“I think it has deteriorated into groundless name-calling, and it’s certainly not the strategy that I would take.”—Rachel Notley reflecting on comments made by Jim Prentice and Brian Jean
To hear Jim Prentice and Brian Jean tell it, Rachel Notley’s plan to create a royalty commission and increase corporate taxes to 12% is an anti-free market experiment that will plunge Alberta into economic armageddon.
Once everyone stops hyperventilating we’ll take stock…
Impact (or lack thereof) on Big Oil
On the last day of the spring legislative session, Rachel Notley tabled Bill 209 which would create a resource owners’ rights commission. The commission would include industry representatives, experts in energy economics and sustainable development, aboriginals and industry employees.
It would make recommendations on royalty structure, value-added processing of natural resources and proposals for long term sustainability. And most importantly, it is transparent. The commission is required to make regular reports and consult with Albertans on the management of their natural resources.
Ms Notley assured Albertans that there would be no royalty changes in a low price environment.
Nevertheless Mr Prentice and Mr Jean are running around with their hair on fire and one industry executive, Cenovus CEO Brian Ferguson, fretted that anything that makes Alberta uncompetitive will cause capital, investment and jobs to flow to other jurisdictions.
Ms Notley was puzzled. “I don’t know how talking…with Albertans, in an independent, transparent accountable forum about a resource that belongs to Albertans is going to kill the industry.”
Is Big Oil really rattled?
The best way to find out whether Ms Notley overlooked a looming threat to Big Oil is to check out what Big Oil is saying about the royalty review and tax hike to its own analysts and investors.
Securities laws require Big Oil to file its first quarter earnings results in mid to late April. These results must include a discussion about the risks Big Oil has identified in the foreseeable future.
Not one energy company, not even Cenovus, updated its boilerplate risk language to address this so-called threat to their bottom line.
A quick look at the boilerplate, which covers every risk known to man including changes to royalty regimes, tax laws, computer hackers, terrorist attacks and alien invasions (sorry, as a corporate securities lawyer I always wanted to slip in the “alien” bit just to see if anyone actually reads boilerplate) reveals that no one other than Mr Prentice and Mr Jean is fussed about Ms Notley’s suggestion that Albertans deserve the right to control their natural resources and corporations can pay a little more in corporate taxes.
Recently five Edmonton businessmen called a press conference urging Albertans to “think straight”. Apparently anyone who wants to vote NDP has lost his mind.
They’re particularly concerned about the NDP’s plan to raise corporate taxes to 12%. One businessman, John Cameron (Keller Construction), said he couldn’t afford to pay two more percentage points in taxes or a minimum wage which will increase over time to $15.
He lamented: “Why is it always the corporations? “Why? Why is it me?”
Ashif Mawji (NPO Zero) said an increase in corporate taxes could result in reduced corporate contributions to charities like the Stollery Children’s Hospital.
Anybody got a hanky?
Right, let’s start at the top.
- The NDP plan will not destroy the Alberta Advantage. The all-in tax burden on individuals and corporations will remain the lowest in Canada because Alberta does not have a sales tax. The sales tax in other provinces ranges from a low of 5% to a high of 10%. I know it’s hard but do the math.
- The Stollery Children’s Hospital is not a charity, it’s a public service provided to sick children. Veiled (well, not so veiled) threats to stop charitable contributions is the last refuge of an illogical mind.
- Why not you? Just because the PC government showered corporations with tax breaks and short-changed public services in the process doesn’t make it right.
Bottom line: if Alberta’s businesses are so fragile that they can’t survive a slight increase in corporate taxes and the obligation to pay a minimum wage that it still less than a living wage, it’s time these businessmen took another look at their business models. Albertans can’t afford to carry them any longer.
The most bizarre argument against voting NDP is that they’ve never been in government and the newbies will create instability at a time when one false step will result in…well, something horrible.
This is rich coming from the PCs who’ve had four different premiers in four years (Stelmach, Redford, Hancock and Prentice), changed the way they budgeted $45 billion in revenues three times in three years and lured 11 Wildrose MLAs, who were universally despised until defection day, into their caucus.
The new NDP government will do what every new government has done in every other province across Canada. Ms Notley will review her mandate, name her cabinet and set an agenda to deliver on the promises she’s made to Albertans. Then she’ll ensure that the public service understands its mandate and gets cracking.
Sure it’s a big job, but someone’s got to do it. Unfortunately for Mr Prentice and Mr Jean they’re so busy fearmongering that Albertans no longer believe they’re up to the task.
May 5: fearmongering or hopemongering? What’s it going to be Alberta?