The demise of the $11.6-billion Voyageur upgrader project won't change the Redford government's hands-off approach around oilsands processing, provincial Energy Minister Ken Hughes said Thursday.
Hughes also suggested the Progressive Conservative government won't alter its policies to meet the goal set by former premier Ed Stelmach of processing two-thirds of Alberta's bitumen into light oil by 2020.
"It's an interesting goal," Hughes said in an interview.
"If that was physically possible with private sector initiatives, then that would be something we could accomplish. But I would argue that if the only way to accomplish that goal is by doing things that are financially and economically unnatural, then I would say that would not be wise for Alberta."
In 2011, 56 per cent of bitumen was upgraded in the province, according to the Energy Resources Conservation Board (ERCB). With an expected major increase in oilsands production, that figure is expected to drop to 44 per cent by 2021.
That figure could drop further with Suncor's Wednesday cancellation of Voyageur, which was intended to convert 200,000 barrels of bitumen per day from the Fort Hills oilsands mine into refinery-ready synthetic crude oil starting in 2017.
A glut of light oil in the North American market helped make the economics of the project unfeasible.
The Tory government has made gaining access to new markets through pipelines to the U.S. Gulf Coast, B.C. and Eastern Canada a priority.
While the price differential between conventional oil and bitumen has narrowed considerably in recent weeks - shrinking to $14.35 a barrel on Thursday - the government says the discount for oilsands has led to a massive revenue shortfall this year.
Hughes said the province shouldn't be concerned only with increasing upgrading within its own boundaries.
"Adding value to Alberta products anywhere in Canada is really good for Alberta as well. It doesn't overheat our economy ... and it does get our product to the market in a way that creates goodwill in other parts of Canada," he said. "It creates jobs in other parts of Canada, it creates economic stability in other parts of Canada."
But the Tories have faced considerable criticism, from the NDP and elsewhere, for focusing their attention on promoting pipelines to ship bitumen out of province, rather than providing incentives for upgrading.
Alberta Federation of Labour president Gil McGowan said the Voyageur situation shows that oilsands processing can't be left solely in the hands of the private sector.
Upgrading within the province will create products that fetch a better price than raw bitumen and create thousands of new jobs, he argued.
"Alberta will never move up the value ladder unless the government gets involved more aggressively in decisions over how our resources are developed," McGowan said, adding he wants actions such as conditions included on oilsands leases, not "subsidies or handouts."
Hughes said it was "naive" to think the province has the capacity to process all the bitumen produced.
But he noted the government does provide incentives through its Bitumen Royalty in Kind (BRIK) program, in which the province receives oil for its share of royalties from producers. The program is being used with the $5.7-billion North West Upgrading project near Edmonton, which will see bitumen refined into diesel.
In February, Premier Alison Redford and Saskatchewan Premier Brad Wall held preliminary discussions on a strategy to work with Ottawa and industry to boost Western Canada's refining and upgrading capacity.
Hughes said the governments are interested in talking to companies about whether a new model akin to the BRIK program could be developed to provide further incentives to industry.
But direct investment is not on the table and private companies must be in the lead, he said.
The Calgary Herald, Monday, Apr. 01, 2013
Byline: James Wood
The Province is facing some intense scrutiny on the prices of it's energy sources.
The criticism comes after a leaked report suggesting Alberta is not doing a great job at getting good prices for energy.
The recently leaked report suggests that Alberta is lagging behind countries like Norway,Russia, and Angola, when it comes to getting a good value for our natural resources.
Alberta Federation of Labour President Gil McGowan tells the Alberta Morning News that increasing royalties would not necessarily have a negative impact on the energy industry.
"The energy industry has been very, very effective in demonizing royalties and they've also been very effective in making PR opportunities out of things like the global economic collapse, cause that's really what happened in 2008" says McGowan.
McGowan believes that a country like Angola has done a much better job at negotiating their energy royalties than we are.
Angola gets 75% of the excess product after costs compared to the just over 50% Alberta is currently getting.
McGowan says during the reign of Ed Stelmach as Premier spin doctors were able to successfully play the fear card after Stelmach's Royalty increase.
i880News, Saturday, Mar. 30, 2013
Byline: Joel Lefevre
Albertans collect lower revenues from heavy crude oil than war-torn African nation
Calgary – Albertans are getting less for our heavy crude oil than other nations with comparable resources, according to Alberta's Department of Energy.
In a report obtained by the Alberta Federation of Labour, government analysts compared royalty and tax rates for heavy crude oil and found that Alberta charges significantly less for their resource than other nations with comparable heavy crude such as Norway, Russia and Angola.
“Oil companies in Alberta benefit from the political stability, first-world infrastructure and an educated workforce,” AFL president Gil McGowan said, noting that some of the nations in the report are known for civil turmoil. “Royalty and corporate tax rates have an impact on the lives of everyday Albertans. Higher oil royalties have helped Angola turn a budget deficit of 8.6 per cent of GDP in 2009 into a surplus of 12 per cent of GDP in 2012. The country is improving, in part thanks to reasonable oil royalties.”
Angola suffered more than 1.5-million casualties during a 27-year civil war that ended in 2002. Despite ten years of landmine clearing efforts, according to United Nations estimates the country is littered with 10-20 million landmines, or about one landmine per person living in the country.
According to the internal government document, Alberta offers an extreme value to this long-lasting resource by reducing the otherwise high risk premium in some regions of unrest.” Research from the World Bank shows Angola having a far greater degree of political instability and presence of violence than Alberta.
“Companies operating in Alberta don’t have to deal with landmines. That has to be considered a competitive advantage,” McGowan said. “But we only collect 54 to 58 per cent of the value of our heavy oil in royalties. We’re 25 per cent behind Norway, 13 per cent behind Russia, and more than 22 per cent behind Angola.”
Norway, which is ranked highly by the United Nations for its stability, peacefulness and infrastructure, collects about 80 per cent of the value of its resources in royalties. Russia, where police corruption and violence are cited by the U.N. as obstacles to oil extraction, collects 73 per cent. Angola, which is eighth in the world in child mortality and whose citizens boast a life expectancy of 54.5 years, collects 71 per cent.
"The negative implications of our irresponsibly low royalties are clear: we have paltry savings in the Heritage Fund and we're slashing the public services that Albertans need and value,” McGowan said. “If we didn't give away our resources, we would be doing much, much better."
The research, which was presented to the Energy Minister in April 2011, is included in the government report “Oil Sands Fiscal Regime Competitiveness Review.” The report includes a comparison of Oil Sands and Conventional Oil Government Share, which is a measurement that includes corporate taxes, royalties and other government fees.
AFL Backgrounder: Oil Sands Royalties-30-
Gil McGowan, President, Alberta Federation of Labour at 780-218-9888 (cell)
Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email [email protected].
The Alberta Federation of Labour claims it has obtained a government report which shows the province is getting less for it's heavy oil compared to other jurisdictions with a similar product including war-torn Angola.
AFL President Gil McGowan says the Tory government only has itself to blame for the red ink on it's ledge.
McGowan says Alberta should increase it's heavy crude royalty rate from 55 to 64 per cent as recommended by a review panel by in 2007.
He says the reason why former Premier Ed Stelmach reversed a royalty increase a few years ago is because he was a weak leader and was bullied by oil and gas companies that didn't want to see their profits reduced.
The AFL says hiking royalty rates would not scare away investment and would generate the revenue needed to build hospitals, schools and roads while pumping more cash into the Heritage Savings Trust Fund.
660 News, Thursday, Mar. 28, 2013
Byline: Kevin Usselman
EDMONTON – There's no denying the public sector took a hit in the 2013 Alberta Budget.
In fact, Gil McGowan, the President of the Alberta Federation of Labour claims Thursday's budget introduces the deepest cuts across the public sector that the province has seen since what he calls "the worst days of the Klein era."
As the province aims to deal with a roughly $2 billion deficit, it has flatlined spending. The budget's hard line applies to teachers, nurses, health sciences workers and civil servants. Many are in bargaining or about to start this spring. The budget also revealed about 80 civil service positions will be lost with more job cuts likely as the Redford government continues to reorganize departments.
So what does this all mean for the every day Albertan?
"It will hurt," McGowan says. "It will mean larger class sizes, it will mean less frontline service, and it's going to be very difficult for us to staff all these schools and hospitals that the government promises to build."
He believes that as the wealthiest province in Canada, if anyone should be able to pay for public service to move their economy forward, it's Alberta.
McGowan also thinks that the province's current fiscal problems date back to the time of Premier Ralph Klein.
"While it's true that he got rid of the deficit and the debt, he actually laid the groundwork for the deficit we're dealing with today – by slashing corporate taxes, introducing a flat tax that benefited the wealthy, and presiding over literally billions of dollars of royalty giveaways. When you give away your revenue source, you can't be surprised that you have a hard time funding things."
Political scientist Chaldeans Mensah of Grant MacEwan University points out that Klein did an "across the board cut."
"This government is using a different approach," he explains. "They want to borrow money, and this is why they've introduced the Fiscal Management Act that will allow them to borrow, and eventually it will create a debt, but they call it 'net financial assets,' so they've come up with a new term to describe the debt situation."
Mensah adds that in addition to trying to sell Albertans on this budget, she also has to sell her party on it.
"I think she needs to convince Tory party members that this new direction is not markedly different from the views in the past. She faces a leadership view in November, and if she's not careful, and doesn't sell this to the membership, there could be trouble politically."
Meanwhile, Finance Minister Doug Horner says he doesn't think public service unions should be surprised that the province did not allow for any salary increase. The government has warned for some months that salaries for teachers, doctors and nurses here are higher than elsewhere, he adds.
"When you look at comparative numbers from across Canada on a market-based perspective, we have the highest paid teachers and highest paid doctors in the country...This is somewhat of a reset for us to get us back to reasonable levels of expenditures."
Global Edmonton, Friday, Mar. 8, 2013
Byline: Trish Kozicka, Global News
Alberta's 2013 budget does little to address the province's chronic revenue problems says the Alberta Federation of Labour
Edmonton – In a province growing as rapidly as Alberta, a zero-per-cent budget increase amounts to a cut says the Alberta Federation of Labour.
Speaking to reporters in the legislature rotunda after having spent hours reviewing budget documents, AFL president Gil McGowan said he was disappointed that the budget did little to address the province's chronic revenue problems.
"The finance minister calls this a 'hold-the-line' budget, but really this is a cut-to-the bone budget," McGowan said.
"In a province that's growing by 100,000 people a year, a 0% increase amounts to a substantial cut."
The budget firmly cements Alberta's miserliness when it comes to public services. Even before the cuts in Budget 2013, no other province spent less on public services as a share of its economy than Alberta. Per person, Alberta has the second fewest public employees of any province.
"If Alberta employed the tax system of any other province, we would raise at least $10.6 billion more each year for public services," McGowan said. "Instead we have just another edition of the old Tory playbook: cuts to vital public services, giveaways to big business."
Even though the economy is running red hot and Alberta has an abundance of resources, provinces like Saskatchewan and Manitoba collect more public revenue per person.
"It's official: the Alberta government has pissed away another oil boom, and ordinary Albertans are going to pay the price through unnecessary cuts," McGowan said. "They promised structural change, but have ignored the obvious structural problem: our broken revenue system."
Since changes to Alberta's income tax laws in 2001, the provincial government has developed a chronic revenue problem, culminating in Budget 2013. This year, the province will not only have sweeping cuts, but also a $451 million deficit.
"Ralph Klein celebrated getting us out of debt by putting us back on the road to debt," McGowan said. "The reason that the Redford Government is having problems with budgeting is that they haven't stopped giving Ralph Bucks to the super rich."
Olav Rokne, AFL Communications Director at 780-289-6528 (cell) or via email [email protected]
CALGARY — As the legislature opens today with the provincial budget ready for Thursday delivery, a new poll suggests the government has lost the trust of many Albertans.
Sensing weakness, political wolves from across the spectrum are starting to circle the PC campfire.
A big-sample survey from Marc Henry's ThinkHQ Public Affairs says only 29 per cent of Albertans feel the government can be trusted.
It's a dangerous number for Premier Alison Redford, whose personal approval rating has also dropped 25 points since last August, according to the survey of 1,214 Albertans.
Fifty-eight per cent of Albertans now disapprove of her performance, while only 33 per cent like it, says the poll conducted last month.
Wildrose Leader Danielle Smith gets 46 per cent approval, NDP Leader Brian Mason has 40 per cent, and Liberal Leader Raj Sherman scores 37 per cent.
Yes, the leaders of the two smaller opposition parties, with a total of nine seats in the legislature, both have higher popularity ratings than the premier.
If an election were held now, Wildrose would win 38 per cent of the decided popular vote, and the PCs only 26 per cent.
Most of those numbers have little meaning, of course; an election is three years away. Last April taught us all how polls can swing.
But the plunge in public trust is something different — and critical.
Once lost, trust is difficult to regain. A string of polls like this could feed into a serious challenge to Redford's leadership at the party's mandatory review in November.
Her sliding support is already lighting a fire under her former allies in the unions, who seem propelled by a fine rage at what they consider betrayal.
Nurses, teachers and other labour groups met in Edmonton on Monday to condemn the government's "Klein-style cuts." Gil McGowan, president of the Alberta Federation of Labour, said the budget will be "Klein lite."
He was talking about ex-premier Ralph Klein's severe cost-cutting agenda that began in 1993.
At the same time, the right-wing Fraser Institute accuses the government of reckless spending and incompetent saving.
To all this the government responds in its usual fashion — by trying to say two things at once.
Finance Minister Doug Horner, at a party fundraising event last week, said "it's important that government show you we can be lean and we can be mean in what we're doing.
"So we're going to head in that direction in a big way, probably bigger than what's happened in the province in the past 20 to 25 years."
He's saying the budget will be tougher than any of Klein's, right?
But no, the PCs won't engage in Klein-style "hacks and slashes across the board."
So it will be tough; except, don't worry, it won't be so tough.
This is how the government lost trust.
Many Albertans simply can't decipher what they mean, or what they are.
The contrast with Klein is stark. In his worst moments, when he did the most difficult things, everybody knew exactly what he meant. Even his enemies trusted him to do what he said, even if they hated it.
These Redford PCs have lost the art. Now, mistrust leaves all their efforts open to attack.
One medical leader, Calgary's Dr. Lloyd Maybaum, even accused the premier Monday of having a "revenge problem" that prompts her to get back at doctors for past criticism.
And so, the PCs are bleeding support to both the right and left, confining themselves to a shrinking centre where even their backers don't know quite what to make of them.
All this is happening just as the budget is about to formally break many promises from the last election campaign. As Horner said, dating his vocabulary in a mid-Elvis fossil, it will be "hairy."
Maybe he was talking about the wolves.
Don Braid's column appears regularly in the Herald.
The Calgary Herald, Tuesday, Mar. 05, 2013
Byline: Don Braid
EDMONTON - Labour leaders in Alberta have joined forces to say they don't want to see public services cuts in Thursday's provincial budget.
The group consists of the Alberta Federation of Labour, Alberta Teachers' Association, Alberta Union of Provincial Employees, Canadian Union of Public Employees-Alberta, Health Sciences Association of Alberta and United Nurses of Alberta.
They said in a joint release Monday that the majority of Albertans don't want public services cut and would rather see an increase in taxes for the wealthy and corporations.
The group says Albertans see a booming economy, soaring corporate profits and low unemployment.
So they're confused as to why health care, education, and community services still don't have the resources they need to do the job right.
The group says the Conservative government is trying to justify massive cuts to health care and education by saying oil prices have dipped, but the labour leaders say Albertans aren't buying it.
Huffpost Alberta, Monday, Mar. 04, 2013