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Province ready to ‘spread the money’ Alberta premier floats idea of one-time-only prosperity bonus; critics say petroleum wealth should be saved, not squandered Gary Park Petroleum News Canadian Contributing Writer
Alberta isn’t about to start copying Alaska by issuing annual dividend checks but C$1.4 billion from its energy windfall could be distributed as a “prosperity bonus” among the province’s 3.25 million citizens.
Under pressure to develop a plan for using Alberta’s bulging surplus, Premier Ralph Klein said his government plans to “spread the money around” in three “roughly” equal ways — infrastructure and educations projects, endowment funds and a hand-out to taxpayers.
He said plans to deal with the unallocated surplus will be submitted to cabinet this fall and checks of an unspecified amount could be in the mail in 2006.
“They won’t be huge checks,” Klein said, adding that the payouts are “predicated on windfalls only and there ought not to be any expectation that this is a permanent thing.”
The government announced in August that the expected 2005-06 surplus will be about C$2.8 billion, but private-sector commodity price forecasts project the excess will be close to C$7 billion.
Klein said the government will divide any windfall above the C$2.8 billion that has already been allocated “on a one-third, one-third, one-third” basis.
Even if the rebates are limited to C$1.1 billion, the bonuses would average C$307 a person.
Kevin Taft, leader of the province’s Liberal opposition, accused the Klein government of developing a policy for the surplus that is “written on the back of a napkin … they just make it up as they go along and hope no one notices.”
Peter Lougheed, one of Klein’s predecessors, has urged the government to steer half of its energy revenues into an existing Heritage Savings Trust Fund of C$12 billion that has been earmarked for “future generations.” Foundation report urges savings The Canada West Foundation, a Calgary-based think-tank, has also called for an aggressive savings strategy, with 50 percent of non-renewable resource revenues being invested.
In a new report entitled Investing Wisely: An Investment Strategy for Creative Leadership, the foundation noted the Alberta government collected C$122.9 billion in resource revenues from 1977 to this year, channeling 91.4 percent into general revenues and the rest into the heritage fund.
“Our petroleum resources are a heritage which cannot be replaced,” said foundation President Roger Gibbins.
For Klein to start allocating dividend checks “is the worst direction we could take with our external relations with the rest of Canada,” he said.
The study recommends that petroleum surpluses should be used to secure Alberta’s leadership position in creating technology and other attributes of a high-performance society.
But the Canadian Taxpayers Federation wants immediate tax cuts, a measure rejected by both Klein, who argues tax relief is a “more permanent thing,” and the Canada West Foundation, which warns that tying lower taxes to volatile commodity prices will not establish the sustainable and consistent tax regime that industries value. Rest of Canada wants a share Meanwhile, a poll conducted by The Strategic Counsel for the Globe and Mail and CTV found 61 percent of Canadians outside Alberta believe they should get a portion of the petroleum wealth, compared with only 26 percent of Albertans.
Klein said that is “not in the cards,” arguing his province sends billions of dollars a year to the federal government for allocation through a national equalization program.
He said the rest of Canada is taking a “give me, give me, give me” attitude right now, but it won’t come to Alberta’s aid if the price of oil collapses.
While Alberta mulls its next move, the resources sector drove second-quarter before-tax profits of Canada’s energy companies to C$7.3 billion, up 8.9 percent from the first three months — about one-seventh of the total corporate profits of C$51.9 billion. Metal and mining profits made a 15 percent jump to C$1.6 billion.
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