Premier Ed Stelmach appears to have navigated his way through some early week rough patches with changes to the oil and gas royalty framework.
Stelmach’s week started out poorly with a misstep over photographs of bitumen-covered ducks dying in a tailings pond near Fort McMurray. The premier claimed he had not seen the images, shown at the Syncrude trial in St. Albert and depicted in newspapers across the Capital. The statement made Stelmach the butt of jokes among the opposition and environmental groups, with Greenpeace offering blown-up versions of the pictures as a gift.
If that wasn’t bad enough, an online poll released Thursday showed the Tories badly trailing the Wildrose Alliance in voter support. The Angus Reid poll suggests 42 per cent of decided voters would support the Wildrose, while just 27 per cent would support the Progressive Conservatives. Meanwhile, an Environics poll suggested Wildrose has 30 per cent support compared to the Tories’ 34 per cent, still not an encouraging sign for a government that has repeatedly stumbled in areas like royalties, which has alienated the Tory’s Calgary base and overall spending, which at record levels has infuriated fiscal conservatives the province over.
Stelmach did something about one of those nagging problems by once again re-writing the province’s royalty framework. The cuts to oil and gas royalties partly reverse a decision Stelmach’s government made in 2007 when he promised to give Albertans their “fair share” of revenues from natural resource activity. A strong backlash from the oil patch and subsequent recession that saw a decline in drilling led to this week’s watering down of royalty fees, which will cost the government $828 million in revenue over the next three years. The Stelmach government believes the cuts, which take effect next January, will breathe new life into the oil patch, creating industrial growth and jobs.
The cuts do not return royalties to the Ralph Klein era, before Stelmach began tinkering with them, but they do aim to restore some of the competitive advantage Alberta lost through the process. The move has even garnered support from both the Wildrose and Alberta Liberals, and could be the first brick in rebuilding the Progressive Conservative base.
Changing royalties to make Alberta more competitive for industry has been a key plank of the upstart Wildrose Alliance. By retreating on his previous royalty tinkering, Stelmach effectively erased one of the notable distinctions between the two parties and could help the Tories mend fences in the oil patch. The move was clearly predicated on short-term gains in the oil and gas sector, but if the government is able to deliver on job growth, the potential exists for long-term gain in the realm of public opinion. That’s the sort of news the premier and all of Alberta would surely welcome.
