Western Seperation not run by dummies

[westernvicki]

UP Chuck the formula Chuck chuck that calculates the underground economy: the r'aison D'etre behind the underground economy is to forfeit recording income, and the necessary evil of sending those taxes to the Federation called Canada.

Enough is enough, the formulas need to work, not only because they are inherently unfair and foster behavior that should not be double rewarded, but the reality is gone are the days when the resource base will blindly carry the load down any course we chose. Canada faces major competition in Agriculture, an attacked small business sector given all the signals that Canada will penalize you if you make more than 150,000$ a year (while just south of us the tax laws change & welcome investors), land locked oil that cannot get to market, a carbon tax whose formula is only cost and nothing even factored for environmental gain, NAFTA, softwood lumber, even beloved Bombardier seriously someone in the "Parliamentary Dictatorship" of the echelons of power should be looking for a process to find solutions, not enforce dogma.

Soon.

[westernvicki]

And F the Norway BS, it is not comparable to our federation, for almost all reasons.

[grassfarmer]

grassant, I'm greatly surprised that you failed to make mention of one crucial factor - at what cost?

Here, let me help you out:

[URL="https://www.theguardian.com/politics/scottish-independence-blog/2014/apr/08/scotland-scottish-green-energy-taxes"]https://www.theguardian.com/politics/scottish-independence-blog/2014/apr/08/scotland-scottish-green-energy-taxes[/URL]

Maybe your small brain with it's one dimensional thinking can't figure it out but it's all subsidized. I much prefer their model of subsidization where most farms now have one or more windmills as an income source for the farmer versus the Canadian system that is subsidized by allowing the pollution and ruination of the environment. The cost to clean up existing wells and facilities in AB exceeds the value of all the oilfield companies operating in that jurisdiction.

Good points.

Scotland had a referendum a few years back to decide on leaving Britain but they decided their big brother England wasn't so bad when they factored in finances and voted to STAY.

As would western Canada.

[chuckChuck]

And F the Norway BS, it is not comparable to our federation, for almost all reasons.

Read this.
Alberta and Norway: Two oil powers, worlds apart
https://beta.theglobeandmail.com/report-on-business/international-business/european-business/norways-sovereign-wealth-fund/article25973060/?ref=http://www.theglobeandmail.com&

Yes Alberta and Norway are not directly comparable but Alberta had the opportunity to put more away and collect more revenues in the first place. They chose not too because of the differing views on how the oil and gas industry should be developed and who should benefit.

"Initially, the fund received 30 per cent of Alberta's non-renewable resource royalties.[9] Over time, successive Conservative governments propped up dubious ventures in domestic ventures ranging from forestry to aviation and food processing.[9]

During the early 1980s, the fund made loans to other provincial governments in Canada. Later the fund's money was used for capital infrastructure projects.[4] After 1987 Alberta's non-renewable resource revenues (NRR) were no longer added to the Heritage Fund.[4] In 1983 $25.5 million from the AHSTF was used to build the Kananaskis Country Golf Course to diversify Alberta's economy while Premier Peter Lougheed was in office.[10]

During the late 1980s and 1990s, the view emerged that government “should not be in the business of business”[5] and should not be so actively engaged in shaping the future. The Alberta Heritage Savings Trust Fund was shifted away from strategic business investments to become a savings tool investing for financial return. Investment into the fund was halted in 1987.[4][11]:101 Ralph Klein, who was Alberta Premier from 1992 through 2007, used the HSTF to fund special projects to encourage economic diversification.[12] During the mid-1990s, public opinion turned against allowing governments to dip into the Heritage fund to fund special projects, and instead all income earned each year began to be withdrawn from the fund and added to general revenues." from Wikipedia

[chuckChuck]

Vicki also read this:
Peter Lougheed's Radical Legacy
His supposed ardent admirers ignore his true gift to Canada: six principles for developing resources.
By Andrew Nikiforuk 17 Sep 2012 | TheTyee.ca

Andrew Nikiforuk is a regular Tyee contributor. Over the last 30 years he has interviewed many western premiers and politicians for a variety of papers and magazines. None stood as tall as Lougheed.

As Canada's inept Tory politicians now salute the remarkable achievements of Peter Lougheed, they tellingly omit his radical views on resource development.

And that should come as no surprise. Unlike the current libertarian "strip it and ship it" crowd that governs most of the west, Lougheed stood for something different. He offered a farsighted vision that was both progressive and altogether conservative. Although everybody from Saskatchewan's Brad Wall to Alberta's Alison Redford now praise the famously competent premier, none walk his talk.

Lougheed's famous principles, which greatly influenced Norway's take on oil development, strike at the core of Canadian life. Alberta's own oil patch didn't like him. Yet over the last few years the affable and charismatic statesman repeated his basic philosophy to the likes of Policy Options and this humble reporter. They should remain on the lips of every Canadian.

1. Behave like an owner

As oil prices shot up from $2 to $25 a barrel in the 1970s Lougheed learned that Albertans, the lucky occupiers of much oil real estate, needed to think and behave like owners. Ownership, of course, came with onerous responsibilities, including the basic recognition that hydrocarbons and most mineral resources are finite. "You have to look at oil and natural gas as a depleting and declining resource. And you have to manage the resource and that means to manage it with good public policy," he recently told Policy Options.

The absence of meaningful public policy on resource ownership (and only the NDP now embraces this conservative notion) puts Canada in the camp of backwater kingdoms.

2. Collect your fair share

Smart owners don't give away oil or any other depletable resource. Lougheed thought that low royalties were not only bad for the owner but encouraged Big Oil to be fat and complacent. One of Lougheed's first moves as premier was to capture a much larger share of hydrocarbon profits. In his day that amounted to raising the owner's share from 17 per cent of all non-renewable resource revenue to 40 per cent. Such increases boosted government income by $10 billion a year (and 30 per cent of that was directly saved for future generations). Industry, of course, called the man a cruel sheik and a "red Tory." Higher royalties moderated the pace of production but also forced industry to be more innovative and competitive.

Ever since then successive Tory governments have lowered royalties and thereby cheated the citizens of Alberta, the owners of the province's hydrocarbons, of tens of billions of dollars. Today, Alberta collects less than 15 per cent of available non-renewable resource revenue. Governing parties in British Columbia, Saskatchewan and Ottawa now shamelessly offer Big Oil some of the lowest royalty rates in the world for oil, heavy oil, natural gas, and shale gas. The direct consequence for ignoring Lougheed's principle in Alberta is that libertarians have bequeathed the province with billion dollar deficits and the prospect of becoming a ghost town when economic hydrocarbons run out.

3. Save for a rainy day

In the 1970s Lougheed, a long-term thinker, established one of the world's first sovereign funds or rainy day accounts. Given the finite nature of oil and gas, he believed in saving at least 30 per cent of the wealth for the inevitable economic deluge. Not surprisingly, Albertans wholeheartedly championed the Alberta Heritage Savings Trust Fund. Norwegians copied and bettered the idea with their own pension/oil fund now worth $600 billion.

But the politicians who came after Lougheed debased the concept. Today Alberta's Heritage Fund is worth a paltry $15 billion, or just $3 billion more than when Lougheed left government. Lougheed's successors didn't believe in saving. They've either lowered taxes or simply given away the balance of the province's wealth to special interest groups such as AltaLink or U.S. multinationals and companies owned by the Communist Party of China. This fundamental betrayal of the public trust "stressed out" Lougheed till the day of his death. Saskatchewan, B.C., Alberta and the Territories still do not bank a significant portion of their finite resource revenue for future generations. Ottawa, the largest beneficiary of resource exploitation in the form of corporate taxes, saves nothing.

4. Add value

Lougheed was never impressed by the convenient Canadian habit of exporting raw resources without adding value. In his reading of the nation's history, Canada should have made clothing instead of exporting raw furs. He also recognized that the majority of jobs in most resource industries didn't come from digging holes but from refining the raw stuff into something useful. As a consequence, he resolutely championed the upgrading and refining of bitumen into gasoline, diesel, jet fuel and petrochemicals. Unlike Redford, Hall and Harper, he opposed the Keystone XL pipeline as wholesale job exporter. He didn't think that Albertans should be enriching refineries on the Texas coast owned by Saudi Arabia or the Koch brothers.

"I think we should be processing the bitumen from the Alberta oil sands within Alberta and creating the jobs east of Edmonton and in that area there," he recently told Policy Options. "And I think that would be, from a political and from an economic point of view, the right public policy for Alberta." A bold tax on exported bitumen still might get this economic ball rolling.

5. Go slow

Last but not least, Lougheed often lamented the speed of bitumen development in the province. His motto was "one project at a time." Over the last decade libertarians rubber stamped more than 100 projects and the gold rush overwhelmed infrastructure, bloated wages, drove up house prices and generally inflated the cost of living. Why bother with a trade or an education when a petro job will garner you 10 times the income, asked Lougheed. Knowing that busts invariably follow booms, he viewed overheated growth in the tar sands as a great calamity. Real owners don't overheat their economies or stress out their communities: they go slow. The architect of Norway's oil development, Farouk al Kasim, a brilliant Iraqi geologist, cautioned the Norwegians to do the same.

In a famous 2006 Policy Options interview, Lougheed described rapid bitumen development as a mess and just plain wrong. "I keep trying to see who the beneficiaries are. Not the people in Red Deer, because everything they have got is costing more. It is not the people of the province, because they are not getting the royalty return that they should be getting, with $75 oil." To date no Tory political leader has had the courage to address the pace and scale of bitumen development on a provincial or national level.

Yet libertarian politicians serving Big Oil continue to speed up bitumen production with potentially disastrous consequences for ordinary Albertans. Environmental and carbon liabilities remain largely unaddressed and no one has prepared for the implosion of the Chinese economy. By flooding the market place with cheap bitumen, Alberta's current stupid government has cheated the owners of a fair price in U.S. markets due to sustained lack of planning.

6. Practice statecraft

Unlike most modern politicians, Lougheed believed in competent government and a smart civil service and for good reason. Sitting on a pile of hydrocarbons has never made a people smart. A lucky resource owner not only needed good accountants and reliable scientists, but a capable political class that could monitor and regulate the resource developers overtime. If tar sands companies had 25 or 50 year plans, then government needed to do the same, reasoned Lougheed. As a consequence he steadily built the civil and intellectual infrastructure needed to make careful public policy that respected future generations.

Lougheed not only constructed one of the country's most able civil services, but actively funded the same sort of environmental science and research that the Harper government has dismantled. To keep an eye on the industry's real profits and costs, Lougheed's government even owned an oil company: the Alberta Energy Company.

Today Lougheed's vision of competent government has been replaced by negligent regimes that slavishly represent resource developers instead of citizens. No western province now has the ability to do long-term planning or perform critical audits such as those routinely done by the U.S. Government Accountability Office. And no western premier publicly challenged the wholesale dismantling of federal environmental legislation and science programs by Stephen Harper, yet this folly may well kill the social license for bitumen development. Dumb and dangerous petro states have actively replaced conservative vision.

So here's the radical Lougheed legacy that Canada's political class has abandoned: Behave like an owner. Collect your fair share. Save for the rainy day. Add value. Go slow. Practice statecraft.

Next time you hear a gaggle of western politicians praising Lougheed, ask these extremists why they won't act like him. And whom they serve.

It's not us, the owners. [Tyee]

[westernvicki]

Politics is all about opportunity, for the west the windows are few as for the most part the Federation is run by central Canada.

THE EQUALIZATION FORMULA must be addressed and the current day economic reality calculated.

Even ALBERTA'S' NOT(remote)LEY business minded premier should be able to see this.

Wall & Notley should agree at the very least on this: and perhaps at the very least shed costs, it we cannot increase revenue.

Move the rhetoric beyond "deeply disappointed" to "we will need things to change if we cannot increase our market by selling the Federation of Canada western oil."

[chuckChuck]

UP Chuck the formula Chuck chuck that calculates the underground economy: the r'aison D'etre behind the underground economy is to forfeit recording income, and the necessary evil of sending those taxes to the Federation called Canada.

Enough is enough, the formulas need to work, not only because they are inherently unfair and foster behavior that should not be double rewarded, but the reality is gone are the days when the resource base will blindly carry the load down any course we chose. Canada faces major competition in Agriculture, an attacked small business sector given all the signals that Canada will penalize you if you make more than 150,000$ a year (while just south of us the tax laws change & welcome investors), land locked oil that cannot get to market, a carbon tax whose formula is only cost and nothing even factored for environmental gain, NAFTA, softwood lumber, even beloved Bombardier seriously someone in the "Parliamentary Dictatorship" of the echelons of power should be looking for a process to find solutions, not enforce dogma.

Soon.

The formulas can be tweaked but the principles behind equalization are sound in my opinion. If they were so bad why didn't Harper try to change the principles? He tweaked the formulae but nothing more. We have always had people who didn't want to pay their fair share of taxes including a lot of people who are very well off and have little to complain about.

[chuckChuck]

Politics is all about opportunity, for the west the windows are few as for the most part the Federation is run by central Canada.

THE EQUALIZATION FORMULA must be addressed and the current day economic reality calculated.

Even ALBERTA'S' NOT(remote)LEY business minded premier should be able to see this.

Wall & Notley should agree at the very least on this: and perhaps at the very least shed costs, it we cannot increase revenue.

Move the rhetoric beyond "deeply disappointed" to "we will need things to change if we cannot increase our market by selling the Federation of Canada western oil."

What is specifically wrong with equalization when its a federal program paid for by federal taxes which are assessed the same across Canada whether you live in Ontario, Quebec, or Alberta?
Alberta is case of a poorly managed resource sector.
What about Peter Lougheed? Was he right or wrong?

[westernvicki]

You know very well why Harper could not change the formula, as you know very well that Quebec own, and only Trudeau II would be the only conglomerate that could, and should.

Will there be the will and the vision?

Or do we have to wait till we see the GDP numbers a few years down the road?

[chuckChuck]

You know very well why Harper could not change the formula, as you know very well that Quebec own, and only Trudeau II would be the only conglomerate that could, and should.

Will there be the will and the vision?

Or do we have to wait till we see the GDP numbers a few years down the road?

Canada's GDP is dependent on a lot of factors. Lower oil prices cause a lower dollar which makes canadian exports more competitive. Oil is in a a slump but is still relatively high especially with an 80 cent dollar. Even with a major drop in oil prices our growth is still relatively good and is the best in G7. We still have a triple AAA credit rating. So all this doom and gloom is more politics than reality.

The federal taxes that the Government of Canada collects do not belong to Alberta or any individual. Alberta is responsible for their own revenue and spending.

What specific principles in the equalization program need to change?

[Klause]

Canada's GDP is dependent on a lot of factors. Lower oil prices cause a lower dollar which makes canadian exports more competitive. Oil is in a a slump but is still relatively high especially with an 80 cent dollar. Even with a major drop in oil prices our growth is still relatively good and is the best in G7. We still have a triple AAA credit rating. So all this doom and gloom is more politics than reality.

The federal taxes that the Government of Canada collects do not belong to Alberta or any individual. Alberta is responsible for their own revenue and spending.

What specific principles in the equalization program need to change?

Let's start by putting Quebec hydro into it..

I like how you run away from adebate whenever you get proven wrong or asked pointed questions.

[chuckChuck]

Let's start by putting Quebec hydro into it..

I like how you run away from adebate whenever you get proven wrong or asked pointed questions.

So what are the numbers? What would the change look like in actual dollars?

[Hamloc]

What is specifically wrong with equalization when its a federal program paid for by federal taxes which are assessed the same across Canada whether you live in Ontario, Quebec, or Alberta?
Alberta is case of a poorly managed resource sector.
What about Peter Lougheed? Was he right or wrong?

What amazes me is how everybody always celebrates Peter Lougheed. he left politics just before oil bottomed out in the mid eighties. He had created a unaffordable beauacracy and government debt started to pile up after he retired. This large buildup of debt lead to the the policies of the Ralph Klein era. So yes there were certainly some of Peter Lougheed's policy that were positive but he created a large beauacracy without setting up the tax base to properly fund it.


There is no doubt in my mind if Alberta had a 24% VAT like Norway energy royalties could be saved instead of put into general revenues.

As for equalization, the biggest problem is that the province that gets the largest total payout per year appreciates it the least, that being Quebec.

[Klause]

So what are the numbers? What would the change look like in actual dollars?

This will cause a revolt on here.

Between 2005 and 2010, Quebec received $42.4-billion in equalization. Lost revenues resulting from excessively low electricity pricing during that period was $28.6-billion (calculations are available at Fcpp.org). Since the equalization formula deducts 50% as a clawback from additional resource proceeds, an extra $14.3-billion (half of $28.6-billion) should have been deducted from Quebec’s equalization if its hydro revenues were treated the same as Alberta’s oil revenues under the rules. That would yield total equalization payments of $28.1-billion instead of $42.4-billion for the 2005-2010 period.

[LEP]

Equalization hasn't changed in a long time because the changes have to be agreed to by the feds and 70% of the provinces, I believe. It doesn't allow for much change if the biggest beneficiary has a sizable say in the change going ahead.

It has been written several times that the equalization formula is fully understood by very few academics let alone politicians.

There are no simple answers to complex questions.