Saskatchewan dangles bait for city energy firms
Brad Wall’s invitation to Calgary energy companies to relocate to Saskatchewan is a “political move” that will be a tough sell among firms with deeply entrenched local roots, the president and CEO of Calgary Economic Development said Wednesday.
Still, Mary Moran said she is taking news that the Saskatchewan premier has been reaching out to Calgary oil and gas producers “very, very seriously,” adding that retaining the city’s grip on its head offices in the midst of an economic downturn needs to be a priority.
“Yes, we should be worried about this,” Moran said of Wall’s letter dated Monday to Calgary-based Whitecap Resources offering to subsidize relocation costs, trim taxes and royalties, and help find space in unused government buildings if the oil and gas firm moves to Saskatchewan. “The disappointing part for me is . . . we’d be far better served to work as a region to take on the world than by being myopic and having fights between provinces. We’ve got a global battle to wage here.”
Moran said it’s no secret the Saskatchewan premier — who has been publicly bickering with Alberta premier Rachel Notley over the two province’s budgets — has been pitching his province as a better destination than Alberta for energy companies.
In his letter to Whitecap, provided to The Canadian Press, Wall cites reductions to corporate and personal income taxes promised in his recent provincial budget as further incentives, adding that his government has no intention of introducing a carbon tax as Alberta already has.
Moran said other jurisdictions, including Houston and Dallas, have also made recent overtures in an effort to lure Calgary companies to their cities. She said Wall is likely to find there are a host of reasons companies want to be in Calgary, including concentration of other business leaders and professionals, transportation links to global financial centres and quality of life for employees.
“I think companies put a lot into the decision-making process, and though the dollars and cents are a big part of it, there’s also the softer part of it,” she said. “Frankly, I think if you lay it out side by side … you’d still see that Calgary fares very well.”
Moran added that a half-point reduction in Saskatchewan’s corporate income tax rate is not enough to outweigh Alberta’s existing tax advantages, which include no PST.
Whitecap Resources CEO Grant Fagerheim said he’s taking Wall’s offer seriously, but would only move if it would benefit his company’s shareholders. He conceded such a decision would come as a “shock” to his Calgary head office staff of 105.
“It’s a very pleasant offer from Premier Brad Wall, but we have to look at that in much more detail,” Fagerheim said. “When we’re working for shareholders, we have to consider all of our costs and everything that goes alongside that, (including) logistics.”
Whitecap Resources produces about 50 per cent of its oil and gas in Alberta, 40 per cent in Saskatchewan and the rest in B.C., said Fagerheim. Other Calgary companies with oil and gas production in Saskatchewan include Crescent Point Energy, Husky Energy, Raging River Exploration and Surge Energy.
Scott Crockatt, spokesman for the Calgary Chamber of Commerce, said Wall may not be fully aware of all the positives that Calgary has to offer, and added it’s unproductive for western provinces to spend time fighting over head offices when they should be working together to “grow the economic pie.”
However, Crockatt said Wall’s move is a good reminder that Calgary is in a global competition for business and investment — something that governments occasionally need to be reminded of.
“It’s especially important to recognize there can be a layering effect of multiple levels of government when they add cumulative cost to business — things like property tax hikes, corporate tax hikes, carbon levies, minimumwage increases,” Crockatt said. “And I do think many businesses in Calgary have hit a point where they’re saying, ‘I can’t handle any more costs from government. Please don’t make it any harder to run a good business.’ ”
Saskatchewan’s Minister of Energy, Dustin Duncan, says this is not the first time Wall has suggested a company look at relocating to his province and that he doesn’t think the letters being sent out are ill-timed.
“I don’t think so because I think this happens on a fairly routine basis,” he said, adding the province would see a long-term benefit if a head office were to move to Saskatchewan.
“If we can get head office jobs out of Calgary and out of Alberta into Saskatchewan, these people will be paying taxes in the province; they’ll be generating economic activity in the province,” Duncan told the Regina Leader-Post.
Neither Wall nor Notley was immediately available to comment Wednesday. However, Alberta Finance Minister Joe Ceci said he’s confident Alberta will continue to lead the country in terms of head office numbers, second only to Toronto.
“There’s no reason to figure any other place is better than Alberta to relocate to,” Ceci said. “I’m focused on promoting this place to anyone who’ll listen and I’m sure (Wall) is doing the same for his province.”