Crawl Across the Ocean

Monday, August 29, 2005

Too Bad They're Landlocked and they Already Have a Provincial Bird

Maybe I'm just cranky today, but does anyone else find that when Albertan politicians start talking about oil, they sound an awful lot like the seagulls from the movie Finding Nemo?

1. sound clip of the seagulls here

2. To be fair to Albertans, I think what really set me off was William Thorsell's column in the Globe ('The Great Alberta Challenge') in which he blithely assures everyone that, "We realize now that Alberta's good fortune is no threat to Canada -- quite the opposite." and one paragraph later,
"And, in any case, what does Alberta's good fortune cost the rest of Canada? We will all pay the world price for oil and gas, whatever its source -- all the better, then, that it be within Canada. And federal equalization programs to fund broadly comparable public programs from coast to coast can be adjusted to reflect Alberta's special situation, so Ottawa doesn't bleed billions to other regions just because Alberta does so well.

There is no politically meaningful "national envy" at Alberta's happy position. It is anachronistic to try to create some."

Apparently, Thorsell has never heard of 'Dutch Disease' in which revenue from natural resources (e.g. oil) drives a currency up making the nation's manufacturers uncompetitive. And it seems he also hasn't considered the potential impact of Alberta slashing taxes and luring businesses there away from the other provinces (maybe if head offices start moving and making donations to the Glenbow Museum instead of the ROM, Thorsell will reconsider his position). And he probably also hasn't considered how many measures the other provinces want to take to deal with their dependence on oil and it's impact on the environment will face opposition from Alberta (remind me again, what's Klein's take on global warming and the Kyoto Accord?). Sigh.

3. In case you're wondering, Alberta's provincial bird is the Great Horned Owl

Apparently it was voted on by children across the province in 1977. I think if we had another vote, in this post-Finding Nemo era, the seagull would have a shot. Although, thinking about it further, the Harry Potter vote would probably ensure victory for the incumbent.


  • By Blogger ainge lotusland, at 2:08 PM  

  • Yeah like that, except luckily I don't think there are quite that many Alberta politicians!

    By Blogger Declan, at 7:38 PM  

  • I suppose I would have some sympathy for this sort of rant, Declan, if Ontario politicians didn't sound exactly the same when they speak of Alberta's oil and gas resources. As for the "risk" that Alberta would reduce taxes to the point that they attract business (Oh NO - a tax cut! the Horror) - how does that compare to Ontario's longstanding strategy of cutting transport costs to the country's major population centre? It has the same economic effect - attracting business to a particular location with the promise of greater profit. Obviously Alberta is late to the game of identifying and implementing dangerous, evil, extremist, unCanadian policies, now aren't they? Or maybe the complaint is a bunch of twaddle - take your pick.

    Ditto for Alberta's reaction to policies like Kyoto - we all know that Ontario and Quebec have never adopted policies or pushed for national programs just because they suit the needs of that particular province (including Kyoto, which will be a windfall for Quebec's hydro-based energy sector). Heaven forfend that a redneck Albertan could actually want a national policy that didn't screw his province in the ear for the benefit of the greater national good.



    By Blogger deaner, at 10:12 AM  

  • I've never heard an Ontarian premier claim that Alberta's oil belongs to nobody but Ontarians, but maybe I'm just not paying attention (or maybe it was before my time).

    A better comparison would be if Ontario hoarding some valuable resource of their own which was catipulting them into a big budget surplus, but Ontario doesn't really have any such resources, so I guess you're stuck.

    I'm also not familiar with Ontario's cunning transportation plan. Is it the gridlock at the Windsor/Detroit border, the super high airport fees or the way overpriced 407 highway you are referring to?

    Feel free to prove me wrong, but I'm guessing that Ontario contributes more than it gets back in most federal transportation schemes (a railway across the rockies?, twinning the trans-canada highway?, $450 million for the RAV line).

    Anyway, the point is not that provinces will generally try to improve themselves, since this is normal behavior. The point is that Alberta, due to its oil wealth and relatively small population, is in aa unique position to be able to (perhaps) cut taxes dramatically, which cold have a destabilizing effect on the country, forcing other provinces to try and compete with them even though they can't because they don't have oil royalties.

    And to be sure, all provinces prefer programs which suit their interests, I was just pointing out that Alberta's interests were not the same as the rest of the country's when it comes to energy, something which is obvious, but which Thorsell seemed to be claiming wasn't true, hence my need to correct him.

    By Blogger Declan, at 6:17 PM  

  • Ontario's "cunning transportation plan" is just the fact of their location; transportation costs are already low because products are already in the country's major market. They accrue much of their wealth by virtue of being "the centre of the universe" - but I don't see them sharing any of that with me. They can blame themselves for their own local transportation problems like the Windsor corridor or Hwy 407, and Pearson gets a better deal on airport fees than YVR does.

    The premier of Ontario is not claiming Alberta oil exclusively for Ontarians - but he is (along with such worthies as Montreal's Thomas Courchene) flying trial balloons about how Alberta's oil 'really belongs to all Canadians.' Quite aside from the fact that constitutionally they are dead fucking wrong, I would be more impressed if over the past five decades I had heard any of the talking heads assuring me that -say- Ontario's gold or nickel really belonged to me in Vancouver, just as much as it belonged to my cousin in Hamilton; ditto for Quebec's iron ore and aerospace industry (which I largely financed), or for Ontario's manufacturing infrastructure or forest resources. Stangely, in those cases they seem to think that the value of those resources should accrue to the stouthearted locals who built them. Fair enough - but spare me the pious hypocrisy about the common national interest in hydrocarbons.

    I don't know what the bien pensants in central Canada expect Alberta to do. If they maintain current tax rates they are pilloried for generating an "excessive" surplus; if they cut taxes they are castigated for "destabilizing" the country by being too attractive a place to live and do business. At the same time, the only solution they offer is to reject "Albertan" policy proposals while demanding that Alberta foot the bill for the policies they like. Nobody (certainly nobody in Ontario) seems to think it is untoward that Ontario "throws its weight around" politically by electing a third of those who govern the country - that's just the normal course of things, since they have the population. Why is it then untoward that Alberta do the same economically; isn't that jus the normal course since they have the money? If Alberta can be expected to share the (literal) wealth, why aren't Mr Courchene or Premier McGuinty proposing that Ontario and Quebec share the 'political wealth' by reducing their participation in Parliament and increasing Alberta's?

    Perhaps Alberta's interests are not the same as "the country's" interests - particularly if, like every Ontario premier in history, you conflate "Ontario's interests" with "Canada's interests" - but I am not convinced that this is so, and Mr Courchene should make that case before he uses it to justify another resource grab. Why is it that when Quebec's interests are demonstrably not coincident with Canada's, the response from Ontario is to shower money on Quebec by reflex; when Alberta's interests might not be completely in line with Ontario's (and less so with "the country's") the equally reflexive suggestion is to steal money from Alberta?

    I agree that "the Dutch Disease" might be a problem for Canada - particularly in regions and industries which have used a steadily declining Canadian dollar instead of productivity increases to make themselves competitive (Ontario auto industry - take a bow). The solution will require reinvestment in manufacturing and other industries to offset the increase in the currency - but there is no reason why that shouldn't be done in Alberta, or done in Ontario by Alberta-based firms. As a national problem, transferring money between Alberta and Ontario will not make a whit of difference.



    By Blogger deaner, at 9:30 AM  

  • I imagine if Ontario moved around, so that it was off in the North for a couple of decades and then suddenly moved so that it was in its current location, you would get people complaining and demanding that Ontario shares its newfound locational wealth, especially if that new location was going to have negative impacts on the other provinces. But it's less of an issue because Ontario stays in one place, so people are used to the current situation.

    As for sharing of resources, it is only in extreme cases where intervention is called for. As long as endowments are relatively equal, intervention is more trouble than its worth. You can blame evil Ontarians if you like, but the same arguments would apply if all the oil was in Ontario.

    I'm not sure what your point is in trying to equate the political principle of one person, one vote, with the economic prinicple of one dollar, one vote. If Alberta's oil wealth was in P.E.I., you are telling me that you would have no problem with all the P.E.I. residents living like middle eastern sheiks while the rest of the country struggles to find enough money for things like education and health care and their companies get driven under by the high currency?

    There is no solution to Dutch disease. People will try to run their businesses as well as they can and adapt, but they do that regardless of the currency situation. The high currency simply makes non-oil related businesses less viable. Telling the people whose businesses are going under that it is OK becuase the people with the oil have a lot more money so that from a national perspective nothing has changed, may not carry a lot of weight.

    You seem to have some idea in your mind that people in Ontario hate Alberta and want to screw them over so they can give money to Quebec whenever they get a chance. This Ontario exists only in your imagination.

    If Quebec was potentially destabilizing the country because they were becoming too wealthy, the reaction would be to try and share the wealth, the same as it is for Alberta.

    If you want a less emotional distinction, then let me say that the interests of oil producers do not align with the interests of oil consumers.

    As for the question of what Alberta should do, Don Drummond made a reasonable suggestion in the Globe today (here) that they should follow Norway's example, and invest a lot of the surplus money outside of Alberta, and indeed outside of the country.

    This would prevent the collective action corporate tax trap, and also help offest some of the impact of the currency, while at the same time giving Alberta a well diversified fund to draw on when oil prices aren't as high or the easy oil is gone.

    To the extent that they do cut taxes, they should cut personal taxes not corporate ones, since corporations are more mobile and more likely to shop for lower tax jurisdictions than people are.

    By Blogger Declan, at 2:59 PM  

  • "As for sharing of resources, it is only in extreme cases where intervention is called for."

    Hmmm... like when it's westerners doing well. Justify it as 'only in extreme cases' if you like; the fact remains that the only national economic policy every deliberately intended to devastate the economy of one region of the country (as noted by Mr Lalonde, who was in a position to know) was aimed at Albertans. Policies that inadvertently devastate the economy of particular regions (ACOA, for example) are scattered around like popcorn after a horror flick.

    "You can blame evil Ontarians if you like, but the same arguments would apply if all the oil was in Ontario."

    Forgive me my skepticism, but when the feds start handing out large inducements to relocate auto plants to Surrey or aerospace contracts to -say- Winnipeg (didn't they do something in that connection a couple of years ago... oh, wait - nevermind) then I will grant the argument some credibility.

    "I'm not sure what your point is in trying to equate the political principle of one person, one vote, with the economic prinicple of one dollar, one vote."

    I'm not suggesting "one dollar, one vote." I am saying that if you have the money, why are you expected not to use it, all in the service of same grand national interest defined by others who have quite definitely told you to piss off in the national policy discussion? All the 'dangerous' things Alberta might do are simply the exercise of their "dollar votes" - and suddenly we think they should be constrained, or the dollar votes themselves should be removed. The argument goes that they will "hurt the country" - well Ontario accrues political benefit from their population, and I think they use it to "hurt the country," too - but we don't have McGuinty responding to any suggestions that those "people votes" be constrained or removed.

    "If Alberta's oil wealth was in P.E.I., you are telling me that you would have no problem with all the P.E.I. residents living like middle eastern sheiks while the rest of the country struggles to find enough money for things like education and health care and their companies get driven under by the high currency?"

    Yes. Just as I am expected to 'have no problem' with EI designed to allow maritimes fishermen to work 10 weeks per annum but maintain a nice lifestyle, or arranged to subsidize Ford and Chrysler's model changeovers. At the same time, hospitals in BC are closing, teachers are (claiming to be) underpaid, etc.

    "There is no solution to Dutch disease."

    No, but it will be a problem no matter whether we transfer money between Alberta and Ottawa or not, so let's save ourselves the bother, okay? By the way, the Dutch disease is not necessarily fatal - currencies can appreciate for a number of reasons, and countries learn to deal with it.

    "You seem to have some idea in your mind that people in Ontario hate Alberta and want to screw them over so they can give money to Quebec whenever they get a chance. This Ontario exists only in your imagination."

    You're right - the people in Ontario merely elect politicians who want to screw Alberta and give their money to Quebec. The people themselves are great, aside from their voting habits - it's the politicians who are the problem. Case in point; Dalton McGuinty. I agree that Don Drummond's suggestion makes sense - after they have accumulated the surplus which Mr McGuinty is so eager to grab some of, and which "destabilizes" the country, according to Mr Courchene. Note - this policy action does not require that any monies be transferred from Alberta to Ottawa.

    "If you want a less emotional distinction, then let me say that the interests of oil producers do not align with the interests of oil consumers."

    Sure - that's a truism. That is still a step shy of determining that the interests of "the country" necessarily align with those of oil consumers.



    By Blogger deaner, at 4:12 PM  

  • In a nutshell, I think that large disparities of income between regions can damage the country for various reasons, espcially when they occur suddenly, and that steps should be taken to mitigate the impacts when these occur, regardless of which provinces are involved.

    You say, this is just cover for Ontarians trying to take Alberta's oil wealth and the principle doesn't get applied in any other situation so why should this be any different.

    Furthermore, while you agree (I think) that an unequal distribution of wealth can be harmful if it becomes severe enough, you disagree (I think) with taking action to mitigate such inequality.

    I guess we just disagree on both counts - but either way, Alberta politicians still sound like the seagulls from Finding Nemo! :)

    By Blogger Declan, at 1:22 PM  

  • Declan - I object to an insulting characterization of Alberta politicians, while ignoring the fact that the central canadian poiticians sound just the same - they are all claiming that oil wealth is "alll mine, my precioussss" - except in their case "mine" includes all of Canada (since they can hardly make the traditional Ontario argument that the benefits should flow to "good Canadians" in central Canada).

    I agree that huge disparities in wealth can cause (some) problems - but such problems tend to be self-correcting; people go where there is wealth to be created and earned. Our history of dealing with such problems by redistributing wealth and directing economic activity (see Atlantic Canada) cannot give us any confidence that this "problem" will be handled any better.

    The oil wealth in Alberta has given the eastern chattering classes a convenient excuse for their own policy and managerial failures: the difference in the hydrocarbon industry in Alberta and BC versus Saskatchewan indicates that being a "blue-eyed Sheik" is more than blind luck, but that isn't taken into account when the Centre of the Universe comes a-calling. I would have more use for McGuinty (which still wouldn't be much) if he had started by admitting that just perhaps Ontario had something to learn from Alberta, and that the first thing he would like from the Wild Rose Province wasn't a big fat cheque, but a lesson in the appropriate role and scale of government. Instead, it was easier to fall back on "they've got oil, we don't; that's not fair."

    There has not been a central Canadian political figure who has spoken rationally to this issue let alone fairly; it isn't only the Albertans who have been squawking here. Given their history of being a whipping boy for central Canadian interests, I can forgive some squawking from Calgary and Edmonton. Given the history of dominating confederation for their own interests I cannot forgive the same from Toronto, Ottawa, and Quebec City - and I thought your description was piling-on.


    By Blogger deaner, at 1:58 PM  

  • "There has not been a central Canadian political figure who has spoken rationally to this issue let alone fairly;"

    So when Paul Martin said, "there are no plans to target Alberta's oil and gas royalties." which part of that was unfair and irrational? As far as I know, the only potentially provocative comment that anyone in central Canada (politically) has made so far was McGuinty's fairly mild remark that "growing regional economic inequality needs to be addressed."

    You disagree obviously, but it doesn't seem like an unfair or irrational statement to me, and that is the only statement that anyone made, which made the reaction from Albeta seem like an over-reaction, hence my post.

    I'm not sure what you mean about Ontarians trying to learn from Alberta or cover for our managerial failures etc. The only big failure Ontario made was electing Harris and co. for two terms to try out Alberta style policies without the oil revenue to back them up, and they were a disaster. Ontario needs to learn from itself, not Alberta.

    Let me note that, based on the Alberta budget, and allowing for the rise in oil prices, natural resource royalties are likely to be above $10 billion this year in Alberta.

    On a per capita basis, if Ontario was to have the same royalties from resources, they would total around $38 billion. This would no doubt help with the $3 billion deficit which is what has McGuinty trying to talk the feds into taking less money from Ontario. In fact, total expenses in the budget are only $80 billion, so royalties could pay almost half and we could cut taxes in half.

    Speaking of which, given that expenses per capita are nearly identical in Ontario and Alberta, I guess Ontario has already learned everything they can from Alberta in terms of scale of government.

    By Blogger Declan, at 7:26 PM  

  • Declan - I put PMPMs comments on Alberta oil and gas resources in the same category as his solemn promise to eliminate the GST; he is lying until proven otherwise. McGuinty's "mild" comment is like the "mild" comment from a bike gang member that maybe he would like to address what's in your wallet. In this country, what Ontario wants, Ontario gets - and if that creates problems for the other provinces they just have to deal with that. Forgive the last guy who got mugged by the same gang of thugs for being a little jumpy. It doesn't help equanamity in Calgary to see Marc Lalonde back in cahoots with a Quebec PM - there are some very bad memories from the last time that happened.

    Perhaps Mike Harris was an Ontarian failure - just like Bob Rae and Dalton McGuinty; I have to admit when I was speaking of managerial failures I was thinking of Quebec. That said, the cost of government in Ontario should be lower than in Alberta - the infrastructure is long established, and the population density and wealth density are both higher and those are large factors in the cost of delivering services.

    No doubt, if Ontario had oil revenues like Alberta's they could cover a huge chunk of government spending. If Alberta had auto factories (and an eighty-year history as a manufacturing economy) and was located adjacent to the largest and richest market in the world they could do pretty well, too, not to mention the advantage of having the bulk of federal procurement occuring in the neighbourhood, or export support for big ticket items like nuclear reactors, hydro turbines, or aircraft. If McGuinty thinks Ontario is going to become a "have not" province, despite the incredible potential it has to create wealth, that's fine; Ontario has to choose a premier they are comfortable with. I do have a problem with a premier in that position whose first reaction isn't "how could I screw this up so badly; what are we doing wrong?" and instead is "how can we grab resources from the successful provinces to allow us to continue to operate the way we have to date?" I suppose I have an even greater problem with people who would elects such a guy, or return ghim to office after that attitude was known - but like I say, you have to elect someone you're comfortable with.


    By Blogger deaner, at 9:01 AM  

  • I guess if you live in a world where when central Canadians say the right thing about Alberta you assume they are lying and when they hint at anything other than the right thing you equate them with gangsters, the central Canadians don't look too good after all.

    As for the other argument about how McGuinty's first thought is to try and take resources from other provinces - sorry, he was elected a few years ago - his one offhand remark last week about preserving a relative balance of wealth between the provinces was not his first thought since taking power, even though it may seem that way to Albertans who ignore everything that happens in Ontario except to jump up and down yelling 'mine' whenever somebody mentions oil (or says something which can be connected to oil revenues).

    Trying to build on that to say that Ontarians are bad people because they elected McGuinty whose first thought was to try and take Alberta's oil money because it's easier than dealing with the mess he created (a mess which of course was actually created by the Conservative party) is getting really out there, not to mention a little insulting.

    By Blogger Declan, at 1:51 PM  

  • " I guess if you live in a world where when central Canadians say the right thing about Alberta you assume they are lying..."

    Declan - you know I didn't say that about Central Canadians; I said it specifically about our Prime Minister. Perhaps your experiences with Mr Martin are different than mine - he is a man of his word; he didn't (privately) repudiate the Red Book of campaign promises as a bunch of bunkum; he fixed health care for a generation; and he actually did cancel the GST - we're just paying it now out of habit or something. In my experience, it is fair to assume that PMPM is lying about policy until the required statute is enacted. As they say, your mileage may vary.

    Apologies if you misuderstood - naturally, this is not McGuinty's first action in office - for one thing, he had to break his election promise about not raising taxes. A revenue grab from Alberta seems to be his first policy reaction following the forecast that Ontario would become a "have not" province in (IIRC) the 2009-10 fiscal year. Unlike -say- central Canadian politicians, I draw no inference about whether Ontarians are "good people" based on whether they (re)elect McGuinty, other than to observe that this would indicate that they are comfortable with his reaction to that development and to the policies he espouses in response to it. Likewise, I make no judgement on Quebeckers who voted for the Bloc, I merely observe that M Duceppe has now offerred a policy prescription that will have a similar effect - to shield Candians from the global prices of the commodities they consume Note that since the bulk of population resides in central Canada that is where the bulk of the benefit will be felt. At the same time, the bulk of the national tax base is in Ontario, Alberta, and BC - my guess is that this proposal would be more or less neutral to positive for Ontario (net), highly negative for Alberta, neutral to negative for BC, and largely positive for the other provinces, generally in proportion to their population. But that's not an attack on Alberta - that's just how federalism works, right?

    I note at the same time that Hydro Quebec will continue to export electrical energy to the United States. Since at the margin electricity prices are set by gas-fired units, the marginal price of electricity will rise until US Gulf Coast gas production is re-established. To the extent that HQ is selling spot eneergy rather than long-term contracted energy they will enjoy a windfall gain from these sales. There is no point asking M Duceppe to share this windfall to (the provincially-owned) HQ with the rest of the country - that's just not how federalism works, is it?



    By Blogger deaner, at 6:01 PM  

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