When Ed Stelmach introduced a new Alberta royalty scheme in 2007, capital for resource development promptly took flight. To make matters worse, on the heels of Mr. Stelmach’s decision was the arrival of 2008’s financial crisis. For a time, the Alberta economic picture was bleak.
Rachel Notley has made it no secret in her desire to review royalty rates and potentially increase them. And strongly associated with the Alberta NDP is the Alberta Union of Provincial Employees. Like the NDP, they too seek an increase in the Government’s royalty take. Lou Arab, former NDP Chief of Staff, and husband of Ms. Notley is currently a Communications Representative for AUPE. He is not shy in reminding people that “there is only one party in Alberta consistently calling for higher royalties and fair taxes. It’s the NDP.”
That kind of rhetoric no doubt brings back memories of other ill-fated government intervention policies supposedly looking out for the people’s ‘best interests’. At the outset, Prime Minister Trudeau’s National Energy Program in the 1980’s for example, had grand and well-being intentions. However, as is keenly remembered by many, the NEP devastated Alberta and eventually was considered to be among the most unfair federal policies ever implemented. It was calculated that the program cost Alberta between $50- and $100-billion in economic value.
If the Alberta NDP want to review royalty rates and potentially have them increased, evidence suggests that not only will this not encourage the much coveted (by NDP) refining incentive, but also scare capital investment away from the development of Alberta’s resources.
This view is shared by many. For example, BNN’s Jameson Berkow recently reported AltaCorp saying “there is a strong indication that investment capital will stay outside Alberta if the NDP wins tomorrow.”
there is a "strong indication that investment capital will stay outside Alberta" if the NDP wins #abvote tomorrow, AltaCorp just "cautioned"
— Jameson Berkow (@crudereporter) May 4, 2015
Given these risks, Rachel Notley may want to re-consider her royalty rate agenda if she indeed is looking out for Alberta’s best interests. As Mr. Stelmach would surely remind her, royalty rate changes certainly can cause problems.