With an election set for March 3 in my home province of Alberta, I'm settling in to election mode. Unfortunately for me I cannot vote, because I am currently a resident of inferior Ontario. Boo. Oh well. At least I can comment from the sidelines.
First of all, I must be realistic and relinquish any hopes that my dear New Democrats will make many gains. A friend of my wife, Duane Petluk, is running in Little Bow. In 2004 the Alberta Alliance, Social Credit Party, and Separation Party all got more votes than the NDP. Ouch. And with all likelihood, although they may lose some ground, the Tories will maintain majority power.
So I am left appealing to Ed Stelmach, who as a farmer of Ukrainian descent must have inherent frugality.
Dear Ed: (we farmers prefer informal greetings)
I am concerned with your handling of the oil sands boom. With reserves second only to those of Saudi Arabia, and its placement within a stable Western democracy, the oil from Alberta is coveted the world over. And with oil prices at historic highs, Alberta has never been more wealthy. But what are we doing with all this wealth? We are squandering it on short term solutions, vote buying, and cockeyed gimmicks. Why not take a page from the Norwegians book?
"Frugal Norway", as the Globe and Mail calls them, have not only found a way to benefit from their North Sea oil riches, but they have also prevented these riches from causing excessive inflationary pressures at home, something at which Alberta is failing miserably. The service industry cannot find workers, and prices are through the roof, thanks to our monolithic economy.
The Norwegians are brighter. They created the "oil fund", a massive $370 billion government pension fund surpassed in value only by the Japanese government pension fund and Chinese foreign exchange reserve fund, both worth around $1 trillion. When this fund makes investment decisions, be they based on financial or ethical principles, the business world sits up and takes notes.
Where does it all come from? Every oil company drilling Norwegian oil must give 78% of their profits to the fund. That makes your small increase in royalties paid to Alberta seem amateur. But the real genius lies in what they do with the money.
The fund holds enough money to give each Norwegian $75 000 (in comparison, the Alberta Heritage Fund has a paltry $4500 per person). So they could do like the Alaskans or the Albertans and dole out "prosperity" cheques. But those crafty Scandinavians created the Management Rule, the guiding principle behind management of the oil fund. First of all, the Norwegian government must save 96% of that money paid by the oil companies. NONE of that can be touched until all the oil is gone. Now that's saving for a rainy day! But it doesn't matter because all of that money is invested in Norway anyway, right?
Dead wrong. Unlike isolationist Alberta, longing for Eastern bastards to freeze in the dark, Norway has made it a mandate of the oil fund that not a single cent shall be invested within the country. Have they gone mad, you say? Not at all. Not investing the money created by oil in Norway means the oil boom barely impacts the Norwegian economy, at least not negatively.
When the Dutch discovered oil, the ensuing economic boom actually caused massive inflation and job loss. A similar experience in Britain left the economy in shambles. Alberta is well on its way down this road. But in Norway, due to their genius economic planning, the non-oil sector is currently growing at a healthy 7% per year, outperforming oil and gas exports even! They've planned AND diversified their economy.
But the taxes....ohhhh, the taxes. Yes Ed, Norwegians pay some of the highest taxes in the world. However, their ability to plan ahead, spend and save smart, and work collaboratively as legislators, instead of wasting time hurling epithets across the legislature, means Norwegians have some of the highest disposable incomes of any people (even the poor share the wealth). Only 2 percent of their people are unemployed and their quality of life ratings put Canada to shame.
So if you think for a second that the "invisible hand" of market forces will guide Alberta to everlasting prosperity, think again. The rich resource upon which our great province sits must be extracted under the guidance of enlightened leadership. A true leader will aim for wealth while responsibly protecting the natural beauty of the land we are all proud to call home. A true leader will ensure that this wealth benefits all Albertans, not just the oil executives and very rich. And a true leader will realize that this resource is for the benefit of future generations and aim to secure their prosperity.
It won't be easy. You will likely pay a great political price to exercise true leadership. But in the end, all Albertans, present and future, will remember you for doing so.
So do it now Ed, call in the Norwegians and learn some lessons. And then show us all what you're made of.
Your homesick friend,