The Oil Drum: Canada

Income trust imbroglio

On April 9, The Globe and Mail reported that Flaherty's tax changes, which were supposed to have brought Ottawa more revenue, are having the opposite effect. Not only is revenue lost instead of gained, Canada is losing ownership of its resources in the process, and investment in the energy sector is decreasing. "It would only take slightly more than 15 per cent of the trust sector to be bought out by foreign private equity, and non-Canadian firms, before Ottawa was losing annual tax revenue equivalent to what it said eluded its grasp before the trust tax."

In other words, Ottawa could lose $5- to $6-billion annually. The article quotes Sandy McIntyre of Sentry Select Capital Corporation: "If so-called tax fairness was intended to accelerate the sale of Canadian companies to foreign entities, then it is a success. If it was intended to increase Canadian tax revenues, it is a failure."

Oilsands growth now beyond regulator's ability to assess impacts

Oilsands development, they say, has become a speeding car with a gas pedal and no brakes....

...."It just doesn't work to have Alberta Energy pouring on the gas and not having another agency empowered to put on the brakes if necessary," he said.

Stelmach's signals have been mixed. He's promised to review Alberta's energy royalty regime and to put affordable housing at the top of his agenda.

But at his first news conference after winning the leadership, he pooh-poohed the notion that government should regulate development.

"There's no such thing as touching the brake," he said.

Some facts on oilsands development and its anticipated impact on northern Alberta:

• Oilsands spending, scheduled or proposed - $12.5 billion in 2007; $57 billion over the next five years; $94 billion by 2015.
• Revenue to government 2006-07 - $2.5 billion in royalties; $2 billion in lease sales, greater than last 10 years combined.
• Influx - 3,950 workers required for Suncor's Voyageur project alone; 27,000 people moved into Alberta in the second quarter of 2006; Fort McMurray population doubled to 75,000 in last nine years.
• Cost of living - $40,000 considered minimum "working poor" income in Fort McMurray, says president of Wood Buffalo Housing and Development Corp.
• Vacancy rate in oilsands communities - one per cent in Grande Prairie; less than one per cent in Fort McMurray for third consecutive year.
• Rents - Forecast to jump 20 per cent in 2007 in Grande Prairie; 25 per cent in Fort McMurray.
• "Shadow" population - 11,779 people live in work camps, campgrounds or hotels near Fort McMurray, says 2005 survey.
• Health gap - Fort McMurray needs twice as many doctors as current 44; will need three times as many within five years.
• Services gap - Fort McMurray needs $1.2 billion in infrastructure to accommodate growth, including new water treatment plant, police station, recreation centre and fire hall.