Who should own Alberta's oil?

[ticker]

Confederation actually does revolve around the needs of Ontario.

Britiain had its colonies, Canada, Australia, etc., and Ontario has its as well - BC, AB, etc.

Tough, eh!

Them's the breaks.

more of that selective thinking

the resources above ground and 100ft down are provincial - we must keep that hydro safe; and minerals.

quebec is safe in its constitution but the west is fair game to pick pocket and strip of resource rights.

quebec and seperate alberta can't.

the english won, them the breaks.

quebec goes back 300 years when trying to justify a position and you complain because Albertan's go back 20 years instead of 20 days.

[Guest eureka]

What piffle! Alberta takes care of its poor. I know the American influence is strong in Alberta but please,! Charity no more takes care of people than it does in the US. Charity can't: charoty never produces the money or the expertise.

[Stoker]

But keep up the talk about us "spoiled Albertans" it only works to our advantage.

I agree. And well the East is at it, insult British Columbians as well.......

[kimmy]

And I suppose that maintaining some fairness within Canada would be a compelling reason, except that we already have Equalization for that purpose. If fairness is the objective here, then isn't that end being addressed by equalization? If fairness is the objective here, then why are we limiting the scope of this discussion to oil? Seems like a very arbitrary choice.

Kimmy, I'd say fine: Let the federal government tax all resource rents and share those revenues with all Canadians. (Oil and natural gas are the big ticket items right now.)

We still haven't heard any explanation of why Equalization isn't already a sufficient redistribution of Canada's wealth.

From earlier on:

Once upon a time, Sarnia was Canada's oil capital... Western Ontario was Canada's storehouse of mineral wealth... and the only think people thought was under Albertan soil was more dirt. So of course provincial control of resources seemed like a good idea at the time

I have not found any reference to support the idea that kerosene influenced the framers of the Constitution. But who cares anyway, that's not my point.

Is it really beside the point?

When the "Fathers of Confederation" got together to get sh*tfaced and hammer out an agreement, what did they actually come up with? We don't call them the "Fathers of Federation", do we? I mean, the word "Confederation" is used on purpose, right?

Let's have a quick look at what a confederation is.

"A confederation is a large state composed of many self-governing regions. Unlike a federation, a confederation has a very weak central government with little influence over the actions or policies of the member regions. However, on certain key issues, such as defense or currency, the central government will be required to provide support for all members."

Was KEROSENE on their minds when they drew up the blueprints for Confederation? Most likely it wasn't. However, I don't think they went in with the intention of ceding control of their provinces' resources, either.

Alberta did not exist at the time of Confederation, so somebody might argue that what the Fathers of Confederation had in mind is not relevant to this discussion. However, later constitutional acts have granted Alberta and the other latecomer provinces all of the status and respect afforded to the original provinces.

But here's my main point, Kimmy:

Albertans have the mistaken impression that they are paying for the rest of the country.  For example, Albertans seem to feel they pay for the lazy folly of all those French bast**ds in Quebec.

In fact though, the constitution by chance confers on the Albertan government the right to tax what is purely a chance gift of geology.  And then Albertans turn around and complain that Canada is unfair to them!

Whether Canada is unfair to Alberta and whether Canada spends a ridiculous amount of money appeasing Quebec are two separate issues, as I see it...

[playfullfellow]

There has been a lot of babbling about that resources should be shared by all in the land. There has not yet been any hard evidence show why this is a good thing. I see a lot of Albertans are whinners, Albertans are greedy, Albertans are ungrateful because it was actually Ontario skill and money that developed the oil industry in Alberta. But no one has shown any substantial reasoning as to why the ROC of Canada should share in the money. There is plenty of evidence of what happened the last time Ottawa dipped into Albertas resources. Total friking chaos and thousands of people out of work. The money taken was pissed away. Show the evidence of where this money would do some good for everyone, not just Ontario or Quebec like the last time. I really doubt that Ontario or Quebec would be willing to share with us if the shoe was on the other foot.

[The Terrible Sweal]

... What we don't like are you out East taking OUR money ...

What tripe!

[The Terrible Sweal]

But no one has shown any substantial reasoning as to why the ROC of Canada should share in the money.

You're not paying very close attention, obviously. The reason: OWNERSHIP. The resources BELONG to CANADA. They are merely administered by the Province of Alberta.

[August1991]

There has been a lot of babbling about that resources should be shared by all in the land. There has not yet been any hard evidence show why this is a good thing. I see a lot of Albertans are whinners, Albertans are greedy, Albertans are ungrateful because it was actually Ontario skill and money that developed the oil industry in Alberta.

Whose skills and developed the industry is irrelevant. It is just as irrelevant to split hairs about who "owns" or "administers" the oil.

By chance, there is oil under the ground in Alberta. By chance, the Albertan government gets to tax this oil.

Your neighbour by chance wins a lottery. The government taxes his winnings and gives you some. Your neighbour complains that his lazy neighbour (you) is benefitting from his lottery win. Does his argument make any sense?

Edited September 8, 2004 by August1991

[The Terrible Sweal]

It is just as irrelevant to split hairs about who "owns" or "administers" the oil.

It is not 'splitting hairs'. It is the essence of the issue. Canada can make use of the windfall under Alberta in exactly the same ways it can make use of the coal under Nova Scotia or the asbestos under Quebec ... constitutionally through legitimately enacted public policy.

The objections from some Albertans to the federal level of government are, in part, based on a mistaken sense of their entitlement. Clarifying the constitutional facts will help alleviate this, hopefully.

I do agree with your point about taxing lottery winnings though. Why should oil wealth be exempt from the reach of the polity just based on who happens to sit above it?

[August1991]

Was KEROSENE on their minds when they drew up the blueprints for Confederation? Most likely it wasn't. However, I don't think they went in with the intention of ceding control of their provinces' resources, either.

Kimmy, kerosene was probably on their minds (although I have found no evidence). Oil was found in Petrolia in the 1850s and it was used primarily to produce kerosene for lighting, heating and cooking, I suppose. I suspect that Ontario did not want to share the revenues of this taxable resource with Quebec or the Maritimes. Hence, the wording in the BNA Act.

We still haven't heard any explanation of why Equalization isn't already a sufficient redistribution of Canada's wealth.

First, the purpose of equalization, as I understand it, is to make it possible for provinces to offer similar services across the country. The purpose is not to share out resource rents collected in one province.

Second, because of equalization, Albertans are under the mistaken impression that they pay their own way but everyone else is on welfare, at Albertan expense. "Those Quebecers eat in those fancy French restaurants with our money..."

"A confederation is a large state composed of many self-governing regions. Unlike a federation, a confederation has a very weak central government with little influence over the actions or policies of the member regions. However, on certain key issues, such as defense or currency, the central government will be required to provide support for all members."

Sorry, but I hate discussions about confederation that start with definitions. The standard line in Quebec now is that Canada is not a real "confederation of sovereign states" etc. etc.

I suspect the "Fathers" used the word "confederation" because it was in vogue at the time. It also gave Quebecers the notion that they were a race a part, or something.

Who cares!

More relevant is that the Federal government could have kept a monopoly on taxing resource rents. The Fathers in any case gave the Federal government residual powers, including the power to tax anything it wanted.

Whether Canada is unfair to Alberta and whether Canada spends a ridiculous amount of money appeasing Quebec are two separate issues, as I see it...

The perception in Alberta that Canada is unfair and the perception in Alberta that the federal government spends (Albertan) money to appease Quebec are closely related...

[kimmy]

hmmmm

But no one has shown any substantial reasoning as to why the ROC of Canada should share in the money.

You're not paying very close attention, obviously. The reason: OWNERSHIP. The resources BELONG to CANADA. They are merely administered by the Province of Alberta.

I think the same passage that talks about "administration" also says pretty explicitly that any royalties belong to the province. So yes, for purposes of this discussion at least, the distinction you're making isn't important in the least.

Just like that other distinction that you're so fond of. What was that again? Oh yeah...

As to breaking up the country, no. Alberta can't separate.

Why? Could Quebec if it wanted?

Merely if it wanted? No. But Alberta and Saskatchewan even less-so.

[The Terrible Sweal]

Just because you don't like the facts, Kimmy, that doesn't change them.

Using reductionism to conflate adminstration and royalties with ownership doesn't change the fact that programs such as the NEP are constitutional.

Purporting to mock an out of context slice of our prior discussions does little to improve the credibility of your argument.

[kimmy]

Kimmy, kerosene was probably on their minds (although I have found no evidence).  Oil was found in Petrolia in the 1850s and it was used primarily to produce kerosene for lighting, heating and cooking, I suppose.  I suspect that Ontario did not want to share the revenues of this taxable resource with Quebec or the Maritimes. Hence, the wording in the BNA Act.

So I gather you agree that the provinces entered confederation with the intention of keeping their own mineral wealth.

We still haven't heard any explanation of why Equalization isn't already a sufficient redistribution of Canada's wealth.

First, the purpose of equalization, as I understand it, is to make it possible for provinces to offer similar services across the country. The purpose is not to share out resource rents collected in one province.

Is "sharing resource rents" a means or an end? If you're arguing that sharing resource rents is a desirable end in its own, I guess I don't see the point. (and why just one province?) If the end we desire is to offer all Canadians services regardless of which province they live in (which seems like a fine idea to me) then equalization is already in place.

Second, because of equalization, Albertans are under the mistaken impression that they pay their own way but everyone else is on welfare, at Albertan expense.  "Those Quebecers eat in those fancy French restaurants with our money..."

Sorry, but I hate discussions about confederation that start with definitions.  The standard line in Quebec now is that Canada is not a real "confederation of sovereign states" etc. etc.

I thought it was very relevant to this topic.

I suspect the "Fathers" used the word "confederation" because it was in vogue at the time.  It also gave Quebecers the notion that they were a race a part, or something.

Who cares!

Well, maybe confederation just "sounded cool". Or maybe confederation is a description of what they came up with. The evidence-- the constitution which gives the provinces a lot of autonomy and control over affairs within their borders, kind of suggests that they meant it to be a confederation and not a federation, don't you think?

More relevant is that the Federal government could have kept a monopoly on taxing resource rents.  The Fathers in any case gave the Federal government residual powers, including the power to tax anything it wanted.

They could have but they didn't. They created a constitution which left the provinces largely in control of the resources within their borders. Is there any reason not to think it was by design?

You said it yourself earlier: I suspect that Ontario did not want to share the revenues of this taxable resource with Quebec or the Maritimes.

I suspect you're right. I suspect that if Albertans have been selfish, selfish people since 1947, then Ontarians have been selfish, selfish people since 1867. I suspect that if and when other provinces have their own resource windfalls, they won't be sterling examples of this great Canadian spirit of sharing, either.

I agree with you that Alberta is incredibly fortunate that the constitution gives it the right to collect royalties from natural resources. Other provinces have had the same good fortune in the past, and will in the future. The constitution was designed that way, by people who wanted their provinces to retain that good fortune for themselves.

-kimmy

[kimmy]

Just because you don't like the facts, Kimmy, that doesn't change them.

Using reductionism to conflate adminstration and royalties with ownership doesn't change the fact that programs such as the NEP are constitutional.

I'm not "conflating" anything. (at least I don't think I am. I'll have to check my dictionary to be sure.)

*You* seem to be the one ignoring the facts.

... What we don't like are you out East taking OUR money ...

What tripe!

There is no arguing the fact that it *is* Alberta's money. It's quite clearly spelled out in the constitution. Does the Federal government have a moral or legal right to tax that money? Quite possibly. But there's no arguing that it IS Alberta's money.

But no one has shown any substantial reasoning as to why the ROC of Canada should share in the money.

You're not paying very close attention, obviously. The reason: OWNERSHIP. The resources BELONG to CANADA. They are merely administered by the Province of Alberta.

The resources may (or may not...) be owned by Canada, but the royalties have been granted to Alberta by the constitution. Maybe the feds could tax it or find some other way of redistributing the money, and maybe in the larger picture it might be a good thing to do. But it IS Alberta's money under the law of the land.

Purporting to mock an out of context slice of our prior discussions does little to improve the credibility of your argument.

I wasn't mocking an out of context slice of our prior discussion. I was mocking the whole of your conversation with Stoker in this thread.

"Merely if it wanted? No. But Alberta and Saskatchewan even less-so."

Maybe I'm dense, but I just don't see any room for degrees of "no." Quebec can't separate, but Alberta extra-extra-can't? (A bit pregnant.) Yes, I recall the astounding feats of constitutional scholarship that brought you to that confusion... but ultimately "no" is "no".

-kimmy

[The Terrible Sweal]

Kimmy,

No-one is taking Alberta's money. No-one denies that the province in entitled to collect royalties on the oil.

Nevertheless, a province's resource administration rights don't defeat the interest all Canadians have in all of Canada and so the federal government can us its own constitutionally apportioned power to derive benefits from the oil for all Canadians.

Regarding the separation point, I think you fail to understand because you don't wish to understand. What you purported just now to mock was hardly that incomprehensible: "Can the mouse jump over that wall?" "No, and the caterpillar even less so."

[Guest eureka]

The Provinces were charged with the Management, Development, and explration of certain natural resources. That gave the right to tax - royalties are a tax.

The federal government also has the right to tax since it may raise money by any means of direct or indirect taxation.

Ownership is a different concept than this and impies a condition that does not exist in our society

The term "Confederation" was used because there was no term which appropriately described the Canadian situation. Canada was not a federation of existing states or a confederation of sovereign states. It was the banding together of colonies to form a nation to which the mother country would add others.

There is no question that Canada was designed to be a centralised state with local admonistrations that were a little more powerful, jurisdictonally, than the Rnglish counties. At the time of Confederation, the natural resources of Canada did not figure very significantly. The Fur Trade was the basis of the knowledge of natural resources and nothing else was too important other than some lumber whose usable extent, at the time, was not too great.

The Provinces were not given in the Constitution anything of major importance and, as has been suggested, the granting of residual powers to the federal government was all important - it is not a feature of the constitutions of the states with which Canada can be compared.

As economic factors changed and developed into a much broader thing than anyone could envisage, and as civil rights took on a meaning that was not dreamed of, the Provinces gained in powers through Constitutional interpretations that did not consider the intent of the Framers.

One evidence of this is that, until 1889 (I think) the federal government routinely disallowed Provincial legislation that nowadays could not be questioned. With the Prive Council's overruling of the Canadian Supreme Court in the Ontario/Manitoba boundary dispute then, things changed. Decisions went almost all the way of the provinces from then and the CSCC became almost toothless as did the Federal Government for the next forty some years.

It was the depression and Keynesianism through the discovery of the spending power that restored the federal government to some semblance of a State government - it still has some way to go, obviously. Keynes is often called a latter=day Father of Confederation because of that.

[DAC]

I suspect you're right. I suspect that if Albertans have been selfish, selfish people since 1947, then Ontarians have been selfish, selfish people since 1867. I suspect that if and when other provinces have their own resource windfalls, they won't be sterling examples of this great Canadian spirit of sharing, either. 

One of the big problems in our country is that every province, no exceptions is so busy looking out for its own interests that it shows no concern for any of the others - which naturally makes every province (except possibly Ontario, which doesn’t worry about it as it looks out for its own interests) feel alienated.

Please take note. Alberta is NOT the only province to get royalties from oil. Saskatchewan, BC, NS & Nfld all get oil royalties. On the other hand Quebec gets electricity “royalties”, and is quite happy to rip off Nfld for transmitting Labrador power. Every province has its own advantages and disadvantages.

In all this talk about the federal government getting more from Alberta’s oil, you all seem to be ignoring a vital (IMHO) issue. Why on earth does anybody want to transfer more money raising power to the federal government? The provinces are responsible for the most costly ongoing programs, and they are lamed by lack of money.

Why is our health care system a mess? On the financial side it is because the federal government persuaded the provinces to take on a lot more in health care with money the feds granted them - and then down the road the feds unilaterally withdrew large chunks of that money, while threatening to withdraw it all if the provinces did not keep up the health care standards.

Since the feds do not have responsibility for these programs (according to our constitutional division of powers), they feel free to withdraw funding at any time. They are not reliable, and they can blame the provinces (since it is provincial responsibility) sufficiently to get away with it when an election comes up. If you want to push fiscal transfers, let’s push transfer of tax power from the feds to the provinces, until they have the funding available to handle their responsibilities.

That might require a more dramatic equalization program as part of the setup, but whatever you do, don’t give the feds more money to waste on boondoggles.

[theloniusfleabag]

Dear DAC,

but whatever you do, don’t give the feds more money to waste on boondoggles.

Amen, brother, amen. If the Feds managed money properly, it would be very difficult, morally and public opinion-wise for Alberta to take the line of 'it's our money'. Since the vast majority can see the 'Feds' pissing away money as if it were free beer, it is equally hard for Alberta to say to Ottawa, 'take the money, you deserve it'.

[Guest eureka]

Actually, DAC, you are not quite right. NS and Nfd. do not really get royalties. The formula is quite different and what they get is clawed back from equalization transfers.

With respect to healthcare, the provinces are getting what they asked for. It was the provinces that wanted the percentage of dedicated payments for healthcare dropped in favour of a block transfer. They got it and they were guilty of a huge miscalculation.

At that time, the provinces were also given a tax point transfer of two points. If I remember correctly, all provinces have used that for general revenues instead of health. It was one of the measures that allowed provinces to ambark on their tax cutting agendas while blaming the feds for everything.

There is no doubt that more federal money is needed but let's keep the proper perspective on this.

I don't know whether this information belongs here but I think it is relevant when there is so much talk of federal spending in provincial jurisdictions. Those two "models of decentralization" Switzerland and the USA each spend a larger share of national revenues on regional affairs than Canada. Both also play significant roles in what we like to think of as Provincial jurisdictions: health and education.

We talk so much of the ignorance of Americans of their own system but we seem, generally, to be as much misinformed. In Canada, though, I put that down to regional political ambitions and duplicity not to the apathy that is apparent in America.

[DAC]

  Actually, DAC, you are not quite right. NS and Nfd. do not really get royalties. The formula is quite different and what they get is clawed back from equalization transfers.

Sorry, but I live in NS and get a lot of info about this. NS & Nfld do get royalties (perhaps by some other name). The big beef is not that they don’t get the royalties, but that they then lose it by decreased equalization transfers. Alberta doesn’t suffer that because it gets no equalization transfer.

Personally, I think that just as Alberta’s oil revenues go into the formula for equalization, so should ours - but don’t tell anybody out here or I might get deported to Alberta in a stylish tar & feather coat!!

[takeanumber]

Several points, for precision's sake:

1. Provinces are designated the 'administrators' of the natural resources within their borders.

2. Administration is not legally identical with 'ownership', nor 'sovereign title'.

3. Provincial administration authority does not preclude the legitimate exercise of federal constitutional powers (e.g. the NEP).

It's not quite as clear cut as that.

As 'administrators', Albertans control access and distribution of that oil.

The NEP was not, by any stretch of the imagination, 'legitimate'. Trudeau was just as bad as any other Liberal Prime minister when it came to minority rights.

If you wern't a favoured minority (by favoured, I mean favoured by Trudeau), then it was okay to trample on them.

Alberta, which was, and still is, a minority, would be trampled if the NEP was brought back in.

I don't understand the double standard...it's fine for the market to work when it comes to automobiles and other manufactured goods in Ontario and Quebec, but suddenly, the market doesn't apply to Alberta...or any other peripheral province, because it's not convinient for central Canada.

Moreover, there was a catagorical pledge by the federal government never to have a repeat of the NEP.

Any moves towards such a program would seriously undermine the fabric holding confederation together.

[idealisttotheend]

don't understand the double standard...it's fine for the market to work when it comes to automobiles and other manufactured goods in Ontario and Quebec, but suddenly, the market doesn't apply to Alberta...or any other peripheral province, because it's not convinient for central Canada.

Prior to 1973 Ontario subsidised the Alberta oil industry by paying prices more than 100% over market prices for Albertan oil, nearly 2 dollars a barrel when the market price was well under one dollar. This program was put in place by Diefenbaker to build a domestic oil industry in Canada and ws obviously to Alberta's deep benefit.

Was this:

trampling a minority?

illegitamate?

threatening to the fabric of confederation?

When are we going to get over the fact that the federal government cannot be expected to give subsidies in all instances and then pilloried for charging them in all instances. The intellectually rigorous among us will realize that a national economy requires giving at some times and taking at others.

Trudeau stubbornly still saw Canada as a national entity in 1980. Through this lense the NEP makes sense (though not perfect sense). 20% interest rates, high inflation and a national deficit were not in Alberta's interests any more than they were in Ontario's. Furthermore do we have some sort of problem with owning our own oil in this counrty or must we sell it to the American multinationals with ridiculously low royalties attached? Are we afraid to be successful or rich in this country or shall we concern ourselves with having various parts climb to the top of their particular molehill and make faces at the other parts while chanting "finders keepers, losers weapers?"

[Smiling Moose]

Prior to 1973 Ontario subsidised the Alberta oil industry by paying prices more than 100% over market prices for Albertan oil, nearly 2 dollars a barrel when the market price was well under one dollar. This program was put in place by Diefenbaker to build a domestic oil industry in Canada and ws obviously to Alberta's deep benefit.

Can you explain this some more? I can't seem to find any background information on when and how this was accomplished?

[idealisttotheend]

I will try to find sources, please hang on.

[The Terrible Sweal]

The NEP was not, by any stretch of the imagination, 'legitimate'.

Oh really?

Was it enacted by a legitimate government? Yes.

Was it declared illegal by the courts? No.

Ergo, it was legitimate.