Carney's Offer That Can't Be Refused

We talked about how the value of a sovereign wealth fund is debatable, given the regularity with which federal projects get delayed and/or go over budget - never mind the risk of project selection being politicized.

But, worse, we also noted that the federal government's proposed "sovereign wealth fund” isn't actually a sovereign wealth fund at all.

Sovereign wealth funds are built from government surpluses, whereas this government's plan is simply to borrow more and hope that the investment decisions it makes will earn a greater return than the extra cost of their extra debt.

But, since Tuesday's announcement, there's been an even more concerning revelation.

During a press conference, Mark Carney was asked whether he'd consulted with the provinces that control oil and gas (British Columbia, Alberta, Saskatchewan, and Newfoundland) about the new fund, and how he planned to "persuade them it's not, ultimately, a resource wealth grab". 

The Prime Minister replied:

“Where there is at the heart of all of these projects, including in resources, provincial jurisdiction; where the federal government is catalyzing, helping to make the project happen, through a tax incentive, through some other support - regulatory or other support - and at the core there is a commercial business making a profit, it is fair, right, just, smart for Canadians to have a share directly in those profits.”

In other words, he was asked whether the sovereign wealth fund was a resource grab, and he answered that it was!

Let's parse his response out bit by bit, because that's where it gets really concerning.

First, if there is a commercial business making a profit, is it fair for Canadians to have a share in those profits?

Some may question what is "fair" in this situation, but in general, this is how our tax system already works, and oil and gas companies already pay massive amounts of taxes.

(Don't forget, Rachel Notley's radical NDP campaigned on hiking taxes on oil and gas companies and conducted a full review of Alberta's resource royalty system once elected, only to leave the system essentially unchanged, as even they concluded it was fair once they examined it!)

The problem for Mark Carney, of course, is that those taxes go to provincial governments, not his government!

Second, and perhaps most devastatingly, note the excuse he gave for why his federal government deserves a cut - because they are helping make the project happen, through tax or even regulatory support.

But, it shouldn't require government help to get major projects built in the first place - that's the whole problem!

What we actually need to make projects happen is for the federal government to get out of the way.

Ottawa has been the cause of all the delays, and cancellations and, economic harm that has happened in Canada.

Now they want a cut of the action just for stopping being in the way?

This is the problem with the government's Major Projects Office, too.

Instead of setting clear, fair rules that apply to everyone, the government creates yet another entity to act as the decider of which projects get graced with this benevolent support.

Instead of fixing the broken rules that hold everyone back, Ottawa is concentrating power in centralized offices that can grant exceptions.

Instead of creating a level playing field, they’re creating a system where some companies get special treatment - and others don’t.

Suddenly, all the pieces are falling into place - I'm not sure you could design a more pernicious system if you tried:

1) Don't repeal bad laws that prevent development, like the tanker ban, just promise certain projects will be given exemptions.

"Oh, you want a permit to build a pipeline? That can be arranged, you just need Don Carney's blessing."

2) Set up an arm of the government to determine which projects get the exemptions.

"Oh, you want to be able to build it on time, without Premiers and protestors shutting down your construction? We'll protect you!"

3) Make it a requirement of being approved by that office, that the government gets their cut.

"Oh, you want to actually be allowed to load your product onto a boat? No problem, as long as we're getting our cut!"

That's not how Albertans want to do business.

A strong investment environment doesn’t rely on government picking winners or negotiating profit-sharing deals.

It relies on consistent rules, open competition, and the confidence that success won’t depend on political connections.

Albertans want a system where anyone can invest, build, and grow - without having to cut the government in on the deal just to get approval.

That's what the Free Alberta Strategy team is fighting for.

Help us win the fight by donating to fund our work:

Thank you for your support,

-The Free Alberta Strategy Team