A vote for unity will help right Alberta’s ship
Divided opposition increases chances NDP’s disastrous rule could continue
On the evening of May 5, 2015, I felt nauseous — and it wasn’t only because I had received my first round of chemotherapy that day. News that the Alberta NDP won a majority government after 42 years of Progressive Conservative rule contributed to that queasy feeling as I recalled the suffering under Bob Rae’s NDP government in Ontario and NDP governments in British Columbia.
Those provincial governments would usually get one term in power when voters wanted to spank the ruling government and inevitably it was the electorate who ended up taking the beating. Enormous budget deficits, hikes in taxes and anti-business policies and rhetoric would make everyone poorer.
Inevitably, it would take many years for subsequent governments to climb out of the debt crater left and to attract investment again to the province.
I was too ill to be engaged on election night but I tweeted a warning that businesses in Alberta’s oilpatch would pack up and leave to more favourable business climates as a result of Premier Rachel Notley’s promise to increase corporate taxes and change the royalty rates. I was ridiculed for that but, alas, my prediction turned out to be correct.
Clearly, Notley learned nothing from the devastation caused by former Progressive Conservative Premier Ed Stelmach when he created uncertainty in the oilpatch by messing with the royalty system.
Notley’s NDP government not only tampered with the province’s royalty structure, but raised corporate taxes and brought in a carbon tax — a triple whammy made worse by profligate spending. The results have been entirely predictable. As renowned economist Jack Mintz said in an interview recently, while low oil prices haven’t helped, “evidence-based economic research shows what will happen to an economy that goes into yearly operational deficits, has no constraint on spending and raises corporate taxes.” In short, “investment goes down.” And when investment goes down, jobs are lost, government revenues decrease, deficits increase and prosperity for everyone suffers.
Today, members of both the Wildrose Party and the Progressive Conservative Party will decide whether to unite and form one United Conservative Party, therefore improving the chances of fiscally sound government being elected in 2019.
The PCs must reach the threshold of 50 per cent plus one while 75 per cent of Wildrose members must vote in favour of merging. The PC voting started on Thursday and runs until today while all of the Wildrose voting takes place today. Results are expected by 6 p.m. If either party rejects uniting, the political right will remain divided and the NDP will have a much stronger chance of winning the next election.
That will be good for Saskatchewan, but not Alberta. According to the Canadian Association of Petroleum Producers, capital spending in Saskatchewan is expected to rebound to almost 100 per cent of 2014 levels in 2017 to $6.1 billion.
Meanwhile, in Alberta, capital investing in 2017 is expected to reach $31 billion, just 51 per cent of the $60.6 billion invested in 2014.
As Claudia Cattaneo pointed out in her excellent July 20 Financial Post column, Advantage Saskatchewan, thermal heavy oil projects are economically feasible at US$45 a barrel of oil in Saskatchewan, “while those in Alberta using identical technology require US$55.”
As a result, BlackPearl Resources is building a second thermal heavy oil project in Saskatchewan while ignoring its larger Alberta opportunities. A Husky Energy spokesman told Cattaneo they can build projects in Saskatchewan much faster than in many other places.
A Wildrose source said that internal polls show 81 per cent of its party members will vote for unity, but they’re still nervous and are refusing to be complacent.
If both parties vote for unity, the likelihood of Alberta returning to fiscal health are much better. If they don’t, well, I get nauseous just thinking about it.