Wednesday, January 15, 2014

A Tale Of Two Countries

When it comes to oil, Mitchell Anderson writes, Canada and Norway have written two different narratives:

A recent news item showed that Norway's massive pot of petroleum of money, now totaling CA$909.364 billion, has made every citizen a millionaire in Norwegian kroner. That works out to about $178,000 for every man, woman and child in the country. By contrast, every Canadian lumbers under an individual debt of $17,000 as Ottawa is in hock to the tune of $600 billion.

What accounts for the difference? It all comes down to taxes:

Alberta has run consecutive budget deficits since 2008 and since then has burned through $15 billion of its sustainability fund. In spite of Alberta's vast petroleum wealth, the province has not contributed a penny to the now moribund Alberta Heritage Fund since 1987. The belief that all tax is bad has led Canada's three western provinces to the bizarre position where they proudly collect less resource revenues on behalf of their citizens than any other jurisdiction in North America.

The anti-tax worldview has migrated from Calgary to Ottawa, where it is being imposed on the rest of the country. In 2009, Prime Minister Harper stated flatly, "I don't believe any taxes are good taxes." Not merely a remarkably ignorant statement from someone who holds a Masters degree in economics, this position indicates Canada's elected leader is opposed to the very project of government -- not unlike hiring a hijacker as an airline pilot.

True to his ideology, Harper's collective cuts to the GST, corporate taxes and personal income taxes now total about $45 billion per year in forgone government revenue. Canada is eliminating up to 30,000 public sector jobs in a supposed effort to balance the budget and currently collects less public revenue as a proportion of GDP than even the U.S. 

In Norway, however, "national wealth is heading in the opposite direction at more than 10 times that rate, with savings of $142 million per day." And consider what that money buys:

Norwegians enjoy universal day care, free university tuition, per capita spending on health care 30 per cent higher than Canada and 25 days of paid vacation every year. By owning 70 per cent of their own oil production and taxing oil revenues at close to 80 per cent, Norway is now saving about $1 billion per week. 

And the Harperites keep chanting the same mantra: Their most salient virtue is their competence.

It's almost funny.


The Mound of Sound said...

Unfortunately, Anderson, is wrong. Taxes have played a tangential role at best in Norway's fortunes.

The first part of the result is owed to a popular decision by the Norse not to treat their North Sea oil wealth as belonging to today's generation. The royalties were to be retained, invested for future generations instead of being taken into general revenues to be squandered.

The second part was the decision that those retained royalties would not be invested in the Norwegian economy. The Norse realized that, injected in their own economy, their windfall would overheat their economy and much of it would be lost in boom & bust cycles.

Alberta, by contrast, relies on oil royalties for 30% of their current budget spending and still runs deficits even as much of their supposed oil wealth evaporates in boom & bust cycles.

"Please, God, Give Us One More Oil Boom and, This Time, We Promise We Won't Piss It All Away." - bumper sticker.

The people of Alberta aren't coming out ahead. Their government isn't coming out ahead. Oil companies, however, with their grants,subsidies and 'never,never' deferrals are doing rather well.

Meanwhile Peter Lougheed keeps rolling in his grave.

Lorne said...

OI will go so far as to say that Harper's visceral aversion to responsible taxation makes him a true enemy of the people, Owen.

Owen Gray said...

There was a reason the oil barons threw Lougheed out of Calgary's Petroleum Club, Mound.

He believed in responsible resource development -- and that applied particularly to the tar sands.

He was what has become an endangered species -- a progressive conservative.

Owen Gray said...

You referred a couple of days ago, Lorne, to a letter in the Toronto Star. The writer concluded that Tim Hudak works for the robber barons.

The same inescapable conclusion applies to Mr. Harper.

karen said...

"I don't believe any taxes are good taxes."

I wonder if Stephen Harper understands where his paycheck comes from?

Owen Gray said...

Excellent question, karen. It's clear that Mr. Harper believes he's not like the rest of us. He's exceptional.

Anonymous said...

Norway is also a very honest country and, that makes a big difference. Canada has become a, cesspool of corruption especially since, Harper's so called majority.

Harper has buried Canada in debt. The 3 amigo's are meeting again. Watch out for the NAU. Big business is pushing for the NAU. They only want one government to deal with. That makes it easier for them to thieve. Big business also wants a huge, cheap labor pool. We were warned if, Harper ever won a majority? We could kiss Canada good-bye. Not that I believe Harper *won* his majority.

Owen Gray said...

The robocalls business and the Senate scandal are all about honesty, Anon.

Jack Layton warned us. We can't take Harper at his word.

e.a.f. said...

Perhaps it is time to check into immigrating to Norway. If Canada continues as it is now, we will just be another 3rd world country with a dictator running it.

Owen Gray said...

Imagine the notoriety, e.a.f. A Third World country in North America.