[Note: The following was first published in the September 2012 Alberta Outdoorsmen.]
Copyright © 2012 Don H. Meredith
For a while I was having difficulty understanding why our governments were backsliding on the conservation of our natural resources as evidenced by the dumbing down of the federal environment and fisheries acts and the breakdown and dispersal of the provincial fish and wildlife division. At a time when the world is heading into many decades of rough sledding with regard to a host of environmental and economic issues, our federal and provincial governments decide to scale back our environmental protections and risk the integrity and reputation of our country and province. It just didn’t make sense to me until I read Rob Miskosky’s August Outdoor Pursuits column in the Alberta Outdoorsmen, in which he related the complaints he had received about the magazine’s coverage of the oil pipeline spills and how some readers felt that criticising the petroleum industry was tantamount to treason in Alberta. That kind of thinking reminded me of some articles written by award-winning journalist and author, Andrew Nikiforuk, in which he demonstrated how Alberta is in reality a “petro state” (e.g., April 2011 AFL magazine; April 2012 The Tyee). On re-reading those articles, the government backsliding started to make sense.
Citing the research of political scientist Terry Karl of Stanford University and numerous economists, Nikiforuk defines a “petro state” as a political jurisdiction that makes at least 20 percent of its income from the sale of oil and gas. Now, it would be hard for anyone to deny that Alberta fits that definition. Oil and gas accounts for 30 or more percent of the province’s income. However, the problem many have with the moniker “petro state” is that it puts Alberta in the same league as Saudi Arabia, Iran, Russia and other less-than-admired states. However, such jurisdictions as Texas, Alaska and Wyoming also qualify as petro states.
So, what’s wrong with being a petro state? For one, governments tend to be less democratic, favoring one-party rule, and catering to and structuring their economies to favor the petroleum industry at the expense of their citizens. In Alberta, we have been under quasi one-party rule for a long time. Although, we have had some significant parties in opposition and prepared to take power from time to time (e.g., 1992, 2012), the electorate has chosen to go with the party in power since Lougheed’s government was elected in 1971. As we often see in this province, continuous one-party rule gives politicians a sense of entitlement to do as they please without consulting with or considering the ramifications to stakeholders.
Petrolization and Petromania
One of the first signs of a state falling under the spell of “petrolization” is low taxes. Alberta prides itself in having the lowest personal and business taxes in the country. As a result, citizens become disengaged with governments and their policies, as evidenced by low voter turnouts in what Nikiforuk calls “no representation without taxation.” After all it’s oil revenue that’s paying for the lavish spending; why should we care as long as our taxes remain low? However, dependence on one of the most volatile commodities in the world leads to boom-and-bust government spending that in turn leads to inefficient delivery of government services at the expense of citizens.
Another sign of petrolization is concentration of power in which politicians and senior bureaucrats seek more control over spending to better cope with the boom-and-bust. Hence we have the dissolution of the regional health boards, the diminishment of municipal authority, the erosion of property rights, and the transfer of fish and wildlife officers to the Justice and Solicitor General Department to centralise control of policing powers.
Nikiforuk lists many other signs, but one of the most disturbing is how petro-states put the needs of the petroleum industry above all else in what he calls “petromania”. Alberta’s petromania is centred around its rapid expansion of the oil sands “without a risk analysis or cumulative impact assessment” as to how the projects will affect the air, water, fish and wildlife or the community of Fort McMurray or the people downstream of the projects.
These projects are being developed so fast that we can’t find enough skilled workers in the country to do the jobs. Instead, we recruit people outside the country, who have no stake in the province. Why not develop the oil sands project by project, as our last far-sighted premier Peter Lougheed envisioned, allowing sufficient time to do proper impact assessments and train out-of-work Albertans and Canadians with a long-term stake in the province and country? But no, our leaders prefer to be lured by the get-rich-quick schemes of oil executives at the expense of the province and country. And thus we have another sign of petrolization: lack of statecraft.
Once you start down that path, it becomes easy to negotiate lower petroleum royalty payments (Alberta has the lowest in North America), to spend like drunken sailors on expensive and suspect projects that often involve paying money back to the oil companies (e.g., carbon capture and storage), and to backpedal environmental concerns, such as watering down the authority of the environment department or ensuring that needed research is not funded or staffed. All of this burdens the next generations of Albertans.
Perhaps what is most disturbing, however, is how the federal government has recently come on board to attempt to spread petromania across the country. Canada does not yet fit the definition of a petro state but Stephen Harper is certainly going out of his way to enable Alberta’s petromania. For example, by watering down the environment and fisheries acts through the infamous Bill C-38, Harper has succeeded in removing many of the impediments to rapid development of the oil sands, pipelines and other petroleum projects, as well as cottage and worse development on lake and stream shores—all at the expense of our air, water, fish, wildlife and citizens. Talk about lack of statecraft!
What can be done?
There are examples of petro states (e.g., Norway) that have avoided petrolization and petromania, and retained control of the ownership of their petroleum resources while benefiting from them. How did they do this? According to Nikiforuk and Karl, by 1) being transparent about reporting royalties and the amount saved from royalties, 2) increasing citizen participation in government through direct taxation, and 3) funding an accountable civil service directly from personal and business taxes and not from oil revenue. In other words, the taxpayers actually pay for the services they are receiving and use the oil revenue for special projects that do not increase government spending, while at the same time, saving a significant proportion of the oil revenue for future generations when that revenue will no longer be available (as Lougheed had hoped to do with the Heritage Savings Trust Fund before it was gutted).
Such changes in Alberta would not be easy. But a government with a handle on statecraft and its responsibility to the whole province should realize that such changes are essential if Alberta is to survive into the next decades as a desirable place to live, work, fish and hunt. The oil sands and the petroleum industry are not going away any time soon. However, they should not be the tail that wags the dog.