ALF V1

EDMONTON — Ed Stelmach's program to stimulate drilling during the recession cost taxpayers $2.9 billion and failed to create promised jobs, new wells or new investment in the oilpatch, says the Alberta Federation of Labour.

AFL president Gil McGowan said Friday the program merely padded the profits of oil and gas companies while depleting the treasury of revenue that could have been used to fund health care and education.

He has passed on AFL's findings to Alberta's auditor-general and also requested the all-party legislature public accounts committee investigate the program.

"When Albertans learn about this they will see this for what it is, which is an outrageous misuse of government funds," he said.

Hugh MacDonald, the Liberal MLA who chairs public accounts, said he will canvass the 17 members of the committee to determine whether they wish to call a special meeting to examine the program. Conservatives have 13 seats on the committee.

MacDonald suggested the auditor general's officer might have a better mandate to determine whether the program met its goals.

But Auditor General Merwan Saher tossed the ball back, noting his office has audited the program.

"At this moment, I don't have a compelling reason to launch a particular audit," Saher said.

He said McGowan's request for a public accounts review is "a legitimate request."

"He is asking the public accounts committee to do what public accounts committees do — examine how policy is being put into effect and whether Albertans are getting value for money."

McGowan said someone should investigate where the royalty tax credits went because a loophole in the program created a "grey market" that enabled companies that had more credits than they needed to sell them to other companies. The program allocated $200-per-meter drilling credits on a sliding scale based on how much the companies drilled in 2008.

Companies that purchased extra credits were able to defray the amount they paid in royalties owed to Albertans without having to hire more workers or drill new wells, McGowan said.

But Albertans won't know who cashed in the credits because Alberta Energy keeps that information secret, he complained.

The AFL produced charts showing the number of new wells being drilled decreased steadily during 2009 and 2010 and over the same period the province lost about 8,000 jobs.

Capital investment in the oil and gas industry swooned, but industry profits increased, the AFL said.

Alberta's rate of well completions for that period mirrored Saskatchewan and B.C., which didn't have programs as generous, and seemed to climb and fall with the price of oil, despite the drilling stimulus program, the AFL reported.

University of Alberta energy economist Andrew Leach said the program was likely not as successful as the government claims and likely not as dismal as the AFL contends, because it can't be determined how many more jobs might have been lost without it.

"I think the truth is probably somewhere in the middle," Leach said. "What you really need is an account of what would have happened in Alberta in the absence of the program."

But Leach said the provincial government has an obligation to be open and accountable to Albertans since they own the resource.

"I think the government should be providing information on who is drilling and what they are paying in royalties," he said. "I can't really see a downside in releasing those numbers."

Alberta Energy spokesman Derek Cummings said the steps to encourage energy investment in Alberta "undoubtedly worked."

"Drilling activity declined from an all time high with the price collapse but would undoubtedly been even lower had it not been for the royalty credit," he said.

He said giving companies the ability to sell the credits ensured that new companies and companies with small production volumes would be able to participate in the program to drill wells and employ Albertans.

"The program also encouraged new technologies such as horizontal drilling that have played a large role in the increased activity today," he said.

Cummings pointed out that the province set records in petroleum and natural gas land sales for the last fiscal year.

Travis Davies, a spokesman for the Canadian Association of Petroleum Producers, said the programs were successful at keeping drilling rigs working during the downturn in the economy.

Hours of operation for drilling rigs jumped from 47,000 hours in 2009 to 76,000 hours in 2010, he said.

"I don't know how that equates to reduced employment in the oil and gas sector," he said. "If you increase operational hours, I don't understand how you have reduced employment."

Calgary Herald, Fri Jul 15 2011
Byline: Darcy Henton

Over the last two years, oil and gas companies have used $2.9 billion of public money to boost profits under a royalty credit system with little in return for the province, the Alberta Federation of Labour said.

During that time the industry lost almost 8,000 jobs, a study by the group found.

AFL president Gil McGowan said the program was a "colossal waste of money."

"It did not create jobs. It did not stimulate increased capital spending or drilling," he said.

The Drilling Royalty Credit program, which expired on March 31, 2011, was a short-term, two-year stimulus designed to offset the global economic slowdown.

New oil and gas wells were eligible for the credit for one year, which would reduce royalty payments according to a sliding payment scale based on production.

An official with Alberta Energy discounted the findings of the AFL, saying the programs helped Alberta survive the economic downturn.

"Those programs undoubtedly worked," Derek Cummings said. "The Alberta economy is expected to lead Canada and that's largely based on increased oil and gas activity."

McGowan said he wants the provincial legislature's public accounts committee to look into the program.

CBC News, Fri Jul 15 2011

Like the little critters in the Stampede midway's Whack a Mole, signs of a fall election are suddenly popping up all over Alberta's political landscape.

First came the announcement by Elections Alberta of a voter enumeration to be held in August and September.

The arm's-length election body is already training enumerators and will be ready for a vote by Nov. 1.

The second sign is the government's sudden proclamation of amendments to control third-party advertising during election campaigns.

With these rules, the government effectively kills any repetition of the anti-government ads that stunned the Tories during the 2008 election campaign.

A group of unions, calling themselves Albertans for Change, spent about $2 million on ads that attacked Premier Ed Stelmach as a man without a plan.

Stelmach was furious.

The PCs responded with their own "Prosperity" ads (so inept, by the way, that even some Tories called them "self-attack" ads).

"We're not going to sit and take it," Stelmach's chief of staff, Ron Glen, said of the union offensive.

"We feel negative attack ads are detrimental to the democratic process."

In the end, the union ads didn't hurt the Tories, and might even have helped them. The government won 72 of 83 seats.

But the victory inspired no generosity whatever.

for ads The PCs raised their legislative hammer with a new bill, and now bring it into effect just in time to prevent such ads on any similar scale for the coming election.

The complex new rules do not exactly set limits on spending by "third parties" such as unions or corporations.

But they limit donors -whether individuals or organizations -to contributing $15,000 per year, or $30,000 in an election year, while circling every donation and third-party group with a maze of conditions.

Some regulation is probably vital to immunize us from a slide into the ugly spectacle of U.S.-style attack ads by interest groups.

But this is over-regulation so confining that it's hard to imagine any group ever again raising significant money for ads.

"It's clearly meant to tie us in knots so we can't do this again," says Alberta Federation of Labour president Gil McGowan, a prime mover behind the 2008 TV campaign.

"I have absolutely no problem with the section of the bill that requires reporting and transparency from third-party advertising campaigns.

"But these rules are clearly designed to stifle criticism of the government."

One criticism in 2008 was that the unions were spending money the opposition parties, especially the New Democrats, were unable to raise.

McGowan acknowledges this without apology.

"Opposition parties in Alberta have never been able to raise anything close to what the Tories can raise.

". . . The real reason we ran the ads is that the Tories for years have had the capacity to simply swamp the airwaves. We didn't think that was either healthy or fair. You can debate the merits of our ads, but one thing was clear -it was the first time the Tories have ever faced an advertising campaign that came anywhere close to their own."

It was indeed the first time. Also the last.

Calgary Herald, Fri Jul 15 2011
Byline: Don Braid