The Politics of Potash
Advocates of low potash royalties are claiming that New DemocratsÂ fared poorly in Saskatchewanâ€™s recent election becauseÂ they proposed higher potash royalties. Of course, potash companies and their boosters would like the NDP to give up this cause. Doing so would be a political mistake for the party and a disservice to the people of Saskatchewan.
Most polling indicates that most Saskatchewan residents support collecting more from potash companies. So, why didnâ€™t the NDP get more traction on the issue? In politics, timing can be everything.
BHP Billitonâ€™s bid to take over the Potash Corporation of Saskatchewan was a golden opportunity for the provincial NDP. The takeover battle focused public attention on potash and underscored loopholes in Saskatchewanâ€™s royalty regime that would have been even more advantageous to BHP than to PotashCorp.
The field was clear for the NDP to propose that whichever multinational corporation operates the mines should pay higher royalties for the resource (as I suggested). Unfortunately, the party leadership chose to narrowly focus on the takeover question, which was fully eclipsed by Premier Wallâ€™s public rejection of BHPâ€™s bid.
The NDP started making the case for reviewing and increasing royalties a few months later. By then, no one was paying attention and Wall had already positioned himself as Saskatchewanâ€™s potash champion.
Even with better handling of the potash file, the NDP almost certainly would still have lost the provincial election. Nevertheless, Wallâ€™s Saskatchewan Party correctly perceived that potash royalties are a strong issue for New Democrats.
Rather than defending low royalties on their own terms, the Sask Party responded by loudly asserting that the province already has the highest potash royalties in the world. (As I again noted last weekÂ in the following letter, this claim is not supported by any verifiable evidence and misses the point that Saskatchewan has the worldâ€™s richest potash reserves.)
In a desperate effort to distract from PotashCorpâ€™s third-quarter earnings, the Sask Party put out more press releases that day than on any other day of the election campaign. Following a single missive on potash, it sought to change the channel to wind, the federal gun registry and starting schoolÂ after Labour Day.
The Sask Party wants to avoid a focused debate on potash royalties. New Democrats should advance this debate over the next four years.
Potash: low returns
The Leader-Post, Nov. 8, 2011
John Findlayâ€™s Nov. 5 letter notes that it has been â€œstated many times that our potash industry pays the highest taxes and royalties in the world.â€ Unfortunately, repetition is not a form of evidence.
PotashCorp and its apologists have presented no publicly-available comparison of potash royalties in different jurisdictions. They sometimes cite the CRU Potash Cost Report, a document inaccessible to anyone who has not paid CRU’s subscription fee of $24,000.
The Ministry of Energy and Resourcesâ€™ annual report indicates that Saskatchewanâ€™s Crown royalty and potash production tax amounted to only five per cent of potash sales last year. Saskatchewan people should charge a higher price for the worldâ€™s richest potash reserves. Collecting the best possible return on provincial resources is just good business, not â€œsocialist hate.â€
– Erin Weir, Regina (Weir is an economist, Canadian National Office, United Steelworkers).