Saturday, August 25, 2012

Your Idea Intrigues Me, I May Have to Steal It From You...

I want you all to think back to 2011, I know, it was a dark and scary place for some of us...And well, for others, it's remains dark and scary. But we're not here to share stories and a drink around the fire, rather we're here to focus on what's important: And that's the Leader's Debate during the Saskatchewan Provincial Election.

Throughout the debate, then NDP Leader Dwain Lingenfelter continually mentioned the NDP's proposal to reexamine potash royalties in province in order to ensure that Saskatchewan was getting a fair deal. He also touted the idea, which is still a damned good one, of creating a non-renewable resource fund that would create wealth prosperity for future generations. (Norway has such a fund for their oil & gas industry, and the total currently sits in BILLIONS of dollars).

Lingenfelter got his point across by mentioning how a school classroom assumed we were receiving half of the profit generated by companies who harvest resources from the province. And while he assured us that he wasn't seeking 50 cents on the dollar for royalty rates, he was asking that we raise it from the pennies on the dollar it is now to a nickle or even a dime at some point in the future.

Needless to say, Premier Brad Wall was flabbergasted at the notion. Wall suggested that a rejiggering of the royalty rates would lead to a standoff with resource producers; much the same as Alberta saw when then Premier Ed Stelmach decided to raise royalty rates. Sure, the producers browbeated and puffed up their chests and cried foul, but when it comes down to it very few (if any) actually packed up shop and left Alberta.

There's a very simple reason for that: Alberta has a resource that those companies want, and the region provides a level of stability that other reasons with the same resource do not. As such, it is to their advantage to gather that resource from Alberta; it would be more cost effective in the long run.

But, that didn't stop Wall from suggesting that an adjustment to Saskatchewan's rates would cause ALL INVESTMENT TO CEASE and BALLS OF FIRE AND SULPHUR WOULD RAIN DOWN ON US ALL!!!! Alright, I may have added that last part myself, but you get the picture.

Wall used the same old answers we've come to expect from right-wing politicians on these kinds of subjects: Adjusting the rate discourages future investment; it increases costs of developing that sector in the province, which will lead to lower development levels and in turn fewer jobs; and, most important, it could force current investors out and the loss of jobs.

Wall was very adamant on these points, despite the fact that all of them are very Chicken Little excuses for not wanting to touch the rates.

So, imagine the surprise of many when it came out this week that the Saskatchewan Party government may indeed be considering an adjustment to some of Saskatchewan's resource rates. And yet, no jobs fleeing the province...No signs of lessened investment...Does that mean Premier Wall was lying during the Leader's Debate by scaremongering his answer to get voters to support him?

Let's hope so, cause otherwise it means we have a Premier with diminished intelligence as he couldn't understand that those scenarios he presented were falsehoods. In this case, it's better to have a liar for a Premier than an idiot.

Actually, that's not true. Either of those is a bad for a province in the long run, and I think the long run brings us to the very reason why this review is being considered.

The Wall Government has spent quite a bit of money advertising the fact that they have Canada's only balanced budget...If you don't look at the details. Again, arguing with the Auditor General over what accounts have to be presented have allowed some wiggle room for the Saskatchewan Party's accounting procedures.

But the bigger worry comes from their projected revenues. Yet again, the Wall Government has banked a high expectation on Potash revenues as well as Oil & Gas. We all remember what happened last time the government put a high expectation on potash, they fell well short of achieving the target they expected...In fact, they had to reimburse Potash companies for overcharging them on their royalty rates; which means we lost money on potash.

With a razor thin surplus, the much touted 'balance' they achieved, there is no room for wiggling on this budget. If potash and oil & gas fail to deliver, their claims to a balanced budget will be tossed to the way side and the people are really going to start wondering whether this government can actually project resource revenues accurately at all.

And there lies the rub. With these expectations on potash and oil & gas, it seems the only way the Wall Government has to actually achieve the targets they set for the sector would be through the use of raising the royalty rate the government currently charges.

So, when it comes right down to it, the Wall Government is looking at it as a question of political expediency; they know they're going to fall short, and they'll need to make up the money somehow at some point in order to keep 'balancing' those budgets.

At least when the NDP introduced the idea, it was under the guise of getting a fair shake for the people of Saskatchewan; as opposed to douping the people into thinking you're a good financial manager...

No comments: