The latest report of Alberta's Auditor General adds to mounting evidence that royalty rates can be increased substantially while sustaining a competitive investment climate.
"Internal reviews by Alberta Energy - uncovered by the Auditor General's investigations - concluded as early as 2000 that royalty rates could be boosted to obtain more revenue for Albertans," said Amy Taylor, a senior economist at the Pembina Institute. "Yet the government chose to do nothing."
The Auditor General found that analysts at Alberta Energy had identified "66 per cent plus or minus a few percentage points" as a fair share for resource owners, while still offering attractive returns to developers in Alberta. The Royalty Review Panel's package of recommendations would allow Albertans to obtain a 64 per cent share for oilsands and 66 per cent for natural gas - entirely within Alberta Energy's estimates.
"Why did we need the Royalty Review Panel to tell us what Alberta Energy already knew?" asked Taylor. "These changes should clearly have been made years ago. If we don't make them now in full, it will prolong an unbelievable state of affairs where Alberta's government is knowingly neglecting Albertans' best interests."
At least two additional studies reinforce the conclusion that the Review Panel's proposed changes are modest:
- A report by the Pembina Institute released in May shows that Albertans could be obtaining as much as a 70 per cent share of oilsands revenues. Aiming for 64 per cent, as the Review Panel's Our Fair Share report concurs, would only make Alberta an average performer in terms of maximizing revenue share for resource owners.
- An independent analysis by energy consultants Wood Mackenzie suggests that the panel's recommendations for oil, gas and oilsands royalties would result in a better, but nonetheless below-average share for Albertans.
"Albertans have already lost out on years of revenue worth billions because neither industry nor government released the real numbers," said Taylor. "Now, three public bodies - Alberta Energy, the Office of the Auditor General, and the Royalty Review Panel - have scrutinized the data and concluded that there's substantial room to raise royalties in order to obtain fair share."
Taylor added, "As Albertans' agent, it's Premier Stelmach's duty to respond to these conclusions by implementing the Review Panel's recommendations in full. The panel's proposals still won't maximize fair share, but one thing is clear: anything but the complete package is much less than Albertans deserve."
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For more information:
Amy Taylor, Director, Ecological Fiscal Reform
Cel: 403-996-0510
Tel: 403-705-4954
amyt@pembina.org
en français
Jaisel Vadgama, Policy Analyst
Cel: 403-807-6566
jaiselv@pembina.org
www.pembina.org/oil-sands
