Harper's trust tax calls into question Canada as a "stable regime". Go figure?

“Mr. Herring (President of the Canadian Association of Oilwell Drilling Contractors) said Ottawa's decision to tax income trusts and then arbitrary and sudden changes by the governments of Alberta and Newfoundland and Labrador to royalty rates, have led foreign investors to question Mr. Harper's claim - frequently made when he travels abroad - that Canada is "a stable regime" for energy investment.


Ease regulations to make Canada ‘energy superpower’: industry
David Akin,  Canwest News Service 

 OTTAWA - If Canada wants to fulfill Prime Minister Stephen Harper's oft-stated goal of becoming an energy superpower, his government and some provinces must do a better job reducing regulatory and financial uncertainty for global oil and gas investors, a trio of industry representatives said on Tuesday.

"Quite frankly, as a result of federal and provincial policy decisions ... investors have lost some confidence in Canada," said Don Herring, president of the Canadian Association of Oilwell Drilling Contractors, which represents the operators of almost all of the country's drilling and service rigs.

"Governments have in place regulatory policies that result in high-cost production."

"Canada provides among the lowest rates of return on investment in the world. I know Canadians may be surprised to hear that," said Gary Leach, executive director of the Small Explorers and Producers Association of Canada. "We have a highly regulated industry. We have some of the highest environmental standards in the world. And all of this increases the costs of operating in Canada. We are facing - and have for several years - an uncertain regulatory climate for CO2 emissions. The uncertainty alone delays, deters and discourages investment."

Though Canada ratified the Kyoto Protocol in 2002, the Liberal government of the day did little to bring in regulations to reduce the greenhouse gas emissions that cause climate change.

Upon taking office in 2006, the Conservative government promised to "get the job done" and while it says it is working on plans to introduce tough new guidelines, it has yet to do so.

Environment Minister Jim Prentice - the third to hold that portfolio in three years - could not immediately be reached for comment.

Mr. Herring said Ottawa's decision to tax income trusts and then arbitrary and sudden changes by the governments of Alberta and Newfoundland and Labrador to royalty rates, have led foreign investors to question Mr. Harper's claim - frequently made when he travels abroad - that Canada is "a stable regime" for energy investment.

Mr. Herring, along with representatives of the Canadian Association of Petroleum Producers (CAPP) and the Small Explorers and Producers Association of Canada, testified to a committee of MPs who are studying the economic crisis in various industrial sectors such as energy and forestry. This work is being overseen by the House of Commons Standing Committee on Industry, Science and Technology, which earlier conducted a similar study of problems in the auto sector.

Some provincial politicians, such as Saskatchewan Premier Brad Wall, have noted that while the largely Ontario-based auto sector is certainly important to the country's prosperity, so too are struggling industrial sectors that are based elsewhere in the country.

On Tuesday, MPs heard that economic activity in the oilpatch has contracted sharply this year.

"We've gone from a $150-billion a year industry in 2008, just last year, to about an $80-billion a year industry today," said David Daly, CAPP's vice-president for fiscal policy. "People are losing their jobs."

Calgary-based CAPP is an influential industry group which represents some of the country's largest oil and gas producers such as Shell Canada, Suncor, and Imperial Oil.

Large oilsands development projects - which often cost billions of dollars - are being deferred. And because manufacturing and assembly of oilsands machinery and equipment happens in Ontario, Atlantic Canada and other regions, the whole country becomes poorer when the oil and gas sector weakens, Mr. Daly said.

Mr. Leach noted that, even with the most rapid advancements in solar power, biofuels and other forms of alternative energy, fossil fuels will still account for about 80% of energy consumption by 2030.

"Canadians need to be told an uncomfortable truth which is that we're going to be relying on the traditional sources of energy for a long time to come," Mr. Leach said. "The oil-and-gas sector is going to be a major contributor to Canada's energy supply many decades to come."

Challenged by Bloc Quebecois and NDP MPs about their industry's environmental record, the association executives said that the large investments required in new production technology can only be made if the sector is a profitable sector and able to attract investment.

Mr. Leach challenged the federal government, for example, to put a price on a tonne of carbon. It is a prerequisite, he said, to a functioning cap-and-trade system in which companies who fail to meet federally mandated targets to reduce greenhouse gas emissions (GGEs) can buy carbon "credits" from companies which have exceeded their targets to cut GGEs.

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