Some economic advice for Premier-designate Rachel Notley
Take a balance sheet approach to managing Alberta’s assets
By Mark Anielski
Genuine Wealth Institute
EDMONTON, May 11, 2015/ Troy Media/ – If I were sitting with Premier-designate Rachel Notley this morning advising her on the economy and the next budget, I would first recommend that she base her decisions on evidenced-based governance.
But to accomplish this, she must start by gathering the facts.
Notley would have to first start with a comprehensive audit of the long-term sustainability of the provinces natural assets (oil, gas, minerals, timber, agricultural land). The audit would examine the reserves and the remaining years of production of oil, gas, coal and other minerals that remain in the ground.
Alberta’s oil sands reserves contain roughly 168 billion barrels that would be valued at $8.2 trillion based on a conservative US$50 per barrel of oil. At 2013 rates of oil production (2.1 million barrels per day) Alberta’s oil sands should last 215 years.
Second, Notley needs to take a lesson from former Premier Peter Lougheed, who was able to negotiate a higher economic return on oil and gas sales from Alberta’s energy industry. The oil sector currently pays less than a dime on the dollar in royalty payments, whereas during the Lougheed era it paid an average 27 cents and as high as 37.7 cents in 1977. At, say, 20 cents, still less than during the Lougheed era, our schools and healthcare system could be properly funded without a sales tax, an increase in healthcare premiums or even an increase in corporate taxes.
Third, Notley needs to conduct an assessment of the renewable energy capacity available for development, including solar, wind, geothermal, biofuels, and other renewable energy options. Alberta has an abundance of sunshine, yet we have the lowest installed solar PV capacity in Canada. Why not consider creating the conditions for a flourishing renewable sector that is as healthy as our petroleum sector?