Let me tell you a secret. The key to Alberta’s future prosperity was discovered 65 years ago—by the Alberta Post-War Reconstruction Committee. The Committee was created by the Social Credit government in the twilight of the war years in order to transition Alberta from a wartime economy to a peacetime economy. Various subcommittees met with Albertans to develop transition plans in the areas of agriculture, soldier settlement, education, finance, natural resources, public works and social welfare.
In a dazzling example of prescience the Finance subcommittee made a bold recommendation:
At Fort McMurray…enough oil exists to supply the world for more than a century. Extraction…has been difficult, but the sands will prove invaluable in the future development of Alberta…It would, therefore, be essential that any such development shall be orderly and economically sound, and that it should be free from any of the destructive features accompanying wild speculation and commercial imperialism under monopoly or combine control. Therefore, a definite and clear-cut policy should be laid down in regard to development, and it should be rigidly observed in the face of every kind of pressure from outside influences.” *
In 1945 the Finance subcommittee was disbanded and its recommendations lay dormant for 65 years. It’s not that nothing happened in 65 years—technological advances were made, oil prices peaked and remained high and the oil sands are being developed—however, nothing strategic has happened in 65 years. Alberta is no further ahead today than it was in 1945 when it comes to the strategic development of this extremely important non-renewable resource.
Why hasn’t Alberta developed a strategy? Because it didn’t need to. In Feb 1947, just 2 years after the Finance subcommittee filed its recommendations, oil was discovered at Leduc. Albertans climbed on to the resource revenue rollercoaster and went for the ride of their lives.
Fast forward to today. The Premier’s Council’s report on economic strategy, Shaping Alberta’s Future, has exhumed the Finance subcommittee’s recommendation in a discussion of the stark reality facing Albertans today: Whether it’s conventional oil, natural gas or the oil sands, it is no longer sensible or even possible to tie Alberta’s long term economy to non-renewable resource revenue. The report states that the Alberta government must start acting like other governments, spending only what it collects in tax revenue without relying on resource revenue which is 4 times as volatile as ordinary income but is used to underwrite 30% of the cost of public services.** This raises the politically unpalatable spectre of increasing personal and corporate taxes.
And that recommendation is the second key to Alberta’s future prosperity. Not surprisingly, this key has also been around for a number of years. Recently it was reinforced by none other than Peter Lougheed. Mr Lougheed not only advocated for an increase in corporate and personal taxes and a reduced dependence on non-renewable resource revenues; he also joined the chorus in favour of orderly development of the oil sands, suggesting that to avoid the inflationary pressures of an overheated economy, the government should control how many oilsands projects proceed at a given time.***
The Alberta government has been extremely reluctant to address this issue head on. Instead it tinkers around the edges of the problem with initiatives like the Regulatory Enhancement Task Force which is attempting to streamline policies and regulations to ensure that Alberta’s oil and gas industry remains competitive (read is exploited as quickly as possible) while still protecting the environment, public safety and resource conservation. (Given the difficulty in aligning these conflicting objectives, the report promises to be an interesting read).
While the Alberta government dithers we sink deeper into the quagmire of increasing debt so consider this: There are two keys to Alberta’s future prosperity lying right there on the kitchen table. Ask your political leader (or leadership candidate) whether he/she is prepared to pick them up. If he/she says yes, you’ll have taken the first step toward a strategy to ensure our future prosperity.
*Shaping Alberta’s Future, p 28
**Shaping Alberta’s Future, p 99, 97
***Calgary Herald, May 23, A8