Reason to vote Red Redford out of office: decimating the oil industry

As you may or may not know, an Alberta election is underway. As its looking like there's a real solid chance that the Wildrose party can seize the reigns of power away from Alison "Red" Redford and her "Progressive" "Conservative" Party, I felt this would be a good time to bring up some of the disastrous legislation enacted by Red Redford's party.

Today this trip down memory lane takes us to 2007, and the day that the Alberta Government made every promise they'd ever made a laughingstock, decimating Alberta's economy and good name to which we still have not recovered.

The royalty framework is a classic case of “Progressive” “Conservative” management, and while the issue hasn’t come up as much in this election cycle, it’s important to remember that the Stelmach mishandling of this file has caused unbelievable damage to the Alberta economy and more importantly to the principles by which this province is based.

The first issue that needs to be raised with this is the “our fair share” nonsense. Yes indeed, the resources of Alberta belong to Alberta as per the Canadian Constitution. Similarly, I think its unrealistic to believe that the Alberta Government should be default be the organization that gets to collect the money, but here the Constitution is a little more fluid. Still, insisting on our “fair share” is a silly game, where progressives seem to think that any Tom, Dick, or Henri who moves to this province from Ontario or Nova Scotia immediately should start getting his mother-fucking oil cheque. Ultimately, the people who “deserve” the oil money the most aren’t the Red Redford progressives, or the Muhammed John Mohammed who moved here from Sudan last Tuesday, or the homeless, or “seniors who built this province”, or even longtime Albertan resident bloggers. The people who deserve the oil money are the people who do something related to taking it out of the ground and selling it. As it so happens, there’s already a program in place that compensates those people as a function of what they do and what value it adds to the oil throughout the process: it’s called capitalism, and basically every government royalty scheme is some method of taking money away from the people who did something to create it and give it to people who did nothing – or worse, in the case of that idiot Hudema, actively campaigned to do harm on the lives of the deservers. “The producers and the takers” as Charles Adler famously discussed on his radio program a couple of years ago.

Yet, as we wrote about a few weeks ago, when Danielle Smith talked about giving Albertans this royalty money, the opposition went apeshit. So I think we can say with a fair degree of confidence that they aren’t really interested in the people of Alberta getting their “fair share” of oil royalty money. Though they still, and this is important, kept demanding the government take more of it.

So anyways, the royalties are how much the oil companies pay Albertans (again, through our government for some silly reason) when they “buy” the tar in the tarsands off of us. Now when the tarsands were first discovered, the technology to do anything of value with them just wasn’t there (or if it was, it wasn’t financially feasible, I don’t know the particulars). Later, the technology became more and more affordable, but by then the price of oil had fell to a pathetic $7-9/barrel. This wasn’t that long ago, it was the 20 years ago that apparently gives Raj Sherman nightmares.

In that timeframe, the Alberta Government decided that collecting a few extra royalty dollars wasn’t nearly as important to them as spurring the investment and development that would create employment and economic growth. So they created what was for the oil companies a pretty sweet royalty scheme. Of particular interest was that you could defer most of the royalties while you were building infrastructure, and that the deferred monies weren’t directly tied to the cost of what you were building.

When Ed Stelmach decided to change the royalty framework, that’s fair enough: the Alberta government did set the royalties and they decided the original rationale was no longer valid in an era where a “13” was tacked on in front of that “7 dollars per barrel”. Now there’s a right way and a wrong way to do this.

The “Progressive” “Conservative” party chose the wrong way.

The royalties were changed rapidly, not gradually. As has been written elsewhere, the fine details of the royalty scheme was adjusted willy-nilly without thought as to the economic impacts. The whole enterprise was treated ham-handedly, and the oil companies were a little upset.

Then, Ed Stelmach turned Alberta into a tin-pot African dictatorship.

Amoung the royalty schemes that the “Progressive” “Conservative”s chose to alter was the ones that Suncor and Syncrude were operating under. Those two companies had an even sweeter deal with the Province of Alberta than the “Mom and Pop” organizations that were impacted by Stelmach’s other royalty tinkerings. The reason they had that sweetheart deal, of course, was that they had previous negotiated separate agreements about what royalties they were expected to pay and when. Which is to say that they had signed a binding contract with the Government of Alberta. Before they knew what was happening, though, those contracts were being arbitrarily rewritten by one side while the contract was still in force. This, more than anything, is where the “Progressive” “Conservative” arrogance and mistrust of Albertan culture comes to the forefront.

Red Redford has been quite down on Alberta culture lately: it’s almost as if we actually dare to believe that a landowner has fundamental property rights, that men who speak out against faggots or immigration or what is being taught in public schools are doing good deeds rather than shameful acts, and that a man’s word is his bond. She hasn’t spoken out much against that last bit, though it goes part and partial with the rest. She let her predecessor spit on that principle, she’s busy spitting on the others. Give Red Redford a chance, though, and she’ll spit on this one.

That’s the real beef Albertans had with the royalty review: if you want to change the royalty framework, fine, it probably did need updating. If you want to make massive and radical changes to what the framework will be, well, you can but you probably shouldn’t. It would be wiser, more prudent, to make a gradual set of small changes on a set timetable laid out well in advance so that organizations could plan for how they will deal with the consequences. Still, you can do that. What you absolutely, fundamentally, cannot do is start using the ham-fisted tools at your disposal in government to change and agreement already in force. That’s what tin-pot African dictatorships do. That’s what criminal extortionists do. For Christ’s sake, that’s what Darth Vader does.

Only now “we” have done that. Stelmach and Redford have eroded the faith in Albertans and our government that we have built up across the world through time. Red Redford is concerned about “our place in the world”, about how we’re “seen” by various other UN member nations, and about what our image is like? Well far more than whether or not we’re letting rig piggers rough up poofters, the Albertan image is determined by our principles. The core principle at stake is something Danielle Smith has mentioned numerous times: we say what we do and we mean what we say.

In the world of business, this is an important statement: it’s at the core of the ISO system that world-class organizations use every single day. In our intensely globalized world, where the business climate in Alberta is one of our primary selling features when it comes to bringing in the best and the brightest, it is absolutely critical that the Alberta Advantage isn’t squandered away. Having a group in charge who think that because they have “MLA” in their title they get to change the rules every time it suits them is unbecoming. It chases away investment opportunities and causes a negative image of our province. Gary Mar in China may be able to win friends by showing that, like the ChiComs he interacts with, his government back home just legislates new rules into place whenever they don’t like their agreements, but it’s not as easy of a sell in Houston or New York or London or Tokyo or Bombay.

You know, the places where you as an Alberta businessman or sales agent are trying to do business. What line will you use under a “Progressive” “Conservative” government? “Well, they do like to change the rules every 45 seconds but don’t worry, odds are pretty low that they’ll notice our industry?”

There is a strong right-wing alternative: Danielle Smith's Wildrose Party of Alberta. Wildrose was formed while Ralph Klein was Premier: but it was the royalty framework that built this party into the force it is today: while a few arts students in Calgary are “scared” that a Wildrose Government won’t give arts grants to mediocre painters to make tapestries about atheism, you should be scared about how under the “Progressive” “Conservative” party your business has to constantly convince potential partners that Stelmach was an aberration.

We know that Red Redford is just as bad: by 2014, who knows what damage your company’s reputation will be in? Vote Wildrose.