OTTAWA—A new study by the Canadian Centre for Policy Alternatives compares the Canada and Alberta experience to that of Norway, another major petroleum producing and exporting country, and finds they have taken very different paths and with very different outcomes.
“Norway’s experience shows that there is a better way to manage our oil wealth, says CCPA’s executive director Bruce Campbell, the study’s author. “For too long, foreign and domestic petroleum interests have been in the driver’s seat, appropriating a disproportionate share of the petro-wealth and blocking effective carbon reduction measures. It is time for Canadian governments to heed the Norwegian example and reclaim control of the petroleum industry,”
Among the study’s key findings:
- The Norwegian government owns 80% of petroleum production, and retains roughly 85% of the net revenues mainly through a 78% company tax and through direct access mechanisms.
- In Alberta and Canada, foreign and domestic private interests dominate the industry and have taken the lion’s share of the petroleum wealth. According to a Parkland Institute estimate, the Alberta government has averaged just 9% of the economic rent from the oil sands over the last 15 years. The federal government now takes (after tax breaks) a paltry 7% of oil company revenues through the general corporate income tax.
- The Norwegian state has been very effective in distributing the benefits of oil wealth both regionally and throughout its population. It has maintained one of the lowest levels of income inequality in the world.
- Inequitable petro-dollar recycling mechanisms explain part of why Canada has one of the highest levels of inequality in the OECD. They explain in large part why inequality is substantially higher in Alberta than the Canadian average, and why it has grown dramatically the over the last decade.
- Economic imbalances and fiscal disparities amongst provinces have grown, with Alberta pulling away from the pack. Its revenue raising capacity could reach 180% or more of the national average over the next eight years, even as federal-provincial redistribution mechanisms have been weakened.
- Norway’s Petroleum Savings Fund has amassed over $664 billion in assets, all invested abroad, which not only ensures the future of social welfare benefits, but also helps to offset upward pressure on its currency and mitigate potential Dutch Disease effects.
- Alberta’s Heritage Savings Fund now contains just $16 billion, 2% of Norway’s fund, and a miniscule share to the petroleum revenue that has flowed into Alberta over the last 36 years.
- Norway is a climate leader with the most ambitious carbon reduction plan in the industrialized world. Canada and Alberta are climate laggards.
“The federal government needs to take the lead, collaborating with provinces, territories and first nations, in building consensus around a national energy strategy—one that address concerns around sustainable economic development, energy security, inequality, interprovincial disparities, climate change and the transition to a low carbon economy.” Campbell concludes.
The Petro-Path Not Taken: Comparing Norway with Canada and Alberta’s Management of Petroleum Wealth is available on the CCPA website:http://policyalternatives.ca.
For more information contact Kerri-Anne Finn, CCPA Senior Communications Officer, at 613-563-1341 x306.