It’s kind of creepy. For the most part, I traditionally tilt towards the private sector versus the public sector when it comes to economic development. To put it another way, I think the government should be about creating the environment that is conducive to attracting private capital.
But lately I have been wavering. When there seem to be blantant examples of the private sector putting the profit motive above the best interest of community – at all costs – I get nervous.
Take Alberta. That province put a deeply discounted royalty scheme in place to attract private investment into the oil & gas sector. This royalty scheme was based on $50/barrel oil. Now the oil is at $80/barrel. Isn’t it natural to rethink this? Not if you are only interested in chasing profits. The industry has been unified in its condemnation of any attempt to tweak the royalty structure. And I read this morning Stelmach Blinks First. I think it is important to remember that governments have always tried to set natural resources royalty structures to provide companies with a reasonable return on a limited risk. For example, royalties are lowered in the early phase of development to allow the company to recoup its exploration and infrastructure development costs. Then the royalty rates increase after those costs have been recouped. It seems, – and I stress seems because I am no expert on this – that companies in Alberta want to keep a highly lucrative royalty structure – even though it is not in line with other models across North America.
Then take Quebec. The province had the hutzpa to block the cutting rights of two Domtar sawmills because they closed the mills. If you close mills, should you keep your cutting rights? Where is the public interest in this?
When we are talking about natural resources, there is a public interest. There is a community interest. Why should the community bend over and take everything the private sector slams down its throat?
There is an implied contract between companies and communities. You invest in our communities and our people and we will work hard to support your efforts. But if you are bilking us, maybe sometimes you have to fight back.
That, my friends, is leaning socialist – and kind of creepy – for me. But I can’t help it.