What Notley should not do

The main economic hope for Alberta now is that Rachel Notley does not do what she promised. The NDP Premier-elect ran on a platform that called for a 10 per cent increase in government spending over the next five years, higher top marginal tax rates of up to 15 per cent, increased corporate taxes, more meddling in economic decision making — including a promise to move jobs from Texas to Alberta.

In short, Albertans voted Tuesday to empower a party that aims to replicate some of the worst policies deployed over the decades by various Progressive Conservative governments. Another hope: That Rachel Notley does not do things she did not promise. We don’t know what those things might be, but it is clear Notley and her elected colleagues incorporate a radical streak that may have to be controlled by professional advisers, preferably ones better attuned to political and economic realities than the strategic bozos who told Jim Prentice that Tuesday, May 5, 2015, was a good day to take a dumb budget to the electorate.

In her first news conference, Notley downplayed her party’s aggressive statements on energy royalties and plans for more resource processing in the province. “I am hopeful that over the course of the next two weeks they (resource executives) will come to realize things are going to be just A-OK over here in Alberta.”

Beyond oil, the known Notley platform is anything but A-OK, committed for example to a 50 per cent hike in the minimum wage to $15 — a crowd-pleasing job-killer — and to turning an NDP government into some kind of grand industrial machine that will “actively” intervene to support economic diversification in “other sectors.”

How actively and what sectors? Notley has a startling list of targets: alternative energy, high tech, advanced research, knowledge industries, film and television production, small Alberta brewing, wind power, forestry, valueadded agriculture, food processing and tourism. As soon as oil prices turn around, the NDP says, it will presumably begin hiking royalties and corporate taxes for fresh cash to support small brewers. No more privatizations in Alberta.

Green organizations expect big things from Notley, including imposition of larger and more pervasive carbon taxes, coal plant shutdowns, and firm opposition to major pipelines, including Keystone and Northern Gateway. Will

TOTAL SPENDING Rachel Notley start a new Washington campaign, flying down to meet Obama to tell him: “Good job stalling Keystone, Mr. President. Keep up the good work! Albertans don’t want that stinking pipeline either.”

The NDP/Notley resource and pipeline polices loom as the most economically troubling aspect of the new government.

Much will depend on who gets appointed to a proposed Resource Owners’ Rights Commission, and the commission’s formal mandate. The official NDP line has been that the Conservatives have “squandered” Alberta’s natural resource wealth and failed to get more “value-added processing” within Alberta. They accused the Tories of having “focused only on more export pipelines for unprocessed bitumen — sending our jobs to Texas.”

Is that the starting point of the commission’s royalty review mandate? Maybe not. In an informative exchange with Andrew Leach, professor of energy policy at the University of Alberta, NDP officials said it’s possible the commission could review royalty rates and “come back with the conclusion that, in fact, Albertans are getting a fair share of royalties.”

That would negate the premise for the main plank in the NDP election platform, but never mind. More likely the commission will find something to gripe about in the complicated business of royalty-setting. It’s also possible, although NDP officials didn’t say this, the commission will come back with the conclusion that processing bitumen in Alberta instead is economically nonsensical and Albertans are way better off extracting resources and shipping them for processing to Texas and China. As Andrew Leach put it in a recent Maclean’s commentary, “I can find no evidence in the data to suggest that refinery jobs are higher-value in any systematic way.”

It will be a brave commission that comes to that conclusion, but Albertan’s can hope that actual facts and data will prevail over the decades-old Canadian fantasy that millions in jobs are being lost because resources are not processed within the provinces where they are extracted.

As a starting point, the commission should review a recent paper by former Alberta Finance Minister Ted Morton on the government-backed North West Upgrader, a risky operation backed by Rachel Notley’s PC predecessors for the same dubious reasons. Morton says the province has already put billions at risk in the upgrader, located north of Edmonton and approved by Conservative politicians angling for local votes. Morton says such economic diversification projects are usually driven by the “diversification siren song of ‘Refine It Where You Mine It.’”

Change is good, but repeating mistakes of the past isn’t change.

Alberta’s new premier should resist radical ideas, and old ideas borrowed from PC

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