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Hill Dispatches

karl nerenberg's picture
Karl Nerenberg has been reporting on federal politics from Parliament Hill for rabble.ca since September, 2011. In his long career, he has won numerous awards as a broadcaster and documentary filmmaker.

For Rachel Notley the hard part starts now

| May 6, 2015
Photo: Dave Cournoyer/flickr

The prospect of an orange Alberta had the business establishment fretting right up to the last minute.

On Alberta's election-day morning the headline in the Globe and Mail's Report on Business was: "Energy industry braces for Alberta election results."

The NDP leader, now Premier-elect Rachel Notley had, horror of horrors, promised a "review" of the cash benefits -- the royalties -- that the people of Alberta get from the oil and gas that private corporations, many of them foreign, pull out of their soil.

With the worldwide oil price in the dumpster, now is not the right time to upset the business community, Conservative Premier Jim Prentice (and his many allies in the Canadian establishment) intoned.

Capital is mobile, warned Deborah Yedlin, a business columnist for CBC Calgary. And if Notley's "royalty review" does not chase away some of the holders of that capital, Yedlin added, raising Alberta's corporate tax from a miniscule 10 per cent to a tiny 12 per cent certainly would.

Ending boom and bust cycle

It is not surprising that in her much-praised victory speech Notley extended her hand in friendship to the corporate bosses of the oil patch.

The Premier-elect even argued that a more environmentally conscious Alberta government might, possibly, have the moral clout to get some of those stalled pipeline projects moving.

The Alberta NDP does not want to provoke the near strike of capital and virtual sabotage tactics on the part of big business that afflicted Bob Rae's Ontario NDP government in the 1990s.

Of course, Notley and her party also know that it is one thing to move a factory to a non-union jurisdiction, or a bank headquarters from separatist-leaning Quebec to Toronto or Calgary. It is not so easy to put an Alberta oil well on the back of a rig and move it to Saskatchewan.

Big oil needs the goodwill of the Alberta government and people as much as Alberta and its people need big oil.

And Notley also said, in her victory speech, that it is time to end Alberta's boom and bust economic syndrome.

In saying that, the newly elected premier might have had in mind another model of managing the gift of black gold, the Norwegian model.

Getting a fair share of oil wealth for the people of Alberta

Throughout the campaign, Notley would frequently say that Alberta gets the least benefit from its fossil fuels of any major oil-producing country/province/state in the world.

Two years ago, Bruce Campbell of the Canadian Centre for Policy Alternatives (CCPA) did a comparison of how Canada (mostly Alberta) and Norway have chosen to manage their oil industries.

"Norway and Alberta have similar population size, similar production profiles, and similar levels of dependence on petroleum exports and government petro-revenues," Campbell wrote.

The big difference is that "in Norway, there was, from the outset, a societal consensus that the government should play the dominant role in the petroleum industry, both as owner and regulator."

As a result of that consensus, "the Norwegian government owns 80 per cent of petroleum production, and retains roughly 85 per cent of the net petroleum revenues ..."

In contrast, in Alberta, "virtually the entire industry is owned by foreign and domestic private interests, which have taken the lion's share of the petroleum wealth."

"According to one estimate," Campbell says, "the Alberta government has averaged just 9 per cent of the economic rent from the oil sands over the last 15 years; and the federal government now takes (after tax breaks) a paltry 7 percent of oil company revenues through the general corporate income tax."

Highest inequality in Canada

Norway's approach to oil, together with its relatively high progressive income taxes, "has allowed it to maintain one of the lowest levels of income inequality in the world."

On the other hand, in Alberta, "inequality is substantially higher than the Canadian average" -- which in turn is among the highest among developed countries.

But while Alberta may have been far more parsimonious than Norway in its social investments, it has been much more profligate with the revenue it has received from oil than have the Norwegians.

Alberta has its Heritage Savings Fund. Norway has a Petroleum Savings Fund, which, Campbell relates, "amassed over $664 billion in assets, all invested abroad, with only the return used for domestic spending."

Alberta's Fund is anemic by comparison. It now contains a mere $16 billion, just 2 per cent of Norway's fund.

The vaunted Heritage Fund, which was put in place by Alberta's first Progressive Conservative Premier, Peter Lougheed, represents, writes Campbell, a "miniscule share of the petroleum revenue that has flowed into Alberta over the last 36 years."

And when it comes to the environment, and in particular global warming, "Norway is a leader in carbon emissions reduction, both at home and internationally. Under the Copenhagen Accord, Norway's carbon reduction targets are the most ambitious in the industrial world." 

As for Alberta and the Canadian federal government -- well, we know that the federal government had been using the need to harmonize with the U.S. as an excuse for inaction on greenhouse gas emissions. Now, the Harper government has a new story. It says Canada will not even bother trying to keep up with our neighbour to the south.

At the coming meeting on climate change in Paris, Canada promises to maintain its record as one of the worst laggards on climate change in the world.

Notley has four years to make big changes

Rachel Notley is not going to turn Alberta into a North American Norway overnight. (And nobody would suggest emulating some of Norway's approaches -- such as its mean-spirited policies toward immigrants.)

But Notley must have had some of what Norway accomplished in mind when she extended the hand of partnership to Indigenous peoples, evoked environmental and energy co-operation among the provinces, and talked fervently about diversifying Alberta's economy, while making it more sustainable.

The Alberta NDP leader has a majority government, and a mandate of four years to make big changes. But she does not have carte blanche.

She will be keenly aware of the fact that 60 per cent of the people did not vote for her party and that the voters who supported her this time can be very fickle.

Rachel Notley will no doubt reflect, from time to time, on what befell the Bob Rae government in Ontario after a similar surprise victory.

Seasoned and wise political observer and blogger (under the name TC Norris) Paul Barber accurately predicted the results of the election to within two seats for the NDP. 

Before the votes were counted, Barber wrote that Notley's challenge will be "quite unlike the situation in Ontario in 1990 when Bob Rae's New Democrats won power."

Then, Barber explains, "it was the end of a long boom and the full effects of the deep downturn of the early nineties had yet to make themselves known."

"Ontario's economy was just beginning to feel the negative impact of the tightening of monetary policy by the Bank of Canada and a high dollar ... Rachel Notley's government must deal with the consequences of decades of fiscal mismanagement by the Progressive Conservatives, but she appears to have the pragmatism and common sense to do so."

On this day, we have a right to hope she does.  

Photo: Dave Cournoyer/flickr

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