauvageau.
The rushed sale of the government’s fleet of airplanes led to a $5 million loss for Albertans. This contradicts claims by former PC premier Jim Prentice that the sale of the planes netted $6.1 million for the government. The planes were sold after Ms. Redford and PC MLAs faced harsh criticism for alleged misuse of the government air fleet for personal and partisan activities.
Public Sector Pensions
Alberta public sector pension liabilities dropped by more than $400 million last year, suggesting evidence that changes planned to the funds by former premier Alison Redford and finance minister Doug Horner were not necessary. The attacks on public sector pensions alienated thousands of public sector workers in Alberta, many who voted for Ms. Redford’s PC Party in the 2012 election. The PC government’s planned changes to the pension plan were scrapped after Ms. Redford resigned as premier in early 2014.
The auditor general reported that the government has been forgoing an estimated $25 million in annual revenue by not limiting surface rights compensation paid by the energy companies to holders of provincial grazing leases. The report states the province does not track which leases have oil and gas activity on them or how much was paid to the leaseholders for access to the natural resources.
“Current legislation allows an unquantified amount of personal financial benefit to some leaseholders over and above the benefits of grazing livestock on public land,” the report says.
The government’s large investments in carbon capture and storage development has not paid off, according to a July 2014 report from the auditor general. Marketed as a key piece of the PC government’s climate change plan, the auditor general reported that “with only two carbon capture and storage projects planned, the total emissions reductions are expected to be less than 10% of what was originally anticipated.”
The NDP pledged to end the carbon capture contracts and instead reinvest hundreds of millions of dollars into public transit programs, but high cost of cancelling binding contracts with private sector corporations developing the projects could solidify this PC legacy.
When premier Peter Lougheed created the Heritage Savings Trust Fund in 1976, the government dedicated 30% of annual revenues into the rainy day fund “to save for the future, to strengthen or diversify the economy, and to improve the quality of life of Albertans.” The PC government halted non-renewable resource transfers to the fund in 1987, when it was worth $12.7 billion. Investments into the fund were only started again in 2004.
Despite Alberta’s immense natural wealth, the fund is now only worth an estimated $17.4 billion.
Recent polls show a three-way split in support between the Progressive Conservatives, New Democratic and Wildrose Parties have generated some interest in Alberta’s provincial election campaign but with 24 days left until voting day we can expect a lot to change. Here is a quick review of what the politicians were saying and political parties were spinning in the first week of this election campaign.
Mr. Prentice targeted his opponents as extremists while moderating his own tone around Alberta’s economy. Before the election was called, Mr. Prentice’s repeated doom-and-gloom messages led opposition critics to name him “Grim Jim.” The PCs are attempting to present Mr. Prentice as the balanced (a.k.a. safe) candidate, as opposed to the extremist (a.k.a. dangerous) leaders of the opposition.
The recent provincial budget included almost sixty tax and fee increases, including increases to personal taxes but no increases to corporate taxes, which appears to have been a political miscalculation on the part of the PCs. The government’s own budget survey results showed 69% of Albertans support a corporate tax increase, a point the NDP has stressed.
PC MLAs and candidates took to social media to post different variations of a message that 8,900 jobs would be lost if corporate taxes were increased by 1%. It is unclear what study the 8,900 jobs number originates from.
Creating more confusion around corporate tax increases, a PC press release from April 9 stated ‘Prentice pointed out that more than 95% in Alberta are small businesses, employing fewer than 50 people, and questioned those who would put those jobs at risk with a corporate tax increase.” This is a good talking point, if not for the issue that small businesses do not pay corporate tax rates.
According to the Department of Finance website, small businesses earning $500,000 of less profit each year pay a separate 3% small business tax, not the 10% corporate tax applied to companies earning more than $500,000 in profit annually. The PCs dropped the corporate tax rate in Alberta from 15% in 2001 to the current 10% in 2006.
NDP leader Rachel Notleylaunched her party’s election campaign in Edmonton and travelled to Calgary and Lethbridge to campaign with candidates in those cities. It is notable that the NDP are focusing resources on candidates outside of Edmonton, where the party has traditionally been weak. Calgary-Fort candidate Joe Ceci, Calgary-Varsity candidate Stephanie McLean and Lethbridge-West candidate Shannon Phillips were prominently placed at Ms. Notley’s side during photo-ops at these stops
NDP messaging in the first week of the campaign focused on the economy. Ms. Notley announced the creation of a Job Creation Tax Credit for businesses as the first NDP election promise, providing balance from their calls for corporate tax increases. The credit sounds reasonable, but much like the PC Party’s 8,900 job loss argument, I am skeptical about this credit creating 27,000 new jobs. The NDP also announced that in-province refining and upgrading is also a top priority. Before the election was called, Ms. Notley’s unveiled her party’s plans to create a Resource Owners’ Rights Commission.
The NDP responded to Mr. Prentice’s “extremist” claims with an “extremist of the week” press release quoting former Premier Peter Lougheed’s support of increased corporate taxes and former Deputy Premier (and current PC candidate) Thomas Lukaszuk support for in-province refining and upgrading.
Focusing on rural Alberta, Wildrose leader Brian Jean campaigned in southern Alberta and his Fort McMurray constituency this week. While the campaign trail in Strathmore-Brooks, Mr. Jean and candidate Derek Fildebrandt cleverly walked around town with a giant arrow in hand pointing out services and commodities, like alcohol and gas, which became more expensive due to tax increases in the recent provincial budget.
Mr. Jean released his party’s “Five Priorities” that include positions on taxes, health care, education, democracy and rural Alberta. Part of the Wildrose plan to balance the budget by 2017 without raising taxes includes cutting 3,200 management jobs, including 1,600 in Alberta Health Services and 1,600 in the Government public service.
The Wildrose announced they would sell the Kananaskis Golf Course, a publicly owned and privately-operated golf course that the provincial government had paid millions of dollars to repair after it was damaged by floods in 2013.
The Wildrose Party also nominated new candidates this week including City Councillor Buck Buchanan in Red Deer-North, past mayoral candidate Shelley Biermanski in St. Albert, Don Koziak in Edmonton-Glenora and Ian Crawford in Edmonton-Riverview.
The Green Party published a media release criticizing the PC Government’s record on environmental regulation, describing it as a “fake, not authentic, regulation and thus an insult to the intelligence, dignity and trusting nature of Albertans.” The release takes issue with the South Saskatchewan Regional Plan and calls on the government to create a regulator that understands the impact of proposed activity and puts rules in place to prevent any unacceptable impacts.
The Parkland Institute released a new report looking at political values of Albertans. Public Interest Alberta released its “Priorities for Change” report as a resource for political candidates in this election And Change Alberta has returned to rank the progressive candidates most likely to win in constituencies across Alberta.