90 Day Deadline: Day 95

Remember back in the fall when Ed’s don't-call-this-a-compromise on royalties meant the big oil companies, Syncrude and Suncor, would have to renegotiate their existing deals with the government? Remember how in a rare moment of leadership, Ed showed he had a plan by giving them 90 days to renegotiate?

Well, that was 95 days ago. Perhaps one of the Alberta media types who frequent this blog might want to toss that question out to the Premier next time you see him. Might also want to ask him if his lame environmental plan that has been embraced by big oil was part of the unofficial renegotiation...

Boo!

Kady O'Malley has the full run down of Halloween in Ottawa (including Harper's witty "man in the brown suit" costume). Although he dressed as Laurier, Dion did did provide a big scare to Liberal backbenchers by musing about raising the GST. It's probably not a smart thing to go around talking about something like that unless you're going to do it, but I do think it would be interesting to see a Liberal campaign plank calling for a restoration of the 7% GST, with all the revenue raised either going to income tax cuts or income splitting. Dion's got to show he stands for something next campaign and it would certainly be a bold position to take.

In other news...

1. As a big V for Vendetta fan, I enjoyed the Wingnutterer's look back on the "Income Trust Treason".

2. Stockwell Day has announced that the Canadian government will no longer oppose death sentences for Canadians abroad.

3. I don't really get the full gist of his criticism, but the man who could have been Premier is going after Stelmach hard on his royalty review compromise.

4. Jack Layton may have an ally in his quest to end ATM fees across Canada. It appears that Brian Mulroney was so sick of ATM fees back in 1993 that he needed to get $300,000 from Karlheinz Schreiber in cold, hard cash. Yes, it looks bad that he didn't declare it on his taxes either but I'm sure there's a logical explanation for everything. Unfortunately, I'm only at page 376 of his memoirs but I'm sure Brian will explain everything fully by the end of it!

5. And a big round of congrats for Andrew Coyne - the new national editor of Macleans!

Reviewing the Review

While the oil companies do Stelmach a million favours by claiming he was too tough on them, every independent expert in the field continues to say that the Stelmach compromise will cost Albertans billions of dollars. The latest:

An independent energy economist who worked closely with the province and royalty review panel said Saturday the Stelmach government's new royalties policy fails miserably on the oilsands -- the province's top energy play -- and won't deliver nearly enough economic rent to Albertans.

The analysis from world-renowned oil and gas economist Pedro van Meurs came a day after a member of the government-appointed royalty panel argued Premier Ed Stelmach's new strategy is "a blatant deceit" of Albertans and doesn't offer them a fair share of energy development.

"I believe that the proposed terms are highly detrimental to Alberta. They provide for only a minimal increase in revenues, compared to what was already a very modest proposal by the panel. The new terms will not give Albertans a fair share of the oilsands revenues," van Meurs said in an analysis provided to the Herald.

[...]

In crafting the new framework, the Tory government rejected nearly half of the 26 recommendations from the royalty panel -- including six of 11 suggestions on oilsands.

One of the panellists, who asked not to be identified, agreed with van Meurs that Albertans aren't receiving a fair share of the publicly owned oil and gas resources under a deal that's not grounded "in too much economic reality."

The 5 Rs: Royalties Raised. Report Recomendations Rejected.

Somewhat predictably, Stelmach has compromised with the oil industry on the royalty review. He'll leave half a billion dollars on the table each year and delay the changes until 2009 but there will be no grandfathering of existing deals and the rates will be going up - something the government Stelmach was a Cabinet Minister in refused to do despite all the evidence that changes needed to be made [someone in the Liberal research bureau needs to dig up an actual figure of how much money has been pissed away and then ram it out there time and time again during the next campaign].

Whenever a politician compromises like this, it will either be seen as a brilliant tactical move, or he'll be attacked for indecision on all sides. Honestly, I have no idea how this one will be spun and, really, it's all about the spin now. I would have personally liked to have seen the entire report implemented since that's what the experts recommended. Andrew Coyne has a non-conventional alternative for anyone interested in the topic of royalty rates (and who isn't interested in that topic?). Another outside the box idea I really liked was to bring in a carbon tax equivalent to the total royalty rise (1.4 billion...2 billion...whatever number you want) so that there's an incentive for the oil industry to become more environmentally efficient.

As for the decision (or non-decision)? Historians will either be calling this the "pension moment" that saved Stelmach's government or the beginning of the end of a 36 year dynasty. And without the results of the next election in front of me, I'm really hesitant to predict which way it will play.

Ed's "Pension Moment"

It's really amazing just how big the royalty review has become in Alberta. In just four days 210,000 people have read the report online - I'd always thought those kind of hit numbers were limited to youtube or porn sites.

The report calls for an additional 2 billion dollars in royalties a year and several sliding scale rates that would depend on the price of oil - makes sense to me. Those on the right are already gearing up to scream "Stelmach's NEP" if he brings the full report in, while those are the left will no doubt claim that Mr. Ed has sold out to big oil and shown a lack of leadership if he doesn't implement every recommendation.

This is quickly turning into Ed Stelmach's "pension moment" that will probably make or break his leadership. Back in 1993, the PCs were down in the polls and left for dead by most. A huge backlash over MLA pensions was brewing, but Ralph Klein went into caucus and laid down the law, telling his caucus they'd have to slash their pensions or they'd lose the next election. They came into line and Ralph's World was created.

The situation is similar now. Implementing the full report, would let Stelmach say he's standing up to big oil, that he's willing to make difficult decisions, and it would cut the Alberta Liberal Party off on one of their big issues. The fringe parties on the right aren't real threats and all Stelmach has to do is remind Albertans that it was Peter Lougheed who massively increased the royalties back in the 70s. "This oil belongs to Albertans, blah blah blah, we deserve our fair share, blah blah blah".

I hate to give the guy advice but I'm fairly confident that Stelmach will take a wishy washy middle ground solution that leaves everyone pissed off. If he surprises, he might be able to extend the PC dynasty another decade. If not? Well, all good things...