Blakeney on Royalties, the Charter and NAFTA
Allan Blakeney, Saskatchewanâ€™s Premier from 1971 until 1982, just published his memoirs, An Honourable Calling. Book launches are scheduled in Regina (Nov. 25), Saskatoon (Nov. 27), Moose Jaw (Dec. 2) and Ottawa (Dec. 9). A few years ago, Blakeney had me pull together some facts and figures for his chapter on oil, so I was quite interested to read the finished product.
Other books, especially Dennis Gruendingâ€™s Promises to Keep and Eleanor Glorâ€™s Policy Innovation in theÂ Saskatchewan Public Sector, have chronicled and analyzed the Blakeney governmentâ€™s signature achievements in public enterprise (the Potash Corporation of Saskatchewan, SaskOil, etc.), social programs (pharmacare, childrenâ€™s dental care, etc.), labour legislation (occupational health and safety, a high and rising minimum wage, etc.) and other areas of public policy.
As expected, An Honourable Calling provides a good overview of this history and new insights about it. But Blakeney also offers timely, provocative and (in my view) compelling commentary on current affairs.
If a government is selling a resource – and that is what is being done when a resource company produces a mineral and pays a royalty – it should sell it at the highest price possible.
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There are always counter-arguments. It is said that our royalty rates should be competitive. I would ask why? If another province is willing, for whatever reason, to sell (say) its oil in the ground at less than its value, that is hardly a reason for Saskatchewan to do so.
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In the 1970s, Saskatchewan royalties were always higher than those of other provinces. . . . resource companies could make profits producing oil in Saskatchewan. The fact that they could make more money producing in another province did not stop them from producing and exploring in Saskatchewan.
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If lower royalties generate more development than higher royalties do, and not just more profitable development for the resource companies, then this is an argument for lower royalties. But this does not end that calculation. This additional development must be balanced against the other development that would come from [public spending financed by] higher royalties . . .
The Charter of Rights:
A recent case decided by the Supreme Court in 2005, Chaoulli v. Quebec (A. G.), illustrates the problem. The reasoning set fourth by the court in the Chaoulli case clearly suggests that if any activity of government poses a threat to personal security, then â€˜Section 7 of the Charter is engaged,â€™ and it is appropriate for the court to determine whether sufficient resources are being devoted to this activity of government. In the Chaoulli case, a decision was arrived at without any reference . . . to other demands on the government of Quebec. . . . Was the Quebec government spending too much on highways and too little on health, so that personal security is threatened? The recent collapse of a highway overpass in Laval suggests that this was not the case.
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It may be argued that the Chaoulli case did not purport to require the government of Quebec to spend more on medical care. Rather, it provided that if the government of Quebec did not spend more money on medical care, then private care supported by private medical insurance must be permitted.
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Several provinces in Canada have reached the conclusion that the parallel private health care system would increase the difficulties in providing medical care for their citizens, accordingly threatening personal security, and as a consequence they have prohibited the sale of private medical care insurance.
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It is the kind of decision that does not lend itself to being disposed of in a one- or two-day hearing before judges who are necessarily unaware of the many complex issues involved.
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I believe that the problem in cases like Chaoulli arises because of the perverse interpretation given to section 7. That section was included in the legal rights portion of the Charter because it was intended to ensure that legal proceedings were conducted in a way that respected high standards of due process. . . . This is the way that substantially the same words in the Canadian Bill of Rights were interpreted by the courts for well over twenty years. I do not believe that Parliament or the legislatures or the public intended that the courts would use the words in section 7 to erect some general supervisory role over all governmental activities. This is the effect of the interpretation given by Chief Justice McLachlin in the Chaoulli case.
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Since a very substantial number of activities of government affect the life and security of its citizens, then it would appear that a very substantial range of government activities are subject to review by the courts to ascertain, not whether they are for the general benefit of the public, but rather whether they adversely affect the position of any individual citizen. Surely this is a startling proposition . . .
The position of the United States is simply too dominant. In addition, the terms of NAFTA, particularly chapter 11, have a much greater possibility of interfering with Canadaâ€™s internal governmental decisions than do the terms of the WTO agreements. I would see a trade regime with the United States governed not by NAFTA but by the terms of WTO agreements, and probably some sectoral agreements such as the former auto pact, and doubtless a sectoral agreement on trade in energy – particularly oil, gas, and electricity. These would be bargained. In the course of bargaining, we would not be without some powerful arguments.
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Unless we find effective ways of governing the activities of transnational corporations . . . the forces of global economic integration must be resisted.
The book was written well before President Obamaâ€™s election. One wonders what Blakeney would write todayÂ about the possibility of renegotiating NAFTA to remove chapter 11 and make other improvements.