The carbon tax – not the low price of oil – is holding back the Alberta economy, according to United Conservative Party leadership candidate Jason Kenney.
Kenney told BNN on Tuesday that despite support for the carbon tax from companies such as Suncor and Canadian Natural Resources, the heavy lifting is falling on the people of Alberta.
“Of course those companies are for it, they don’t really pay it,” Kenney told BNN. “The costs cascade down through the system, through the economy. It’s not a properly-designed, value-added tax, it’s a crude form of consumption tax which has this cascading effect which means that average people end up paying the brunt of this tax at the worst possible time, during recession.”
Kenney said that in addition to hurting Albertan consumers, the tax is driving foreign investment out of the province.
“I find it interesting that multinational oil companies like British Petroleum, Total and others endorsed the NDP carbon tax two years ago, but they’ve all pulled out of Alberta since then with about $34 billion of foreign capital fleeing Alberta’s oil and gas sector,” he said. “And where have they re-deployed that capital? To jurisdictions that do not have a carbon taxes. I think that’s not a coincidence.”
“It’s carbon leakage. It’s capital leakage. It’s hurting Alberta.”
His comments come one day after Sprott Asset Management Portiolio Manager Eric Nuttall said regulations were drawing his money to stateside oil and gas.
“Whether its carbon taxes, royalty regime changes and pipeline takeaway issues: we don’t get that in the U.S., we get the same commodity exposure, with equally good fundamentals without all that noise.”
The head of Canada’s producer’s association also criticized the current regulatory environment, telling BNN on Tuesday that processes need to be ‘streamlined’ to get Canada on equal footing in the international energy market.
“We have an opportunity here to be a supplier of choice around the world, but it is going to take both industry and government showing a lot of leadership to streamline our processes, to lower timelines, and still maintain our high environmental standards,” Canadian Association of Petroleum Producers President and CEO Tim McMillan.
Kenney pointed his finger at provincial and federal regulations for driving investment out of the province.
“Tens of billions of dollars of foreign capital has fled this province, much of it leaving our oil and gas industry, being redeployed to oil and gas fields in other jurisdictions around the world at the same price point,” Kenney said. “This is because there’s been an accumulation of anti-investment policies by both the federal and provincial governments.”
As far as prices go, Kenney was firm in his belief that lower oil prices aren’t ‘the primary problem.’
“Alberta had a balanced budget, a stronger economy and a stronger labour market at $10, $15 and $20 oil for much of our modern history as opposed to the $50 oil we have today,” Kenney told BNN.
“The price is not the primary problem here. We’ve seen investment grow substantially in oil and gas just next door in Saskatchewan,” he said.