AFL finds evidence of huge royalty giveaway: "Grey market" trading of royalty credits bleeds Treasury of billions

EDMONTON - Oil and gas companies have used $2.9 billion of public money to boost their own profits, while the government lays off over a thousand educational staff and professionals according to Gil McGowan, president of the Alberta Federation of Labour.

"It is staggering to me that this government is putting the education of our students in jeopardy because it says that it cannot afford to fund schools at an appropriate level, while it literally gives away billions of dollars to companies that are already very profitable," says McGowan, noting that 55 per cent of the government deficits for the 2008/09 and 2010/11 fiscal years were because of the $2.9-billion Drilling Stimulus.

"Albertans were told that for $2.9 billion, we'd get new jobs and increased oil and gas drilling," says McGowan. "The $2.9-billion Drilling Stimulus did none of these things. It did not create jobs – jobs in that sector declined over the run of the program. It did not stimulate new drilling – new well starts declined with the stimulus."

The Drilling Stimulus Initiative created a "grey market" – a legal, unregulated market - where companies could buy and sell royalty credits used to reduce payments to the Crown with no strings attached. This grey market allowed companies owing royalties to the Alberta public to reduce what they owed by simply writing a cheque: No new jobs or drilling required.

Where the $2.9 billion in drilling stimulus cash went is secret. Under Section 50 of the Mines and Minerals Act, this information is confidential except for the Minister of Energy and a handful of government staff.

"We are calling on the Alberta Legislature's Public Accounts Committee, who has the authority to review and report all public accounts of the province of Alberta, to convene a special review of this program," says McGowan. "$2.9 billion of public money simply vanished without any of the promised outcomes and without any public accountability. This is simply unacceptable, particularly when we are in an era of record government deficits.

"We have often said that the reason that the government is cutting our important public services is not because they cost too much, but rather because the government is not collecting enough revenue to pay for them," says McGowan. "This is a classic example of the government mismanaging public money and the ones who pay the consequences are average Albertans. This fall it will be our school children who will be suffering because of this government's misguided decision making.

"It's time that the Progressive Conservatives realize that they are meant to be working for the people of Alberta, not profitable private industries."


MEDIA CONTACT: Gil McGowan, AFL president, 780-218-9888

  • Alberta's $2.9-billion Drilling Stimulus: Where did the money go? (report)
  • Alberta's $2.9-billion Drilling Stimulus: Where did the money go? (fact sheet)
  • Alberta's $2.9-billion Drilling Stimulus: Where did the money go? (powerpoint presentation - July 15, 2011 Press Conference, Chateau Lacombe, Edmonton)

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