Same old sweetheart royalty schemes

The last few months saw another Canadian province facing scrutiny for its failure to collect a “fair share” of the monetary value of public assets granted to resource companies. The recent controversy over low oil and gas royalties in Alberta garnered sustained headlines across the country. Much of the coverage framed the issue as if this problem is unique to Alberta; it isn’t.
The Alberta royalty brouhaha followed on the heels of the debate over the successful effort of Newfoundland’s Danny Williams in forcing oil companies to give the province an equity stake in offshore oil and gas development, which itself followed on intermittent uproars over BC’s low stumpage rates, and is echoed in the current controversy about windfall giveaways to Western Forest Products, Timberwest, Weyerhaeuser and perhaps Pope & Talbot in the form of ill-advised Ministerial approvals of BC Tree Farm License (TFL) deletions.

The pattern is the same in all Canadian provinces, whether it is triggered by BC charging only $0.25 in stumpage for each telephone pole sized log on more than one-third of the wood logged in the province, or by world-low royalties on gas and capital cost offsets on tar sands infrastructure as is the case in Alberta. Either way the scam is the same, with resource industries getting rich at residents’ expense and our governments doing little or nothing to protect the public interest.
Here is how the cycle goes: periodically a report, or a scandal, reveals the criminally low royalty rates that Canadian governments are charging its resource industries (logging, mining, oil & gas), this leads to a panel being struck to investigate; the panel confirms that Canadians (or British Columbians or Albertan’s) are not getting a fair return on their public resources; the industry responds in outrage usually beginning with denial, followed by sky-is-falling predictions about the demise of their industry (sometimes analysts in the capital markets intervene threatening lost investment);  then the government makes some slight adjustments that essentially allow the business as usual giveaway to continue in a slightly altered form.

This calms things down for awhile, then wait ten years, hit reset and begin again.
Canadians need to realize that our economies have evolved; we no longer have to give away our public resources to build our nation. In fact, as the Parkland Institute points out in an excellent op-ed on Alberta royalties, because we control 50%-60%; of the world’s investable oil and a substantial amount of the world’s timber within a stable political country , we “can afford to be in the higher range for royalties while still remaining very competitive in terms of attracting investment.”

Given these trends, it is not surprising that Alberta’s Premier Ed Stelmach has committed to quasi royalty reforms that move Alberta “from the very bottom in terms of international [royalty] comparisons to somewhere in the lower end.” That is the typical response of a Canadian politician.
Until Canadian’s demand better, they will continue to get ripped off by systemic corporate-friendly giveaways of public resources. It won’t be easy, given the centuries long expectation that Canadian logging, mining, and oil and gas companies are entitled to feed at the public trough. But if we want healthy prosperous communities living within natural limits, we have no choice. Help Dogwood Initiative demand better.

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