Thursday, January 18, 2007

Harper's New Green Con-version – Is it Environment Policy or Political Envy Driving the Conservative Eco-Agenda?

I am starting to wonder about the Harper Cons quick conversion to green. Is it the result of a real concern for the environment and a thoughtful purposeful reconsideration of an important public policy position? Or is it a just quick fix political response founded in fear and desperation and a large dose of green envy over Stephane Dion’s grasp of the issues.

Today Canada's Environment Minister, the Hon. John Baird spoke out and, according to media reports, appeared to do the usual Ottawa unilateralism with his disparaging and defensive comments on oil sands tax incentives in the news today. He says: "I cannot explain why the Liberal government of Mr. Dion made these changes," Baird said, speaking in French.

This is just altogether too cute because he is also trashing the Alberta government with these comments and he knows it - or at least he ought to know it. Doing it in French is the really cute part. Did he think Albertans would not hear about this if he only commented in French?

The tax incentive deals Baird is trashing was part a broader deal including more than just federal taxes. It was done in the mid 1990’s in collaboration with industry, Alberta’s PC government and the federal Liberals and covered royalties along with provincial and federal taxes.

This deal was done by the Chrétien government, and negotiated by Anne McLellan as Canada’s Minister of Natural Resources and Premier Ralph Klein and Syncrude’s Eric Newell. This is clearly not the “Dion government deal” as Baird tries to characterize it in the media today.

Premier Stelmach is widely known to be embarking on a royalty review of Alberta’s oil sands resources. But nowhere does Baird acknowledge this and suggest there nees to be come coordination and communications on this. He is trying to blame Dion for something that Dion was not any part of. Baird is ignoring, or worse, he is oblivious, to the impact of his actions and statements on Alberta’s energy sector and the Government of Alberta.

It would be nice if there was some evidence of a cooperative spirit between Progressive Conservative Alberta and Conservative Ottawa on this issue. But as Ralph Klein said last year “It doesn’t seem to matter who is in control in Ottawa, it is still Ottawa.” That reality was sure evident today.

Obviously it is timely to revisit the royalty and tax regime but industry needs certainty. An open honet porcess with a collaborative spirit from the two orders of government and input from the oil sands operaters is needed if this is going to work.

The Cons can obviously do what ever they want with the federal corporate taxes payable from oil sands extractors. But this tax review is not going to be at Dion’s expense. It is looking more like yet another Harper broken campaign promise akin to income trusts. Here is what Pierre Alvarez, the head of the Canadian Association of Petroleum Producers is reported to have said today about the Harper Cons oil sands tax review: “… (he) was puzzled by Baird's comments about the tax regime, noting Prime Minister Stephen Harper had insisted in December there would be no changes.” Ouch!

In the days the tax regime was set up we had with oil prices in the “teens” and oil sands production costs around $20 per barrel. The deal was predicated on industry doing some serious risk investing in oil sands development, committing $5B over the next 25 years in exchange for the royalty and tax deal.

Well we know what happened. In the 10 years following since the deal was done and how successful it was. In fact industry invested about $27B in the first 5 years of the deal and we have about $100B of oil sands related projects in the hopper that is running much of Canada’s economy today.

Pitbull Baird was keen to try on the rhetoric to trash Dion but he missed his target today. Instead he ended up chewing up his leader’s credibility - and mostly in Alberta - and particularly in Harper’s home town of Calgary. Not a bad day’s work if you are looking for a career change after the next election.

Yes Minister Baird was cute and clever today, but he was definitely not wise…and at so many levels.

UPDATE January 19, 2007
Interesting to see the Edmonton Journal Editorial Board and Paul Stanway of the Edmonton Sun being on the same page about this today.