Reboot Alberta

Tuesday, October 23, 2007

Some Thoughts From a Lougheed Cabinet Minister on Royalties

Yesterday I received an email from a friend and a former Lougheed Cabinet Minister. His observations on the royalty issues of 2007 compared to the same stuff in 1972, when Lougheed raised them are interesting. The observations and comparison are as follows:

“I submit four comments re: royalties -- First, the extent of change
recommended is barely half of what was done under Lougheed in the '70s -- so it should have been an easy and immediate decision for the Stelmach gov't. I think the recommendations are timid, so no deviation no doubt which way…is acceptable to me.

Second, if the Premier felt time was needed why the hell not have a "Committee of the Whole" public hearing in the Legislature -- exactly what was done in December 1972 (I was there). Then Big Oil could have its say, but to the public at the same time as the gov't, not behind closed doors; others had their say too, and many did.

Three, I don't think the energy industry problems are so much additional cost (which no one would like) but the uncertainty (which anyone making an investment hates).

Finally, Ed's big problem is that he failed to call a general election instead of those bye elections last summer. The Premier's moral authority is hobbled by still being the Klein gov't, though with someone else warming the chair.”

My friend sure has added more grist for the new and positive political mill that Alberta is quickly turning into. I like the idea of a “Committee of the Whole” but it is too late now...but who knows , we are going into a legislative session in early November, it could still happen!
If the “Our Fair Share” recommendations are “barely half of what Lougheed did, then it is arguable the “compromise” is already in the Royalty Review Report…that is my belief. I think Stelmach will enhance the Royalty Review recommendations to provide some ecological incentives as outline in the "Our Fair Share" in the "Afterward" comments.

I think Stelmach will redefine are reframe "the balance" beyond the industry seeking status quo and the Royalty Review recommendations to include social, environmental as well as economic concerns and a balance between short and long term approaches.

Certainty is certainly more critical than additional costs given that Alberta is still going to be in the most competitive half when it comes to royalty costs internationally. The fast we provide a long term stable governance structure that is not available in many other oil producing places and you don’t need a private army to protect you assets or you people seems to be lost in the cost comparisons.

As for the election call, I disagree. Ed doesn’t need and election now and he did not need to call one instead of the by-elections either.

One thing for sure is the response to the Royalty Review will be definitive for Premier Stelmach. The Stelmach government response is going to determine, in the public mind, if he is merely “warming the chair” for the continuation of the Ralph Klein government or is he his own man. My money is on the latter.

1 comment:

  1. Anonymous3:08 pm

    Ken,
    I disagree with the claim that having called a general election would have been a good thing. Yes, the polling numbers were pretty good, and it would have removed the complaint (by some) that there was no direct election of the current Premier's team.

    However, there are some flaws to this idea. One, the government was only just over three years into its mandate. The 2004 election - widely derided as an election 'about nothing' - was also much earlier than necessary, and the PCs suffered for it. Two, the new Premier had significant staff changes to make, even if you just count replacing those retiring from the previous regime. Third, the party had to get its act together, after just being the "Ralph Klein show" for so many years (this is still a work in progress).

    I also dispute his/her assertion that the recommendations are "timid". If you go from 10% take to 20%, that's a double. If you are at 40%, by his/her logic you would need to go to 80% to record the same magnitude of change. Clearly, the law of large numbers comes into play somewhere. Also, a government cannot abdicate its authority to an unelected panel - however independent and knowledgable it may be. There is only one group accountable to the electorate, and so it is only good practice to evaluate the recommendations, even if industry and the public have to wait a little. I know most of the public, including myself, have attention deficit disorder and want things done immediately, but surely we can wait five weeks for something that could impact the next 5-10 years?

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