Alberta should learn from Norway on managing oil – by Bruce Campbell (Toronto Star – January 17, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Bruce Campbell is executive director of the Canadian Centre for Policy Alternatives. His study, The Petro-Path Not Taken: Comparing Norway with Canada and Alberta’s Management of Petroleum Wealth, is available on the CCPA website: http://policyalternatives.ca

Momentum is building across Canada on the need to develop a sustainable national energy strategy. On this front, Canada and Alberta, its main petro-province, have much to learn from another major petroleum-producing and exporting country, Norway.

Canada and Norway are advanced industrialized countries with highly developed political, bureaucratic and economic institutions.

Norway and Alberta have similar population size, similar production profiles, and similar levels of dependence on petroleum exports and government petro-revenues. During my recent trip to Norway, I found they have taken very different paths, and with very different outcomes.

In Norway, there was from the outset, a societal consensus that the government should play the dominant role in the petroleum industry, both as owner and regulator. The Norwegian government owns 80 per cent of petroleum production, and retains roughly 85 per cent of the net petroleum revenues mainly through a 78-per-cent company tax and through direct access mechanisms.

In Alberta and Canada, ownership and control have been controversial issues. At present, virtually the entire industry is owned by foreign and domestic private interests, which have taken the lion’s share of the petroleum wealth.

According to one estimate, the Alberta government has averaged just 9 per cent of the economic rent from the oilsands over the last 15 years, and the federal government now takes (after tax breaks) a paltry 7 per cent of oil company revenues through the general corporate income tax.

The Norwegian government has been very effective in distributing the benefits of oil wealth both regionally and throughout its population, thanks to a generous social welfare system, an equitable labour relations system and a progressive tax system. It has maintained one of the lowest levels of income inequality in the world.

Inequitable petrodollar recycling mechanisms explain, in large part, why inequality is substantially higher in Alberta than the Canadian average (which in turn is among the highest in the OECD), and why it has grown dramatically over the last decade.

For the rest of this column, please go to the Toronto Star website: http://www.thestar.com/opinion/editorials/article/1316092–alberta-should-learn-from-norway-on-managing-oil

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