Good Advice for the Liberals

This was forwarded to me. It would be smart for the Liberals to listen carefully to its message:

From:
Sent: Monday, October 01, 2007 8:19 PM
To: calgary.mountainview@assembly.ab.ca
Subject: Letter regarding current Royalty review

Dr. David Swann,

I am not sure what your personal or official stance is regarding the Oil and Gas royalty review currently underway. I am also unaware of the official stance of the provincial Liberal party regarding this very important issue. If you have a moment, I would very much appreciate it if you could enlighten me on your position and the position of your party.

I ask that you review my stance and consider it - for what it is worth - as that of a true-blue Albertan who wants only the best for the province. Alberta has become my home and to me it is the best place to live in the best country in the world. I do not work for a company directly involved in Oil and Gas, nor do I have significant direct investment in that industry. But, like most Albertans, I owe much of my personal prosperity to the wealth that grows here becuase of that industry and those supporting it.

Because of the well documented and wide-spread benefits of the current economic climate in Alberta, driven in no small part by the oil and gas industry, I see this royalty discussion as a critical debate on the future of investment in Alberta. This is every bit as important as discussions about funding schools, universities and healthcare in our province. After all, it is private business, private industry and private investment that, in the end, funds everything the Provincial government and private citizens can do and want to do.

The Royalty review is a potentially nasty disruption to a very successful system that generates a great amount of investment and wealth in our cities, this province and, by extension, our nation. How it has been handled by the governing party is nothing short of incompetent and naive... it is no secret that business and investment have intense discomfort and disinterest with instability and changing regulatory climates. Many companies, especially those who work on the more marginal, low-yield, but very important properties in Alberta are now in investment limbo, not sure that their business plans are sustainable under the proposed "new regime". Their losses will be felt disproportionately close to home, mostly by local businesses born and raised in Alberta.

Alberta must look beyond fattening government coffers through royalties alone. This is dangerous opportunism fueled by an unclear view of high oil prices. Alberta's Oil is already sold at a 20-25% discount to the $80/barrel of WTI or Sweet light crude. Further reducing the profitability of this industry could very possibly result in its contraction, possibly to the effect of nullifying the supposed higher take from higher royalty rates. A 10-20% smaller base (very possible) would effectively wipe out the benefit of the proposed royalty increase.

Our neighbours are licking their lips at Alberta's indecision, or worse - the potentially damaging decision to significantly alter our business and investment climate. It is somewhat shocking that BC and Saskatchewan may offer, in the end, a more competitive business climate to the host of exploration, production and service companies that have been born and raised in Alberta. Though the new royalty structure may result in taking in money for the government through higher royalties, it will miss out on the taxes and benefits of a highly competitive economy - such as larger takes from income taxes and corporate taxes, not to mention lower expenditures for welfare and the unemployed. In addition to the realities of cold cash, these companies have been responsible for the incredible spread of useable public infrastructure, from roads, bridges and telecommunications networks to logistics networks and small-scale research and development - much of it the envy of the world over. Driving these people off is a risk to us all.

As a province I always thought we wanted to be more competitive, encouraging the "can-do" entrepreneurial spirit that is a logical extension of the pioneering spirit of our forebears. This should mean leaving money and property in the hands of individuals and organizations to use according to their needs and wants - not to be centrally planned, assigned and disbursed by an overbearing government. What are we... the heart of the New West or after the heart of the Old East?

The fact that we are even considering disrupting what is a very good economic arrangement for all parties is startling... especially in these economically unstable times. There is a pile of international capital looking for a safe haven right now and we should be doing everything to attract it, not frighten it away.

Please consider your position carefully and use your voice for leadership, rather than as an uncommitted, undetermined, open-ended reassurance (which is not reassuring at all!). The full danger of these proposed changes is not in the determined costs - it is in the unintended consequences of the decision.

I see this as an incredible opportunity for your party to take leadership on an incredibly sensitive and visible issue, to show up the Conservative government as naive, undecided and somewhat incompetent. It will be a pivotal issue for many years to come, and a strong and decisive voice will be heard loud and clear, to be remembered for many years afterward. Please consider a strong defense of the many long-term interests of all Albertans - yes - even including those working, investing and profiting in the oil patch.

Thank you for your time.