Memo to Energy Minister
Memo to Alberta Energy Minister Ron Liepert: Royalties are not taxes
Already â€œunder attack for allegedly being rude and dismissive when he was health minister,â€ current Energy Minister Ron Liepert conceded he hadnâ€™t read the Parkland Instituteâ€™s new report on vast oilpatch profits but that didnâ€™t stop him from dismissing it:
â€œThis is a not unexpected sort of NDP/socialist view that if you tax everybody, everything will be fine,â€ he told the Calgary Herald.
Apparently someone needs to remind the man in charge of managing trillions of dollars in Albertansâ€™ natural wealth of an elementary fact: A royalty is not a tax.
The oilpatch doesnâ€™t own the resources; Albertaâ€™s oil and natural gas and bitumen belong to Albertans.
In that sense, Albertans are like homeowners. The oilpatch is like our real estate agent.
What is left over from the sale of our â€˜homesâ€™ after the real estate agentâ€™s costs and a modest profit are deducted is our â€˜home equityâ€™.
Royalties and land sales aim to capture that â€˜home equityâ€™ back for Albertans, the owners of the resource.
Royalties are not taxes, they capture the equity generated by Albertansâ€™ natural wealth.
As currently being managed, however, the Alberta government grants the oil and gas real estate agent more than half of Albertansâ€™ â€˜home equityâ€™.
In the tar sands, the real estate agents get at least 85% of the â€˜home equityâ€™.
Albertans might ask themselves why the real estate agent has any right to any of their â€˜home equityâ€™, let alone 50-85%.
Even Liepertâ€™s own Department of Energy recognizes, â€œa decision to not capture the full [equity] amounts to a decision to sell the provinceâ€™s resources at less than their full value.â€
Albertans keeping more of the equity generated by their natural wealth isnâ€™t some extreme idea that can be rudely dismissed by the energy minister â€“ it is simply thinking like an owner.
But as the 2007 Royalty Review Panel noted, it was clear to them the view that Albertans owned their resources was not shared by the Progressive Conservative government.
 Dan Healing, â€œLiepert angered over oilpatch invitationâ€, Calgary Herald, 26 November 2010, pp. B1ff.
 Dan Healing, â€œRoyalty cuts â€˜cost billionsâ€™â€, Calgary Herald, 26 November 2010, pp. B1ff.
 Alberta Department of Energy, â€œAlberta royalty review 2005: Some additional questions,â€ March 2006 quoted in Annual Report of the Auditor General of Alberta: 2006â€“2007, September 2007, vol. 1, p. 116.
 Alberta Royalty Review Panel, â€œOur fair share: Report to the Hon. Lyle Oberg, Minister of Finance,â€ 18 September 2007, p. 5.
Regan Boychuk is the public policy research manager for the University of Alberta’s Parkland Institute, a non-partisan research centre studying economic, social, cultural and political issues facing Albertans and Canadians from the perspective of political economy.