CBJ – April 15 – An audit has shown Alberta's oilsands royalties system to be an embarrassment to the province, the Alberta Federation of Labour said today.
“Premier (Ed) Stelmach should hang his head in shame with the release of this report,” AFL President Gil McGowan said in a statement. “The Auditor General has confirmed our fears that we may be missing out on billions of dollars in foregone royalty revenues.”
In a report released yesterday, the office of the Auditor General of Alberta said while the province's Department of Energy has developed measures to track the performance of conventional oil and natural gas royalties since a review in 2007, no measures are in place to assess oilsands royalties.
“The economic impact of the oil and gas industry and the significance of royalty revenue for funding services such as health care, education and infrastructure, make it important that the royalty regimes are well-designed and monitored to align with the government’s policy goals and objectives,” Auditor General Merwan Saher wrote.
The importance of the oilsands to Alberta and the unique “size and nature” of the deposits in the province make direct comparisons to oil and gas unfair, the AG wrote.
Work is being done to put a similar royalty scheme in place that properly values the oilsands, but “until clearly stated oilsands royalty regime targets and measures are in place, the department will not be able to readily demonstrate the effectiveness of its oilsands royalty regime,” Saher wrote.
That the royalty system in place has been unaccountable for so long is unbelievable, McGowan said.
“What the Auditor General discovered is that the government doesn't actually have any targets – which is shocking when you consider that the oilsands provide one of our province's most important revenue streams to fund things like health care and education,” he said.
“With high oil prices, instability in the Middle East and dwindling international supplies, we hold all the cards. And yet the Tories are behaving as if it's the oil companies that have the better hand.”
The sale of such an important asset without a critical review of the price would be unthinkable to most Canadians in other parts of their lives, McGowan argued.
“For individual Albertans, their home is usually their biggest asset. For Alberta as a whole, our biggest asset is the oilsands,” he said.
“Can you imagine selling your home without trying to figure out what a reasonable price would be? Can you imagine setting the price for your home far below market value and then patting yourself on the back because so many people are lining up to take advantage of your stupidity?
“That's what's happening with our collectively-owned oilsands assets.”
Canadian Business Journal, Apr 15 2011