Rainy Days in Alberta Who've Saved Nothing to Cope With It. Time to Cutback and Diversify

'Rainy days' have arrived in Alberta. These are the kind of days that former Premier Peter Lougheed, who served as Premier of Alberta from 1971 to 1985, setup the Heritage Savings Trust Fund [also know as the Alberta Heritage Fund ] back in 1976 to prepare for. As Andrew Nikiforuk wrote yesterday: "Had Alberta maintained a 30 per cent royalty rate on the share of the value of the oil and gas produced between 1971 to 2014, Albertans would have generated $471.4 billion in oil and gas royalties. Instead, for 35 years, the former Tory government of Alberta consistently lowered royalty rates to among the lowest in the world. At the same time it saved almost nothing for future generations.

As Better Way Alberta explains: "Alberta now collects far less than other oil-producing jurisdictions, like Alaska, Texas and Norway…and less than other heavy-oil producing jurisdictions like Mexico, Venezuela and Angola. Instead of saving royalty revenue in the Heritage Fund, the government spent almost all of it on day-to-day operational expenditures. This gave the illusion of stability and allowed the government to provide middle-of-the-road services that their shrunken tax base would not otherwise allow them to afford.

Now it's raining and Alberta is moaning. They must have forgotten that for decades they boasted about the Alberta Advantage - no sales tax, low gasoline taxes, a flat income tax, low corporate income taxes, royalties that have plummeted from a 40 per cent high during the Peter Lougheed years to less than four per cent today and occasionally even a 'prosperity bonus' - to entice businesses and families to move to Alberta. Thousands of our sons and daughters believed in this free lunch delusion and left for the 'easy money' in Alberta, it'll be good to see them more often after their return.

Now it's raining Albertan crocodile tears. Alberta, along with their conservative residents and their Conservative politicians now are demanding help, not only from their residents who enjoyed the low-tax advantages all these decades, but also from the rest of us who had to endure listening to how Alberta, by spending it's natural capital instead of saving some as Lougheed did, was populated by some sort of economic geniuses. Instead Alberta's advantage was simply a combination of being lucky to be living on top of an ancient tar sands deposit and short sighted enough to believe the good times provided by the bitumen bubble would just keep rolling on.

In response to Alberta's whining about this mess they themselves created their new NDP Premier Notley [who's party spent decades of opposing the endless royalty cuts] chose a bunch of bankers and industry 'experts' to produce a review of royalty rates which critics are slamming as a policy disaster. They, of course recommended a policy, that if adopted, would lower Alberta's royalties by another billion dollars a year, estimated Jim Roy, an Edmonton-based royalty consultant and a former senior adviser on royalty policy for Alberta Energy.

Barry Rodgers, a former high-ranking Alberta civil servant in the Department of Energy and a fiscal systems expert, noted the review barely mentions that the former Tory government consistently failed to save revenue (except under Lougheed), collect its fair share as mandated by the government policy, or report to citizens in a transparent and open manner on royalty issues. "Alberta's royalty policy", said Rodgers, "is not consistent with the fundamental resource and environmental management notion of "In-Trust." That notion, long abandoned by the Tory party, reflects the principle "that current generations have a moral obligation to not leave future generations worse off."

So, now in response P.M. Trudeau is promising to expedite Alberta's share of the infrastructure investments that his Liberal govt. is planning but, to his credit, has refused to fast-track the pipelines that the oil industry is trying to pressure him into, saying that he blames Conservatives for 'politicized' NEB process and won't rush Energy East. Were Trudeau and Notley to themselves adopt the  'In-Trust' paradigm they'd concentrate on diversifying Alberta's economy, on mandating that oil and gas royalties and taxes are befitting what the owners of a resource should be getting and putting a Lougheed sized share of that In-Trust'. They'd mandate a 180 degree turnaround on prairie grassland restoration to save their soils from the same fate their oil and gas resources are facing now and they'd cut back to near elimination the tar sands and fracking industries until such a time in the future when some methodology has been invented that will allow these energies to be used without damaging our shared environment. Then use them to power Canadian industries that employ Canadian people not export them as raw resources.