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Confederation – Why Would We Stay?

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W. Brett Wilson. Photo by BOOKSTRUCKER Photography.

Since becoming one of the last provinces (along with Saskatchewan) to join Canada in 1905, Alberta has, in different ways and at different times, struggled with its position in confederacy. From the inability to control its Crown lands and natural resources (a power finally transferred from Ottawa in 1930), to national tariff and freight rates in the 1920s and 1930s which served the interests of Central Canada only, to the national energy program of the early 1980s – confederacy for Alberta has not always been rosy.

Notwithstanding these bumps along the road, Alberta has, on the whole, grown stronger and more prosperous over time. This is thanks, in large part, to the province’s oil and gas industry. Since the discovery of the Turner Valley oilfield in 1914, the industry has grown to become the economic backbone of the province. Indeed, for many years, Alberta has been the most affluent province in Canada.

While enjoyed by Albertans – who account for approximately 11 per cent of the national population – this prosperity has benefited the rest of the country too. Tax revenues, equalization payments and fiscal transfers have all seen Alberta punch far above its economic weight for years, sending billions of dollars to other parts of Canada for virtually nothing in return.

Today, of course, Alberta does not sit as pretty as it once did. The devastating recession of 2015/16 has gripped the province, causing unemployment to soar, tax revenues to drop and property values to plummet. Downtown office towers sit empty, while investment in the oil and gas industry has evaporated. At the same time, federal and provincial (in Alberta and elsewhere) government policies, laws and world views are at best divergent from and at worst diametrically opposed to Alberta’s well-being. Many serve only to exacerbate our woes.

The pain is real for everyone in this province, with few glimmers of hope in sight. With provincial and federal elections on the horizon, what’s a province, a people, to do?

“I happen to believe that we’re being pushed out of Confederation,” says W. Brett Wilson from his office on 17th Avenue downtown. The chairman of Prairie Merchant Corporation and well-known investment banker, businessman, investor and philanthropist is outspoken about the various headwinds Alberta faces from within and outside Canada. “It’s not a bunch of people saying, ‘We need to leave’; it’s a bunch of people saying, ‘Why would we stay?’ We’re being pushed. And we’re tired of pushing back and saying, ‘No, no, we want to be here.’”

The forces behind the push? “Tanker bans, no pipelines, stranded oil and paltry platitudes in terms of the things the government has offered so far,” Wilson says. “It’s becoming increasingly impossible to be a meaningful part of Confederation because of these.”

Fuelling most of these forces, he continues, is the foreign-funded attack on Alberta’s energy industry. “Their aim is to landlock our petroleum resources. And to do that, the foreign-funded environmental groups, including [David] Suzuki, started an all-out attack. Most people in Calgary, in Alberta and frankly in Canada assumed that logic would prevail. But now we’ve got this emotional debate where people truly believe that the oil industry is attacking the earth.”

He refers to foreign-funded environmental groups, including Ecojustice, Leadnow and Change.org, as eco-terrorists. “Because they’re guilty of treason for what they’ve done to Canada. They’ve made clear what they want to do and have set about doing it. They have made a business out of attacking what we have, for the benefit of the U.S. oil and gas industry.”

Their efforts have worked. “Canadian energy has gone from approximately two-and-a-half to three-and-a-half million barrels per day in the last 10 years, while the U.S. has gone from approximately five to almost 12 million barrels per day,” Wilson points out. “The eco-terrorists have been successful: while our industry has stagnated, the American industry has flourished.”

Playing right into the hands of the “eco-terrorists,” Wilson continues, is the federal government and Justin Trudeau. “We’re in a situation now where we’ve lost Northern Gateway because Trudeau said he didn’t want it. We’re having trouble with Energy East because one province [Quebec] doesn’t want it. We’re getting behind on Keystone XL, and if it wasn’t for [President Donald] Trump saying he wants it, it wouldn’t be underway.”

The Trans Mountain pipeline – acquired by the federal government last year – Wilson concedes, is going ahead, though he’s loath to credit Trudeau for it. “People say the federal government gave a gift to Alberta by buying Trans Mountain; well there’s no gift. The only reason they bought it was because they realized it was their last ditch at getting market access for Alberta oilsands crude.”

Another sore point is Bill C-48, the federal Oil Tanker Moratorium Act, now at the Senate’s Standing Committee on Transport and Communications. The bill prohibits loading shipments of everything from diluted bitumen to oil and gas condensates from the northern tip of Vancouver Island to Alaska. Once enacted, it will sharply limit or eliminate movement of Alberta oil through B.C. and off the coast. It will not, however, affect B.C. exports of its own liquefied natural gas.

“The location of the tanker ban implies that’s our only valuable coastline,” Wilson scoffs. “And yet it’s only a fraction of Canada’s total coastline. On the other [East] coast, there are hundreds of tankers coming in every year, but no peep.”

Quebec, he argues, has managed to capture the flag in terms of protecting its infrastructure of oil import terminals along the St. Lawrence Seaway. “It’s the unions and the very well-paid longshoremen. They don’t care where the oil comes from because they have a business called oil importing. They’re protecting it.” According to the National Energy Board, Quebec receives approximately 220 Mb/d of crude oil via tankers arriving at Montreal and Lévis. This accounts for roughly 31 per cent of all crude oil imported into the province.

Wilson says it’s a lie when the premier of Quebec, Francois Legault, says there is no social acceptability in Quebec for a pipeline. “They drive SUVs, they drive on pavement, they heat their homes with natural gas – there’s no question oil is socially acceptable. Legault is actually out of step with the vast majority of Quebecers who support western Canadian oil. It’s simply protectionism and regionalism.”

Federal Bill C-69 – which purports to add gender diversity and Canada’s commitments in respect of climate change, among other things, to impact assessments of new infrastructure projects – further muddies the waters for Alberta. “It’s very apparent that adding gender diversity and upstream and downstream greenhouses gases to the assessment, when they’ll gladly write a cheque to make Bombardier happy, makes no sense,” Wilson laments.

Federal government “assistance” to Alberta – $1.6 billion announced in December for energy companies, expanded employment insurance benefits and accelerated write-offs – has amounted, Wilson says, to platitudes and ignorance. “The $1.6 billion is mostly commercial loans. They thought that these loans are what we’ve been waiting for – there’s been no consultation with industry,” Wilson decries. “With regard to expanded EI benefits: we’re not looking to sit at home and collect a cheque, we’re looking to work. Given that the solution to work is inside their purview, it’s dismissive to just offer EI insurance.”

Accelerated write-offs, he continues, are only beneficial when a company has income. “Virtually every oil company in Canada is going to report losses, so the accelerated write-off is yet another slap in the face, taking stupidity to the highest possible levels.”

Equalization is a similarly problematic issue. Using a formula that is roughly two-thirds based on population and one-third that swings, Quebec has, for the past 10 years alone, received no less than 48 per cent of the total amount distributed. For the year 2018/19, it received $11.7 billion (61.8 per cent of the total $18.9 billion) and in 2019/20 (when only five provinces will receive equalization payments), it will receive $13.1 billion (66 per cent of the total $19.9 billion).

By comparison, during the period between 2008/09 and 2017/18, Alberta paid approximately $28.1 billion in equalization payments – 17.8 per cent of the $158.3 billion in total payments – while qualifying for nothing.

“The formula doesn’t work,” Wilson says. “There are unintended consequences – one province gets it all when they’re in an operational surplus. They have free health care, the lowest cost of daycare, the lowest cost of schooling – all benefits – and on top of that they’ve somehow played the formula.”

He argues while equalization creates a disincentive for Quebec to contribute to Canada, it also disincentives the West from staying in Canada. And despite the calls for an overhaul of the formula from Alberta and elsewhere (including Ontario, Saskatchewan and Newfoundland), federal Finance Minister Bill Morneau unilaterally renewed the formula for another five-year period last year. Unfathomable, Wilson says, in the context of Confederation.

He sees equalization and separation as key issues in the upcoming provincial election. “[Jason] Kenney has said, and I agree with him, that he would do polling or a referendum on the equalization structure,” Wilson says. “Opponents argue a referendum can’t be binding and the formula is set, so who cares. But implicit in a referendum is how the people feel. If we’re 80 to 90 per cent in favour of restructuring the equalization formula, that’s effectively a message about independence. Because if we can’t get equalization restructured, Kenney’s true mandate is to organize Alberta’s independence.

“But I don’t think anybody wants separation,” he qualifies. “What I’ve constantly said is I’m not a separatist, I’m a frustrated nationalist. I need a better deal. I need a fair deal. That’s our first choice. Separation is really a second choice, though it used to be the seventh choice. Then it became the sixth, then fifth, and somehow in the last month it’s jumped to second.”

The reason, he reiterates, is the feeling of being pushed out of Confederation. “Constantly being slapped when we say this doesn’t feel right. You can only get slapped so many times before you move out.”

Kenney’s main opponent in the upcoming election, Premier Rachel Notley, gets a better review than Trudeau, though Wilson confirms he’ll vote for Kenney. “Notley came to power on a platform of anti-pipelines and anti-oil and gas industry,” he says. “Less than a year after she came into power, she realized the bills get paid by a well-regulated, thoughtful Canadian oil and gas industry. All the criticisms of it become irrelevant and moot when you start to realize how good we are on a relative basis. You can complain about the oil and gas industry as a whole, but on a relative basis we are very good. She realized that.”

He dismisses the notion that Alberta needs to diversify and become a technology (or other industry) mecca. “Diversification often means wanting what someone else has: looking over the fence and saying their grass looks a whole lot greener than mine, instead of recognizing that if we stop trampling on our own grass, it would grow nicely. We’re a resource economy. Our natural resources are extraordinary. Diversification done right – I call it empowerment or enhancement – is to build on what we do.”

For example, he says, Alberta should be a centre of excellence for battery technologies for energy, construction of solar panels, fracking, well drilling, demulsification of oil and gas processing, among other things. “All of those things are where we should be. Not this concept that we need to diversify away from oil and gas.”

With so many opinions, one wonders whether Wilson will get into politics. “Yes,” he reveals, “but not soon. I have no interest in being the leader of any party, but would I like to be at the table? Yes.” He adds there is no particular political role or seat he currently desires. “Because I’d rather have a voice at the provincial, municipal and federal levels.”

Though Alberta sits once again in an uncomfortable spot within Confederation, 2019 will no doubt bring change. While the extent of that change is difficult to predict, one thing is certain: the status quo cannot continue. The very existence of Alberta, indeed Canada as a whole, depends upon it.

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