Doug's Blog

Royalty Review Reflections

I have been reflecting on a quote that I read that came from Dwight D. Eisenhower, "A people that values its privilege above its principles, soon loses both."  Interesting quote I thought.  At first I thought it was because of my trip to Guatemala and the dismay I felt about how angry people were when they called complaining that the province needed to do more because their lives were so awful. In reality, most of those people still live in some of the best living conditions on the globe (and if they aren't, it turns out more often than not that they create their own situation).

No, the intrigue a had with that quote was less profound and more immediate, and I have finally realized that I believe it applies to the Royalty Review.  I first have to  say two things:

1. I don't think it matters much what is in the report.  The important aspect of this situation is people's reactions, particularly to what they perceive is in the report (since I have come to realize that only about 1 in 10 with an opinion has actually even read the thing.)

2. This report stands to be the one issue that has the potential (if the government doesn't get off its keister and get engaged) to tear the Conservative Party and the entire province of Alberta apart since people with little or no information or understanding are taking sides and making this a very polarized debate with no solution in sight.

Now, on with my point.  I have always heard from all Canadians that Albertans are appreciative of their frontier spirit and their ability to do more with less.  I always hear that we consider ourselves pro-business, do not consider profit to be a dirty word, and value the community aspect of neighbour helping neighbour.

Fascinating that my phone has been ringing off the hook with calls, from business people no less, saying things like, "nail those oil guys to the wall."  They have actually pointed out that they make way too much money, or that they have been given too good a deal for years (they completely forget that it is that very deal that allowed them to be so profitable in the first place, pay $100 Billion in royalties to the province, and create thousands of jobs that helped drive Alberta into the success it is today).  This stuff is coming from people I know are 'conservatives' and business owners themselves. 

Apparently their core beliefs that 'profit' is not bad and that business has to be given the chance to  work and treated fairly only applies to them.  Lord knows they would never welcome a government move that announced that their business was too profitable and they were going to have to pay 20% more income tax than other businesses.  Apparently now it is easy to look at how rough we have it here in Alberta, how dire our circumstances are, and look to the oil companies, the ones that came here to invest because of one royalty structure, and change the rules on them to squeeze out $2 Billion more dollars. 

And consequences of that decision be damned.  $2 Billion will meet all of our Healthcare, Education, Infrastructure, and Savings WANTS won't it?  Oh, wait, it won't likely since the $8 billion we got this year in royalties alone didn't, and the $100 Billion over the last decade didn't quench our wants, but rather increased our demands and expectations.  And even if it did manage to finally be enough would there be enough left over to cover off the possible  thousands of job loses and spinoff company closures that could ensure?(I say possible because it could happen . . . it might not, but as a Government Member I have to take very seriously the possiblity that it could happen because all of those that assured me it wouldn't won't be around to take the blame if it does)  No, it wouldn't even be close.

Think of it this way. This situation is tantamount to the government mandating that every company give all of their employees a 20% pay raise.  Few employees would investigate the consequences or consider the long term ramifications, and so would of course agree.  Of course bosses and owners would say 'no', but employees would decry the ignorance of the rich managers above who want to horde profits.  Oh, but what would they say when jobs were cut and people were laid off?  They would blame the government for not thinking ahead.  Same situation as with the royalty review.  So many calls come in to do it right now, but WE have to think of the possible consequences. 

Now I am not saying that the review is all wrong and we should do nothing.  On the contrary, there is only one part of the report that I don't like one bit; the name.  'Getting our Fair Share' is a ridiculous title.  My notion of a fair share is different than my wife's, different than Brian Mason's, different than Kevin Tafts, different than even the Premier's, and I am sure your notion of what is 'fair' is different than all of their's too.  In fact, I would bet that there are 3.3 million ideas of what fair amounts to.  The use of the word 'fair' is an emotional one, and I believe naming the report as such has stirred this debate to an emotional level that serves no Albertan well.

The Province is NEVER going to find what is fair, simply because there is no such thing.  You can't mathematically decipher 'fair'.  The Province has to find out what the RIGHT balance is.  We have got to make sure the industry is profitable and viable becasee if it suffers extensively, it doesn't matter how much money the province takes up in royalties, it wouldn't be enough to compensate for the loses to the economy.  We must also, however, ensure that our environment, our infrastructure, our education, or our savings do not fall behind so that we leave debt to the next generation or lack the resources to transition away from the resource sector to the next economy WHEN it experiences a downturn.  That is what the government must do.  Unfortunately not one of the calls I have received is about that balance.

That balance of which I speak is not the responsibility entirely of the industry, however.  I actually believe that a calm conversation with the industry (no they are not big bad wolves) about our needs would have brought a welcomed discussion and much agreement to increased royalties because they know that a solid infrastructure and an educated workforce are critical to their own success.  It didn't have to be a stand off.  It did not have to be us or them, but we made it such.  It doesn't still have to be a battle of threats and doomsday predictions on both sides, like it currently is. Part of the responsibility rests with the Provincial government and Albertans in general.

The government needs to get its spending in check.  I can see soon, a headline in the paper that reads, "Its the spending stupid."  We spend more per capita than any other jurisdication in Canada, and we have the largest bureaucracy per capita than anywhere else in the nation.  That means it is not that we are not spending enough money.  It is not that we don't have enought revenue.  It means that we either aren't spending it properly, or in the right places.  It means that it is time to get tough and say enough is enough, which I am working to do. 

It also means that Albertans need to take a good long look in the mirror and ask themselves, do we really need to collect more?  Do we really need to spend more.  Are those what our issues are?  Or maybe, just maybe we need to quit demanding everything.  Maybe, just maybe we need to quit starting our sentences with, "In a province this rich . . ."  Maybe, just maybe we need to remember and recognize the meaning of JFK's immortal words, "Ask not what your country can do for you, ask what you can do for your country."  Maybe we need to realize that we are always building for the future and that this is not about what we can get from others or our government, but  rather what we can give back to build for the next generation.

Maybe we need to move back to our principles of self reliance, doing more with less, and encouraging business to make a profit, knowing that their success is our success.  Maybe we need to forgoe some privileges and try not to forget just how good we have it.  Maybe we need to do this now before we lose both and wind up with nothing but a bumber sticker that says, 'woops, God, I did it again," but this time, with no one to blame but ourselves.  I am not saying the royalty structure is fine, but I also hope you all admit that it is not the root of all of our woes.  We have a bigger problem at hand.  We all want more and more and we want it now, and that will be the end of us, unless more people than just me speak up.  Know this; even if I am the only one, I will still stand up because I would prefer to lose saying what I believe, than win because I said what would get me elected.

P.S. The government of Alberta wants to hear your opinion on the Royalty Review Report.  You can follow the link and it will provide you with all of the information you need to submit your opinion in your preferred manner: