01 February 2016

Notley quite correctly accepted the Royalty Review Panel's conclusions

The Alberta Royalty Review Advisory Panel has concluded its study and issued its report. One of its conclusions, and certainly its most controversial, was, "Alberta’s total fiscal take (including royalties) from crude oil and natural gas wells is reasonably positioned against its most direct competitors." In other words, there is no justification for raising royalties.

Was I surprised? Absolutely. Do I believe the Alberta government should have accepted this conclusion? Again, absolutely. Indeed, I believe it had no choice. It appointed the review panel and is therefore honour-bound to accept its conclusions whether it likes them or not.

It has nonetheless raised the ire of many of its supporters including Alberta Federation of Labour President Gil McGowan, who claims his organization's suggestions and concerns were "passed over in favour of a plan that could have been introduced by a PC or Wildrose government" and accused the NDP of being "captured by industry."

My own surprise resulted from ignorance. I had for a long time assumed our royalties were too low relative to other jurisdictions, but this was based more on hunch than knowledge. (In my defence, Alberta's royalty scheme is very complex—the panel has recommended greater transparency.) The panel did a thorough comparison of rates and found that Alberta's revenue share is roughly the same, for instance, as that of Texas and North Dakota (and much higher than Saskatchewan’s).

The panel did extensive research and consultation. Over several months, they considered 132 submissions, the views of Albertans at dozens of public meetings, and the advice of three groups of experts. They did their homework and therefore I accept their results.

I respect the process: impanel a group of respected citizens; have them consult widely with the public, interest groups, and experts on the issue; and then make appropriate recommendations to government. The government should in turn act on the recommendations. The Alberta government has done just that, it has engaged in evidence-based decision-making and I applaud it for doing so. I do not want to see the Harper approach (ignore the experts, go with your gut) adopted in Alberta.

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