Tag Archives: GOVERNMENT

RACHEL NOTLEY’S CABINET

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NDP Caucus 2012-15, credit: rabble.ca

Later today at a public celebration on the legislature grounds, Alberta’s new NDP government will be sworn in. With a large number of inexperienced MLAs elected, many are suggesting that the NDP doesn’t have a strong group for cabinet. The announcement earlier this week that the cabinet would only have 12 people, including Notley, served as proof to these people that the caucus was weak.

I’ve been spending some time since May 5th looking at the makeup of the caucus and I didn’t find that to be the case at all. There may be a few holes, like in energy, but there are plenty of qualified people with a wide range and depth of valuable experience. In fact, I earlier thought there would be about 17 cabinet ministers and I still had many good people sitting away from the table.

Alberta Premier-designate Rachel Notley addresses the media in front of her caucus at Government House in Edmonton, Alta., on Saturday, May 9, 2015. THE CANADIAN PRESS/Jason Franson
Alberta Premier-designate Rachel Notley addresses the media in front of her caucus at Government House in Edmonton, Alta., on Saturday, May 9, 2015. THE CANADIAN PRESS/Jason Franson

With the 12-person announcement this week, I have revised my estimates and come up with a new prediction. With only 12 people and only four incumbents (all from Edmonton) the trick to cabinet making will be geographic diversity. I suggest that the cabinet making starts outside the two metro areas, then goes to Calgary and finally ends in Edmonton. Here are my picks:

Outside the Metros:

  • Shannon Phillips, Lethbridge West (Int’l and Intergov Relations)
  • Colin Piquette, Athabasca-Sturgeon-Redwater (Environment, Agriculture)
  • Marg McCuaig-Boyd, Dunvegan-Central Peace-Notley (Advanced Ed, Jobs and Labour)
  • Bob Wanner, Medicine Hat (Municipal Affairs)

Calgary:

  • Joe Ceci, Calgary-Fort (Human Services)
  • Kathleen Ganley, Calgary-Buffalo (Justice)
  • Karen McPherson, Calgary-Mackay-Nose Hill (Service Alberta, Culture and Tourism)

Edmonton:

  • Rachel Notley, Edmonton-Strathcona (Premier, Energy)
  • Brian Mason, Edmonton-Highlands-Norwood (Finance)
  • David Eggen, Edmonton-Calder (Health, Seniors)
  • Deron Bilous, Edmonton-Beverly-Clareview (Infrastructure, Transportation)
  • Sarah Hoffman, Edmonton-Glenora (Education, Women)

The interesting thing to me about this experience is that after filling in these qualified cabinet candidates, you end up with a quite a strong list of backbenchers who just miss the cut, like: Bob Turner, Lori Sigurdson, Marie Renaud, Danielle, Larivee, Richard Feehan, Marlin Schmidt, Stephanie McLean, Ricardo Miranda, Irfan Sabir and David Shepherd.

 

9 WAYS ALBERTA SHOULD MANAGE RESOURCES BETTER

Sometime toward the end of November, the Alberta government will release their 2nd quarter fiscal update. Finance Minister Robin Campbell will likely tell us that the second quarter was another good quarter but that the good news is coming to an end and the 1st quarter projection of a $3 Billion bonus will be revised.  The reason of course is that oil prices are down again. The budget projected $95 oil (WTI) and today’s spot price is under $79.  For every drop of one dollar in the price of oil (WTI) the government treasury loses $215 million.

As much as Premier Jim Prentice wants to paint the government as being under new management, I’m not willing to buy until I see changes to how the government manages our oil and revenue situation. He has already stated that he does not plan on raising taxes, which means we will continue to rely heavily on volatile revenue sources.

“Alberta relies heavily on revenue sources that can be volatile and unpredictable, including non-renewable resources, corporate income tax and investment income. Since 2000-01, these revenue sources have accounted for anywhere between 38% and 55% of total revenue.”

– Alberta’s Fiscal Plan 2014-17

An Alberta government truly under new management, would propose a comprehensive new plan for managing our oil resources, rather than approaching it the same mediocre way we have been doing it for the past 10-15 years. Here are 9 key features that should be part of that plan:

1. Restrict resource revenue to capital expenses, savings, debt repayment or economic diversification

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Credit: Government of Alberta

Some like to say that taking on debt amounts to stealing from our kids and grandkids. I would argue that the rapid development of our oil resources is a similar form of inter-generational theft. That oil belongs not just to us, but also to our kids, grandkids and all future generations of Albertans. As we sell of that long  term asset we are obligated to spend it on things that have long term benefits, Here are four things that would qualify.

First, we can spend it on long term investments like roads, schools, hospitals and other capital infrastructure. Second, we can save it like Norway has done (more on this later) so that down the road the interest on the savings can be used by future generations. Third, we can reduce our debt, but this only makes sense if the interest on debt is lower than the interest that can be earned by saving the money. Finally, we owe it to future generations to invest some of the earnings on economic diversification; our oil reserves are finite and we must make sure that the economy remains vibrant after the oil is gone and we must start work on that now.

2. Remove resource revenue from operational spending

With over 20% of our operational revenue coming from non-renewable resources we are stealing from future generations to pay for programs now. This must stop. Peter Lougheed said that we need to behave like owners. It is irresponsible to sell off part of the farm just to pay for more fertilizer.

3. Raise corporate and personal income taxes on the wealthy

Credit: Public Interest Alberta
Credit: Public Interest Alberta

We will need to replace that revenue, but fortunately we have a great deal of room on the taxation side to accomplish that.  The Alberta government proudly acknowledges that we could collect an additional $11 Billion in taxes and still be the lowest taxed province in the country. We need to collect just $9 Billion more to stop the intergenerational theft of using resource revenue to fund current programs. A mix of new taxes on personal income over six figures, on corporate income and a small consumption tax can balance the books without losing our competitive advantage.

4. Raise Royalties

Credit: CredBC.ca
Credit: CredBC.ca

Simply put, royalties are what Albertans are paid when we sell our oil or gas in the ground to the company that digs it out and sells it or processes it. In 2009, a comprehensive report comparing jurisdictions found that other places, including Norway, collected much more in royalties despite having higher production costs and a similar business climate to Alberta. Despite having lower production levels and less time to accumulate, Norway’s oil trust fund is nearing $1 Trillion while the Alberta Heritage trust fund is at about $17 Billion and hasn’t grown in decades. We are similarly selling out our kids when we sell off their oil at a big discount.

5. Start a crown corporation to extract and develop oil here and abroad.

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To be fair, it is not just royalties that have contributed to Norway’s huge fund, it is also the existence of StatOil. StatOil is the world’s 11th largest oil company and is owned two-thirds by the people of Norway. Not only does StatOil account for 60% of Norway’s oil production, they are also active in 35 other countries includingCanada. In 2012, they generated over $11 Billion in profit. A crown corporation would bring strong revenue to the province and additional stability to the sector at home.

6. Invest in green energy and alternative sources

Credit: Chandra Marsono
Credit: Chandra Marsono

I mentioned earlier that some of our resource revenue should be used to invest in economic diversification. The best way for us to diversify our economy is to invest in alternate and green energy. Oil is finite, but the world will always need energy even after oil is gone. We are an energy super power now, we can be an energy super power in the future but we have to take some risks and use our current wealth to invest in research and development to become leaders in alternative energy sources.

7. Demonstrate a real commitment to the highest environmental standards

Credit: Globe & Mail
Credit: Globe & Mail

The death of 1600 ducks on an Alberta tailings pond in 2008 was a tipping point for how the world viewed Alberta’s environmental record when it came to oil. Rightfully or wrongfully Alberta gained an international reputation for bad environmental practice. We need to regain the social license for oilsands development and we must be leaders at environmental enforcement. To accomplish this we need an environmental regulator that is not just effective and stringent but is also seen to be effective and stringent. This means staying away from appointing energy lobbyists as chair of our environmental watchdog corporation.

8. Upgrade more bitumen in Alberta

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The biggest benefit for general Albertans of having such a large store of oil here is the jobs that are created. But the bulk of job creation around the oilsands relates to the building and expansion of extraction projects. As the projects move from the construction phase into the production phase there are fewer jobs. It is in our interests to extract more value before the product is shipped out of the province. Also, processed product demands a higher price (albeit from more limited markets) than raw bitumen. We should get more value from our oil by upgrading more bitumen here than we currently do.

9. Get the products to the best markets in the safest way possible

Credit: flickr.com/baggis
Credit: flickr.com/baggis

Oilsands production levels are increasing faster than our capacity to get the product away from Alberta. This results in a glut of oil that stays here and, by the law of supply and demand, fetches a lower price. We should be supporting infrastructure investments that safely move the product to markets that generate higher revenue. If the safer method is pipeline then we should support pipeline development but we should also support research into technologies that will continue to make pipelines safer.

Conclusion

I think that as much as controversy over expenses, skypalaces and aircrafts sunk Alison Redford, so did the unnecessary cuts of Budget 2013.  A common problem with the Klein, Stelmach and Redford administrations was a lack of a comprehensive long term financial plan – especially as it related to managing our oil resources. The 9 keys presented here are not just individual tips but are integrated with one another to create a coherent strategy. This plan may not be the one Premier Prentice wants to use, but an integrated and well articulated strategy is needed.

WHAT’S THE STATUS OF THE PC’S 2012 MANDATE

So, you’re a former capital region mayor, who was popular as mayor, has good progressive credentials and now finds themselves on the inside of provincial government. You might be looking in the mirror today, thinking about the health portfolio and wondering how the world unfolded to put you where you are today. If this is you, then you’re not alone.

Sure, you might be Stephen Mandel, but you might also be Cathy Oleson, Ken Lemke or George Rogers, for that matter.

There is an important distinction however between Sherwood Park MLA Cathy Oleson and Health Minister Stephen Mandel. Oleson was elected to office by discussing her views on provincial healthcare (amongst other issues) with constituents as part of an election. In fact, Oleson had to discuss healthcare extensively with Sherwood Park constituents who were unhappy with not getting the hospital that they felt they had been promised – and still got elected.

The fact that Stephen Mandel was chosen by Premier Jim Prentice to be health minister over, say, Cathy Oleson, or any of 57 other PC MLAs raises an important question: what is the status of the mandate given to the Progressive Conservatives in the 2012 election?

That mandate was a progressive mandate. It is common knowledge that the PCs won the election because progressives all across the province, in ridings like Sherwood Park, coalesced around the PCs in an effort to defeat the lake-of-fire and anti-climate-change views that became emblematic of the Wildrose Party. Oleson, Lemke, Rogers, and most of the other PC MLAs were elected with that progressive mandate.

It is important to note that while the Alberta public has since come to reject Alison Redford, they haven’t necessarily rejected that mandate. Redford was tossed aside not because of her policy but because of her personal ethics (Indeed, it could be well argued that she would have been safer if she had stayed true to her original policy directions). In fact, a group of PC MLAs who were largely progressives and were instrumental in her downfall are all now on the outside of cabinet looking in.

In the days leading up to Redford’s resignation as premier, a group of10 rebel MLAs started clandestine meetings to discuss the growing spending controversies of the premier. They included Oleson and Lemke, but also included Janice Sarich, Matt Jeneroux, Moe Amery, Neil Brown, Jacquie Fenske, Mary Anne Jablonski, and David Xiao. Arguably, these people did more to bring down Redford than anyone else at that time. Most of them were very much elected on that progressive mandate.

I suspect that these MLAs were motivated by uneasiness amongst their constituents and growing disappointment with the Redford government. Not just disappointment over the spending controversies but also disappointment over the abandonment of the mandate that voters gave to the PCs in 2012.

So, does the appointment of outsiders like Mandel and Education Minister Gordon Dirks over these 10 MLAs speak to a rejection of the 2012 PC mandate or will the new Prentice government embrace that mandate that its caucus was elected on? Time will tell.

However, if Prentice wants to pursue a new direction then he needs to obtain it from the electorate. A set of by-elections may provide him with a limited new mandate, but then he has to fight those by-elections with a clear policy agenda and not just vague messages of change or accountability. Only then will he have the authority to change the policy directions given to government. If he doesn’t get that permission from voters, then he has an obligation to follow up on the commitments that got his MLAs elected.