Friday, October 12, 2012

More Erin Weir Releases

As promised, this post will look a little closer at the newest release from the Weir Campaign; when I made that vow, there was only one to talk about, but the campaign has put out another release so we'll talk about both in this post.

We'll start with the release on closing "potash loopholes".

The plan boils down to a change in structure, that doesn't touch current royalty rate or tax levels, but instead focuses on closing other avenues that allow developers to pay less while getting more. This starts by closing an exemption that allows developers to not pay tax on any tonnage amount over the 2001 or 2002 average; moves on to lower the 120% return on investment in Saskatchewan to 100% of actual investment; the removal of Crown Royalties from the potash production tax; and remove the Saskatchewan resource credit.

According to the release, these moves would increase revenue by $475 million. The release also states that this would reduce provincial corporate taxes by $55 million and federal corporate taxes by $70 million. The three major potash companies would take it on the chin, however, seeing a decrease of $350 million in their bottom-line profits.

Erin also used the release to endorse the previous NDP plan to establish a non-renewable resource revenue fund.

While a lot of that on the face is interesting, there's a more subtle piece in the release that I want to talk a little about. The release came out on October 10th, and includes a bit of history on Erin's involvement in campaigning for change in the way the province collects resource revenues. The small bit of history includes mentioning how former MLA Eric Cline introduced these loopholes in 2003, and how Erin spoke out against them in the NDP paper The Commonwealth.

Now, why I find this particularly interesting, is that on October 9th, Eric Cline had endorsed his constituency successor Cam Broten.

Perhaps the timing is just coincidental, but I politics I tend not to favour coincidence as an explanation. This is the second time that Erin's campaign has included a 'dig' at Cam's campaign, which is perhaps suggesting that Erin's campaign seems to think that Cam might be the candidate they need to win supporters from to secure a win at the end of the campaign. Nothing revolutionary in that thought line, as Greg over at Accidental Deliberations pointed out that this was likely the case back in September. (LINK)

So, if anything, this release is interesting in that it is structuring a bit of a challenge to highlight the differences between Erin and Cam. Whether or not it is a strategy that works, remains to be seen.

That brings us to the next release, which focused on oil & uranium loopholes.

Like the potash review, Erin is proposing an approach that doesn't focus on raising royalty rates or tax structures. The key focus is removing incentives for horizontal drilling; removing the special deal oil recovery initiatives; and removing the Saskatchewan Resource Credit giveaway.

According to the release, horizontal drilling started in the 1980s and was a new approach given an incentive of no royalty payments on the first 38,000 barrels produced. It now makes up the majority of wells in Saskatchewan, and according to the release, no longer needs the incentive.

Oil recovery initiatives have similar advantages, but also avoid paying most royalties until their initial investment has been recouped.

Now for the numbers.

The release suggests that the current system collects around 12% of current royalty rates and that by closing these loopholes Saskatchewan would collect closer to 20%, which is still below current resource rates. This would result in a return of around $645 million.

The removal of the Saskatchewan Resource Credit would also result in an additional profit of $10 million from Saskatchewan's uranium production. Weir also called for uranium reviews to be moved to a public sphere, as opposed to the current government's behind closed doors approach.

That's the release in a nutshell, and now for some observations. It would take a stronger mathematical mind than mine, but I'm sure it would be interesting to see just what Erin's proposals would have for a total revenue increase, decrease, and all of that fun stuff as a grand total; perhaps the campaign will release a totals sheet in the future, if some intrepid blogger or reporter doesn't get to it first.

As noted before, Erin is really rushing to the gate with the release of policy developments almost every week. It's a good strategy for keeping him in the news, and for reaching members en masse. 

My only concern, of course, is that all of the releases thus far draw on Erin's experience as an economist. Now, the economy is a very important issue (that can't be disputed); but there is a real risk that a lot of people who don't understand all the intricacies of the economy are going to look at these releases and just see a lot of numbers and not fully understand what they all mean.

While someone who knows the economy might see these as good policy, and understand why they are such, others might just see the numbers and immediately tune out like a five year old in an advanced algebra class.

I'm not saying that these issues aren't important, they are; but I do feel that the campaign would benefit from reaching outside of the economy zone on occasion. I'm sure we'll see social approaches and policy soon from Erin's campaign, as we will from the other campaigns, but I think if Erin wants to attract a wider swath of supporters from 'other camps', he'll need to flex some social policy muscle as well.

And more importantly, he has to do it before the other campaigns have staked out their claims on social issues. I say this because we've seen a lot of similarities in the campaigns thus far; and Erin has highlighted differences economically on policy between himself, Cam Broten, and Ryan Meili. But social policy, where a lot of NDPers tend to nod their heads and agree with one another, is a different beast.

Social issues will be harder to become identified with if everyone is agreeing with one another, and whoever is first out of the gate with some comprehensive social policy (Cam has a good start on his outline and ideals, but we've yet to see concrete policies) will likely be hard to catch later in the race to win socially minded New Democrats.

1 comment:

Erin Weir said...

Thanks for your interest, Scott. Your points are well taken. There may well be substantial overlap among the candidates on social policy. But a crucial point of differentiation is who has a concrete plan to collect the additional revenue needed to pay for the social policy improvements that all of us presumably favour.