EDMONTON — Despite Alberta Federation of Labour claims the province blew $2.9 billion on drilling incentive programs that failed to create jobs or investment in the oilpatch, the Conservatives vying to be the next leader continue to support them.
All six candidates for the premier’s job say the two-year incentive program that expired in March kept Albertans working in the oilpatch and in service industries when the recession hit in 2008. They suggest if Alberta found itself in similar circumstances under their leadership, they might announce a similar program in a bid to rejuvenate oil and gas exploration.
The labour federation has asked the auditor general and the all-party legislature public accounts committee to review the program and determine whether it achieved its objectives.
The federation says the $2.9 billion the program cost taxpayers would have been better spent on programs and services because it merely padded the profits of major international oil and gas companies. During the period the program was in place, the oilpatch lost 8,000 jobs, the federation says.
“We’re not opposed to stimulus efforts aimed at creating jobs,” said federation president Gil McGowan. “What we’re opposed to is spending literally billions of dollars of public money without any strings attached and with no mechanisms in place to measure the effectiveness of the program.”
The government “shovelled money out the door” without putting in place any measures to determine whether the spending was effective, he says.
“The fact that so many of the leadership candidates have blindly endorsed the giveaway is almost as bad as the giveaway itself,” he said.
But Tory candidates seeking to replace Premier Ed Stelmach this fall reject claims the program was a failure.
“I think drilling incentives have had a tremendous purpose and that’s been to keep the economy going,” said former justice minister Alison Redford.
“I don’t take the view the Alberta Federation of Labour takes with respect to what the impact has been on the economy,” said Redford. “Theorizing on whether there’s been an improvement or not is pretty difficult. We know that rig activity has gone up . . . so I support those initiatives.”
Former finance minister Ted Morton said the program was important to get rigs working.
“I think they were the right policies for the right time.”
Deputy premier Doug Horner said it was all about trying to create jobs.
He said it’s important to recognize that a tremendous amount of wealth is created in the province by development of natural resources and incentive programs have long been used to stimulate creation of jobs in those sectors.
“We don’t want to have a bunch of people sitting around and waiting for a rig to go up,” he said. “We want to have them working. So from that perspective, I think we achieved the results we were looking for.”
Horner said he didn’t recall what performance measures were created to determine whether the programs lived up to expectations, but he was satisfied they worked.
“We felt it would stimulate x numbers of wells drilled and it would stimulate the kind of activity we achieved which is good.”
Calgary oilman Rick Orman said the incentives were required because the Ed Stelmach Conservative government made “a mistake” in raising royalty rates. “I would prefer a situation where there is no need for incentives,” he said. “What we’re doing is we’re trying to say the royalty decision was the right thing — and backfill with incentives.”
“They may have created jobs; they may not have created jobs. I don’t know. But I know . . . that if we’re talking about labour shortages (now) there is something going on.”
Backbencher Doug Griffiths said he doesn’t know if the incentive program worked, but something had to be done to keep the economy going when the recession hit Alberta.
“I would probably agree that it didn’t create a lot of jobs, but one of the things it did was keep jobs from being lost because we had some challenges with the royalty review and the downturn in the economy that created a perfect storm that slowed down investment around the world and particularly here in Alberta,” he said. “Something had to be done to counter that so we didn’t lose jobs.”
Former Washington envoy and conservative cabinet minister Gary Mar said he would be interested in seeing the AFL report on the program, but he believes it was successful.
“I am not sure they have it right, but I would be happy to look at their numbers too see how they have come to that conclusion because it has not been my observation,” he said.
But NDP leader Brian Mason also called for a review of the program.
“I think if you are going to create a stimulus program you need to define exactly what you are trying to accomplish and measure your results to see if you get any,” he said.
Calgary Herald, Mon Aug 1 2011
Byline: Darcy Henton