Letter to Alison Redford

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ALBERTA’S ECONOMY IS STRONG BUT IT IS GENERATING LITTLE REVENUE:

THE OIL SECTOR IS PROFITABLE, SO WHY IS GOVERNMENT REVENUE SO LOW?

  • “The diverging fortunes of the province and the oilpatch are clearly evident from the contrast between the government’s ongoing revenue crisis, which has resulted in a $3 billion deficit, and the growing profits being reported by the oil industry. Suncor, Canada’s largest oil and gas company, reported yearly profits of $4.3 billion, while Imperial Oil, which is 70% owned by U.S.-based ExxonMobil, made profits last fiscal year of $3.37 billion, the second largest in its record” (Page 5).
    Misplaced Generosity: 2012.  Extraordinary Profits in Alberta’s oil and gas sector.  Parkland Institute, 2012.
    http://parklandinstitute.ca/downloads/reports/MisplacedGenerosity2012-WEB_1.pdf

ROYALTY RATES ARE TOO LOW

  • “During his decade-plus tenure as premier, Peter Lougheed attempted to ensure Albertans received maximum benefits from the oil and gas sector by setting a target for his government to capture 35% of the revenues from the industry … [H]is government managed to meet or exceed that target for the 5 years between 1977 and 1981″ (Page 9).
    Misplaced Generosity: 2012.  Extraordinary Profits in Alberta’s oil and gas sector.  Parkland Institute, 2012.
    http://parklandinstitute.ca/downloads/reports/MisplacedGenerosity2012-WEB_1.pdf
  • “Since the heyday of Lougheed, the consistent failure of the Tory government to meet their revenue targets for the petroleum industry throughout their political reign has cost Albertans dearly. If the three sectors (oil, natural gas, bitumen) are taken together, then by not meeting Lougheed’s 35% target between 1971 and 2010, including those years Lougheed failed to do so, Albertans forfeited approximately $195 billion in revenue. That figure would grow substantially, of course, if we include the interest that would have compounded over the decades” (Page 10).
    Misplaced Generosity: 2012.  Extraordinary Profits in Alberta’s oil and gas sector.  Parkland Institute, 2012.
    http://parklandinstitute.ca/downloads/reports/MisplacedGenerosity2012-WEB_1.pdf
  • “In the pre-election budget, the provincial government announced its intentions to have royalties capture only 9-12% of all oil and gas revenues over the next three fiscal years. By not restoring Lougheed’s 35% target in the conventional sector and a 25% target in the tar sands, the government’s plan means Albertans will forgo additional revenue of $17 billion in 2012-13, and $19 billion in both 2013-14 and 2014-15. Essentially, this means reforming Alberta’s royalties is a $55 billion question (Page 11).
    Misplaced Generosity: 2012.  Extraordinary Profits in Alberta’s oil and gas sector.  Parkland Institute, 2012.
    http://parklandinstitute.ca/downloads/reports/MisplacedGenerosity2012-WEB_1.pdf

OTHER OIL BASED ECONOMIES HAVE MUCH BETTER REVENUE INTAKE AND SOCIAL PROGRAMS

  • “Canada and Norway are advanced industrialized countries with highly developed political, bureaucratic and economic institutions.  Norway and Alberta have similar population size, similar production profiles, and similar levels of dependence on petroleum exports and government petro-revenues. . . . The Norwegian government has been very effective in distributing the benefits of oil wealth both regionally and throughout its population, thanks to a generous social welfare system, an equitable labour relations system and a progressive tax system. It has maintained one of the lowest levels of income inequality in the world.”
    Bruce Campbell, Executive Director of Canadian Centre for Policy Alternative.  The Star.  January 16, 2013.

    http://www.thestar.com/opinion/editorials/2013/01/16/alberta_should_learn_from_norway_on_managing_oil.html

  • “The Norwegian government owns 80 per cent of petroleum production, and retains roughly 85 per cent of the net petroleum revenues mainly through a 78-per-cent company tax and through direct access mechanisms. . . . According to one estimate, the Alberta government has averaged just 9 per cent of the economic rent from the oilsands over the last 15 years, and the federal government now takes (after tax breaks) a paltry 7 per cent of oil company revenues through the general corporate income tax.”
    Bruce Campbell, Executive Director of Canadian Centre for Policy Alternative.  The Star.  January 16, 2013.

    http://www.thestar.com/opinion/editorials/2013/01/16/alberta_should_learn_from_norway_on_managing_oil.html
  • “Norway’s Petroleum Savings Fund has amassed more than $664 billion in assets, all invested abroad, with only the return used for domestic spending. . . . Alberta’s Heritage Savings Fund now contains $16 billion, just 2 per cent of Norway’s fund, and a minuscule share of the petroleum revenue that has flowed into Alberta over the past 36 years.”
    Bruce Campbell, Executive Director of Canadian Centre for Policy Alternative.  The Star.  January 16, 2013.
    http://www.thestar.com/opinion/editorials/2013/01/16/alberta_should_learn_from_norway_on_managing_oil.html

ALBERTANS ARE SUBSIDIZING THE TAR SANDS

  • “The Alberta Oilsands Technology and Research Authority spent over $800 million dollars between 1974 and 1999 working to develop, in part, the steam-assisted gravity drainage (SAGD) technology that made the vast majority of the tar sands extractable” (Page 8).
    Misplaced Generosity: 2012.  Extraordinary Profits in Alberta’s oil and gas sector.  Parkland Institute, 2012.
    http://parklandinstitute.ca/downloads/reports/MisplacedGenerosity2012-WEB_1.pdf
  • “Residents say that tar sands mining is not only dangerous but illegal because it violates the rights laid out in Treaty 8, an agreement signed in 1899 by Queen Victoria and various First Nations. . . . The Treaty, which covers an area twice the size of California within northern Alberta and neighboring provinces, guarantees basic rights such as health care and education, as well as the right to pursue traditional ways of living, including trapping, hunting, and harvesting. If the government does decide to reduce the amount of land used for these activities, it has a duty to consult with and accommodate the affected First Nations.”
    Yes! Magazine.  Alberta Tar Sands Illegal under Treaty 8, First Nations Charge.  October 17, 2012.
    http://www.yesmagazine.org/planet/alberta-tar-sands-illegal-treaty-8-first-nations-shell-oil

ALBERTA NEEDS A MORE PROGRESSIVE TAX SYSTEM

ALBERTA’S CORPORATE TAXES ARE TOO LOW

  • “Alberta has cut the province’s general corporate tax rate from 15.5 per cent in 2001 to 10 per cent today. The government estimates each 1 per cent cut in the provincial corporate tax rate represents a loss of $350 million to the treasury. . . . Returning corporate tax rates to pre-2001 levels would generate nearly $2 billion additional revenue annually.”
    Better Way Alberta.  Tax and royalty reform for strong public services.

    http://www.betterwayalberta.ca/the-status-quo/the-real-problem-tax-and-royalty-giveaways

ALBERTA SPENDING CUTS PLANNED FOR MARCH 7TH BUDGET

  • “I have clearly stated over and over again that we will not be increasing taxes in this budget”
    CBC News.  Redford vows no tax increase, hints at doctor pay cuts.  January 27, 2013.

    http://www.cbc.ca/news/canada/edmonton/story/2013/01/27/alberta-redford-budget.html

  • “We’re in the middle, right now, of some pretty interesting negotiations with our teachers and with our doctors, many of which have taken place across the country, but you’ll know, for example, in Alberta, our doctors make 20 to 29 per cent more than the national average. . . . We can’t afford that anymore, and we’re going to have to look at some of those tough choices to really make sure we’re delivering services to those Albertans who need the services paid for.
    CBC News.  Redford vows no tax increase, hints at doctor pay cuts.  January 27, 2013.

    http://www.cbc.ca/news/canada/edmonton/story/2013/01/27/alberta-redford-budget.html

  • “About 3,000 summer jobs, including the popular Green Shack program in city parks, are on the chopping block as the province closes its Summer Temporary Employment Program.  Community leagues were shocked to discover this week that the $7.1-million program is on hold and expect the funding will be cut in the March 7 provincial budget, said Allan Bolstad of the Edmonton Federation of Community Leagues.”
    Global Edmonton.  Thousands of Alberta summer jobs could be axed.  February 26, 2013.
    http://www.globaltvedmonton.com/thousands+of+alberta+student+summer+jobs+could+be+axed/6442817347/story.html


WASTEFUL SPENDING BY THE ALBERTA GOVERNMENT DESPITE CALLS FOR AUSTERITY

Permanent link to this article: http://occupyedmonton.org/letter-to-alison-redford/

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