I began last week’s commentary with some words about how you can tell when a government is on its downward spiral. It has to do with arrogance and listening to your own propaganda.
This past week we have seen the Premier telling SUMA delegates that they must be prepared to tighten their belts and that much-needed infrastructure will be put on hold. He cited a $300 million decline in oil revenues and as yet, unannounced declines in potash and uranium.
The same week one of western Canada’s most respected economists Jack Mintz of the University of Calgary stated that the current potash royalty system in Saskatchewan is bizarre and full of distortions and inefficiencies. He stated that the system is incomprehensible except to a few senior bureaucrats in the Department of Finance and obviously their counterparts in the potash companies. Not exactly the kind of transparent system that the people of this province need so they can determine what their resources should be returning to the people of this province.
I would like to quote Mr. Mintz from the article which appeared in Saturday’s Regina Leader-Post. And I quote:
“I’m afraid the premier has his head in the sand,” Mintz said. “Just because you are getting $12 billion more in the potash industry doesn’t necessarily mean you are getting a high enough investment in Saskatchewan as a whole. “It is highly inefficient”, he added. “It is very distorting. It has a very bad impact, I think, on the allocation of capital within the province and also distorts the actual investment decisions of the potash companies.”
The PC Party of Saskatchewan has been saying this consistently for the past two and a half years. We have proposed a process that would help to rectify this inefficient and unfair royalty structure so that Saskatchewan people can get an understanding on the royalty return from their resources. The reaction from Mr. Wall’s Minister-of-everything, Bill Boyd, was typical of the Sask Party’s approach – do nothing so that you don’t make some of your biggest political donators angry. By not even allowing a good and thorough discussion of these royalty rates in the Legislative Assembly means that Saskatchewanians will never know from year-to-year what our resources should be returning.
The Saskatchewan government cannot do anything about the international pricing of commodities produced in this province. But what we can do is have formulas that maintain our fair share in spite of whatever decisions company CEOs make on their sales agreements - agreements which may or may not be in the best interests of Saskatchewan. The decision to fritter away $97.6 million in an Illinois courtroom should not be on the heads of Saskatchewan citizens.
Former Alberta Premier Ed Stelmach took a lot of heat from the oil industry and from many in the media for trying to change the royalty structure in Alberta to get a larger return for his citizens. His timing was lousy because it coincided with a major industrial and financial turndown that was worldwide and particularly hard in the United States of America which is western Canada’s largest trading partner. Mr. Stelmach was forced to back down on those changes which I believe was a terrible precedent for our democracy. In a free and democratic society, there should be a way for a public discussion on royalty and taxation issues surrounding non-renewable resources to be aired in a public forum. Until governments do this, we will have the situation where the CEOs of some very large mostly foreign-owned companies can basically threaten to shut their industries down and bring duly-elected politicians on bended knee to their table. This is not a good process and must be changed. This will take political leadership and courage and not about saving your political backside.
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These issues must be debated for “The Right Reasons”.