Oil industry needs stability
Here in Newfoundland and Labrador, we rely heavily on revenues from our offshore oil to pay for government programs and services. For this reason, recent comments made online by the NDP member for St. John’s North, Dale Kirby, are very concerning. Mr. Kirby said several times online that we need to add a new surtax on oil production, in addition to our current royalty regime.
After trying many times to get details of his proposed new tax with no response, I have noticed that this tax is no longer mentioned.
Although I don’t agree with his proposal, I am not ideologically opposed to the conversation. My issue is with the NDP’s tendency to hastily propose new taxes on industry and back off after they realize it is not advisable for various reasons. Another example of this behaviour happened during the last election campaign. During a television interview, Lorraine Michael suggested that no deal was final, and proposed that an NDP government would legislate opening existing oil contracts for more favourable terms. Presumably, she was later advised we would be sued and backed off.
I am concerned about the message this sends to the oil industry. Offshore oil takes many years to go from exploration to production, and many regions have unexplored territory looking for investment. Shale gas in the U.S., offshore oil in the Gulf of Mexico and the Arctic are only a few examples of areas competing for investment in exploration.
Our government has the responsibility to make sure Newfoundlanders and Labradorians benefit from our resources, therefore fair royalty and tax regimes are necessary. However, the NDP comes up with new ideas to tax industry seemingly on a whim, without fully considering the implications.
This approach to taxation and royalty could drive away investment, because no company wants to deal with an unpredictable government that might retroactively add a tax at any time. I would think that given that St. John’s sees the majority of the employment associated with oil, the NDP would be more aware of these facts.
Jeff Marshall writes from St. John’s