Prentice Blames Albertans

[1stLand]

Prentice is right in blaming Albertans.

Too many times Albertans voted in the PC Government due to lavish Spending Promises during election campaigns - More Schools, Higher Pays for Teachers & Health Care Workers, getting rid of health care premiums. They pandered to the teachers and nursing unions for votes especially.

So while the PC Party is to blame by giving away too much money and poorly managing our money, by and large, that's what the populace wanted and the populace voted in the PC Party.

Albertan's never voted in the Wildrose Party who preached fiscal conservatism.

In many respects those who voted in the PC Party are to blame for the mess we are in.

Since I voted for Wildrose, I will use my Mirrors just to assist in plucking my random ear hairs, and not for self reflection on my choices.

[Oil Stain]

Originally Posted by 1stLand

Prentice is right in blaming Albertans.

Too many times Albertans voted in the PC Government due to lavish Spending Promises during election campaigns - More Schools, Higher Pays for Teachers & Health Care Workers, getting rid of health care premiums. They pandered to the teachers and nursing unions for votes especially.

Do you really think Alberta's problems come down to teachers and health care workers that are overpaid?

I know that they make liveable salaries in most cases but I can't see how they are egregiously overpaid.

[Fozzie_DeBear]

The problem is that the public has let the Government (or cowed the Gov) into letting to much of the resource royalties be used for Government operations instead of being saved for investment in province building (or rainy days).

If Prentice came out with the plan of getting the Heritage fund back on track by investing 30% of resource royalties in the Heritage Fund, cutting Government waste and implementing a revised tax structure for Albertans to address the lost resource revenue...would he get enough support to get that mandate?

Probably not... I wager most Albertans only think government needs to shrink and voila...problem solved.

Pass the mirror...

[Harry Lime]

If the boom and bust cycle runs about five years, I would like a plan in place to eliminate known loopholes to the royalty structure, and increase incrementally investment to the heritage fund to close to double that 30% suggestion over the next five years.

We can use the return on investment from the heritage fund as a revenue source, which would be significant in about a decade of investment at a high rate.

Perhaps mandate one significant capital project a year, that builds infrastructure, and doesn't have to be in a position to repay the initial cost. (ei. year one build a billion dollars worth of education facilities and tools, year two a billion dollars in medical and diagnostic facilities, year three a nice little mag-lev from Calgary to Edmonton, ect.)

Rinse and Repeat.

Considering how much money we are sitting on, can't we stop worrying about if we have enough Kraft dinner, and live in a futuristic wonderland for once? Our aspirations are so depressingly low.

[troutman]

http://calgaryherald.com/news/politi...-course-repair

Opposition critics lashed the Jim Prentice government Tuesday for mistaken priorities, saying it is putting executive payouts and golf course repairs ahead of funding necessities and the safety of vulnerable children.

Wildrose Leader Heather Forsyth slammed the governing Tories for approving $10 million to repair the flood-damaged Kananaskis golf course as it prepares to hike taxes in a painful austerity budget that it has promised will be felt around the province.

[Frequitude]

Originally Posted by Harry Lime

If the boom and bust cycle runs about five years, I would like a plan in place to eliminate known loopholes to the royalty structure, and increase incrementally investment to the heritage fund to close to double that 30% suggestion over the next five years.

Which loopholes would you like eliminated?

[Harry Lime]

Originally Posted by Frequitude

Which loopholes would you like eliminated?

Only one that really sticks, and that's the one that prevents a project from ever reaching payout. The 5% sweetheart deal was supposed to be temporary. The royalty structure doesn't need to be changed. It doesn't need to be raised. The spirit of the original agreement just needs to be enforced.

The only new thing that I would like to see is the majority of royalty proceeds going into the Heritage fund, with only the interest available for budgeting purposes.

[crazy_eoj]

Originally Posted by Harry Lime

Only one that really sticks, and that's the one that prevents a project from ever reaching payout. The 5% sweetheart deal was supposed to be temporary. The royalty structure doesn't need to be changed. It doesn't need to be raised. The spirit of the original agreement just needs to be enforced.

The only new thing that I would like to see is the majority of royalty proceeds going into the Heritage fund, with only the interest available for budgeting purposes.

How does a project never reach payout... unless it's unprofitable?

[Frequitude]

Originally Posted by crazy_eoj

How does a project never reach payout... unless it's unprofitable?

You call new projects "expansions" within the same royalty ring fence of an old project that is approaching payout. It basically piles a bunch more capital into the "to be paid off column" and keeps that original project in pre-payout for much longer.

It's a bit of a grey area, but for the most part I agree with Harry Lime. New projects should be their own ring fence and the scope of old projects should largely be frozen for royalty purposes. However companies should still be allowed to include true ongoing sustaining capital in the scope of the original ring fence.

[crazy_eoj]

Originally Posted by Frequitude

You call new projects "expansions" within the same royalty ring fence of an old project that is approaching payout. It basically piles a bunch more capital into the "to be paid off column" and keeps that original project in pre-payout for much longer.

It's a bit of a grey area, but for the most part I agree with Harry Lime. New projects should be their own ring fence and the scope of old projects should largely be frozen for royalty purposes. However companies should still be allowed to include true ongoing sustaining capital in the scope of the original ring fence.

So should expansions not be subject to payout then? Basically you are saying we should provide no incentive for companies to improve upon old or existing technologies, or to expand any projects; and instead strive to create entirely new systems or simply abandon and walk away from lowly profitable ventures. Is it better to have higher royalties and lose investment?

You can't have a portion of a project in paid out status and another portion in non-paid out...?

[Frequitude]

Originally Posted by crazy_eoj

So should expansions not be subject to payout then?

They should be their own ring fence for royalty purposes and eventually hit payout on the expansion capital, just like any greenfield project.

Originally Posted by crazy_eoj

Basically you are saying we should provide no incentive for companies to improve upon old or existing technologies, or to expand any projects; and instead strive to create entirely new systems or simply abandon and walk away from lowly profitable ventures. Is it better to have higher royalties and lose investment?

There are many ways the government incents companies to expand and improve. The low pre-payout royalty rate itself is one. Accelerated Capital Cost Allowance deductions is another. Those are specifically designed to incent investment. Ring fencing a new project into an old asset is merely gaming the system.

Originally Posted by crazy_eoj

You can't have a portion of a project in paid out status and another portion in non-paid out...?

Of course you can. Its just an accounting status. Call them two separate projects if you want. Take an in-situ facility that's been cranking out 50kbpd for a decade that's approaching payout. If I want double it by essentially putting a 50kbpd cookie cutter facility right next door, is that really the same project? No, it's 2 projects. Let the first hit payout and the second be its own ring fence for royalty purposes. That is the intent of the program.

[troutman]

For discussion:

The Real Culprits?

Time for Tories to look in the mirror!

http://www.betterwayalberta.ca/the-real-culprit

What’s really behind Alberta’s sinking budget?

For the past 20 years, successive Progressive Conservative governments have introduced and maintained an array of irresponsible tax and royalty cuts that have blown holes in the revenue base we need to fund important public services like education and health care.

The Alberta government’s rock-bottom tax on corporate profits; its flat-tax giveaway to the wealthy and its penny-on-the-dollar oil royalties have made it difficult for us to fund even middle-of-the-road services.

This was true even when oil was trading at more than $100 a barrel. Now that the price of oil has been cut in half, it’s impossible to ignore the damage caused by years and years of irresponsible tax and royalty cuts.

[troutman]

Proposed Solutions:

http://www.betterwayalberta.ca/the-better-way

If we’ve learned anything from past economic downturns, here in Canada and around the world, it’s that cuts don’t end recessions; they make them deeper and longer.

But the good news is that we have options. Alberta could increase the amount of money it generates from taxes on profitable corporations and wealthy individuals by more than $11 billion a year – and STILL be the lowest tax jurisdiction in Canada.

We could also increase royalty rates on oil company profits by billions and still have dramatically lower rates than other oil-producing jurisdictions like Alaska, Texas and Norway.

1. Replace the Flat Tax with a Progressive Income Tax

2. Increase Taxes on Corporate Profits

3. Increase Oil Royalties

4. No Health Care Premiums

5. No Sales Tax

The Better Way Alberta Campaign is a project of the Alberta Federation of Labour, the United Nurses of Alberta, the Health Sciences Association of Alberta and the Canadian Union of Public Employees (Alberta Division).

[calgarygeologist]

Originally Posted by troutman

Proposed Solutions:

http://www.betterwayalberta.ca/the-better-way

If we’ve learned anything from past economic downturns, here in Canada and around the world, it’s that cuts don’t end recessions; they make them deeper and longer.

But the good news is that we have options. Alberta could increase the amount of money it generates from taxes on profitable corporations and wealthy individuals by more than $11 billion a year – and STILL be the lowest tax jurisdiction in Canada.

We could also increase royalty rates on oil company profits by billions and still have dramatically lower rates than other oil-producing jurisdictions like Alaska, Texas and Norway.

1. Replace the Flat Tax with a Progressive Income Tax

2. Increase Taxes on Corporate Profits

3. Increase Oil Royalties

4. No Health Care Premiums

5. No Sales Tax

The Better Way Alberta Campaign is a project of the Alberta Federation of Labour, the United Nurses of Alberta, the Health Sciences Association of Alberta and the Canadian Union of Public Employees (Alberta Division).

I like everything that they have put forward. Royalty rates should be between 12% and 15%.

[nik-]

Norway has done very well with their fund, but productions from their oil holdings in the North Sea also peaked in the early 90's and their Barents Sea fields have about 1/300th the economically recoverable oil that the Alberta has.

Not saying we shouldn't much better with that fund, we absolutely should, but we're in a drastically different situation than Norway is.

[Tyler]

Is anyone else sick to death about the constant Norwegian comparisons? Totally different countries, governments, etc. It really is apple to oranges

[Flash Walken]

I dunno, apples to oranges comparisons have validity when you're running a fruit stand.

[edslunch]

Originally Posted by Tyler

Is anyone else sick to death about the constant Norwegian comparisons? Totally different countries, governments, etc. It really is apple to oranges

Not quite the same, but even if they collected $5B from sales or other tax over the past 20 years we could have $150B saved

[nik-]

Originally Posted by Flash Walken

I dunno, apples to oranges comparisons have validity when you're running a fruit stand.

It's not about the product though, it's about the mentality of government and populace. Scandanavian countries will go for things that even in Canada would be considered too left.

[V]

When you have a government that hasn't changed in as long as the PCs you don't really know what the populace will and won't go for. They've been so concerned with being re-elected that they don't want to lead, they just want to give people what they want.

Truth is, we have no idea just what it would take to remove the PCs from power, but if the last 5 years have shown us anything it's that it would take an awful lot. I find it pretty hard to believe Albertans would toss the PCs over a royalty or tax decision that they didn't like.