I am starting to feel a little socialist this morning

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.

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0 Responses to I am starting to feel a little socialist this morning

  1. mikel says:

    Skip the melodrama comrade:) Since when is it ‘creepy’ to not want huge corporations to rape and pillage the land for few costs?

    What is kind of creepy is how hesitantly you maintain ‘I don’t know, maybe they shouldn’t be allowed to rob us blind?’

    Or ‘maybe its just me but shouldn’t we get at least something for handing over resources?’

    THAT, is creepy. Socialism has been around just as long as, well, whatever the opposite would be, and no, its not capitalism.

    We had the same discussion when Graham announced that they would be handing over the potash basically in exchange for jobs. It’s true, there is SOME payoff, but is it the payoff thats equal to the profits they will be getting, and the lack of potash that future generations may say “you sold ALL the potash for three magic beans??”

    And again, let’s bring that home. In the US there have been several jurisdictions where its been found that gas companies simply don’t PAY their royalties, and the government doesn’t come after them for it-which is the same thing.

    IN NB, there should be a HUGE spike in gas royalties as soon as the Irving terminal goes online. However, the liberals changed the budget documents so that all royalties are mixed together-nobody knows how much the natural gas royalties are. Now ask yourself…why would a government do that? Hmmmm.

    And of course its ironic because IF being able to protect resources means socialism, then the United States is FAR more socialist than Canada. But what you are talking about is simply return on investment and what makes a fair return on investment-thats not socialism.