Thanos Thanos:
bootlegga bootlegga:
Again, had Klein kept depositing 30% of resource revenues and not withdrawing every penny of interest the HTF generated, it would be far larger than it is today and could have been used by Redford to deal with the 'bitumen bubble'. Same goes for slashing revenues by bringing in the flat income tax, which has robbed the government of billions of dollars of tax revenues. Getting rid of the health care premiums cost the government another $1.2 billion each year. Ralph bucks cost the province another $1.2 billion, though it was a one-time payout.
The faithful may hate when someone has the gall to denigrate Saint Ralph, but facts are facts. His policies, popular though they were, have played a huge factor in decline of the PCs over the past decade.
Sure, hubris and arrogance on the part of Redford and Prentice played a big part too - but if any of Ralph's successors had had a savings account of $150-200 billion to draw on as Peter Lougheed envisioned when it was created, the deficits under Stelmach and Redford never would have happened. Same goes for Prentice's unpopular budget.
Without the royalty discount on oil sands development most of those projects wouldn't have been built at all though. They cost far more than conventional drilling does and the companies needed that reduced royalty rate to make their first few years of revenue worth it against the cost of project development. Half of those companies in the oil sands still aren't making much in the way of profit, even with the discounted royalties. Take a look at CNRL as one of the worst examples, where even at $100 per barrel the dopey fuckers were still in all kinds of trouble (mostly from their piss-poor management but also from the open sore they created for themselves by choosing their Horizon mega-project to be open-pit instead of a SAGD).
No royalty discount meant that a lot of those projects never would have ever seen the light of day, which in turn would have meant none of the employment prospects that those projects in turn created, which in turn then meant that the standard amount of income tax taken off those paycheques would never have happened, and then in turn the type of spending (both for basics & necessities as well as disposable) by those workers never would have happened either. It's not a case of the government having deliberately ripped itself off on royalties and taxes, it's far more that without the royalty discount the remaining royalties and then all the accrued taxes never would have happened at all. And without that there would have been none of the belated infrastructure development that was delayed not just because of the Klein cutbacks but also because the low oil prices and horrible job market of the 1990's wasn't capable of creating that tax revenue either.
In reality Alberta didn't live high on the hog until the effects of the Sept 11, 2001 terrorist attacks and then the 2003 invasion of Iraq caused the first wave of massive price spikes on oil. Then it partially collapsed again in 2008 with the Wall Street meltdown, a diminishing of demand for Alberta's product in the US thanks to the runaway development of Bakken, and then a full collapse in recent months again thanks to the Saudis opening their taps wide. And, hovering above it all, was the near total collapse of the natural gas market, that used to provide as much royalty revenue as oil did, which has been going on for almost a decade now. All in all, if you start your timeline at about 1990 or so, the market (both in terms of oil price and employment demand) in Alberta has been half-good and half-bad. As such gains made in any good year were pretty much balanced out by a bad year. And tax or take too many royalties in a bad year and you're pretty much ensuring that the next good year is delayed at best or completely negated at worst.
This isn't a defense of the Klein years. It's just that, flaws and all, pinning the entire blame on the decisions of that era is pretty short sighted and doesn't even take into account decisions (e.g. what the Saudis have done lately) or events (e.g. Sept 11) that were completely uncontrollable by anyone in the Alberta government. It's just as legitimate to argue that a set and inflexible tax & royalty regime would have caused as much suppression of the Alberta job market as it is that a too-flexible royalty regime has drained the place dry of government revenues. This place is a roller coaster, and always will be. Taking what works somewhere else (like the system that works for Norway's off-shore system or Texas' prodigious conventional drilling/collection system) will work as effectively in Alberta really doesn't have much of a logical basis to stand on.
Actually, the royalty discount had NOTHING to do with the stagnation of the HTF.
The HTF was set up with the goal of receiving 30% of any non-renewable resource royalties. During his time in office, the Alberta Government collected about $100 billion in royalties from non-renewables (oil and natural gas). Had he saved about $30 billion of it as Lougheed had envisioned - and not raked off all of the interest the HTF was generating each year (up to $500 million each year) - a drop in oil prices like this wouldn't mean squat. A fund of $150-200 Billion would generate close to somewhere between $5 - 20 billion a year in interest (depending on the rate of return).
How big is the drop in royalties this year...$5 billion. So, yeah, today's financial woes really can be traced back to the shortsightedness of Getty and Klein. Klein isn't entirely to blame, as he merely followed Getty's own shortsightedness.
All Klein had to do was show some leadership and raise a tax here and there (say on sin taxes or gas taxes) to cover what was then, a relatively small sum (as small as $2 billion early on in his tenure). Hell, even if he had left the interest in the HTF, it would still be worth at least double what it is now.
Instead, he slashed spending and later on, cut revenues even farther and made the province even more reliant on royalties to pay the bills. Because of the very boom you mentioned after 9/11, Albertans simply expected this to continue on forever.
However, our politicians are supposed to make all the decisions, both easy and hard. Klein and company just chose to make the easy ones and put off the hard ones, which we are now paying for.
For the record, Klein's royalty discount was one of the things that he did right IMHO. It spurred development and really helped get oil sands production ramped up. The only problem was that they didn't clarify the rules for the 1% royalty rate very well and oil companies took advantage and claimed upgrades to existing facilities qualified for the 1% rate, while Klein's intention was only new projects would qualify.
However, I'd put that blame on the bureaucrats/legislators who should have known better when they drew up the legislation and not specifically on Klein himself (who wasn't a lawyer).
CKA Uber 
CKA Moderator 
I think that's pretty standard procedure to suggest that was happening, and probably did happen.
