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Oilsands plan needed now, Lougheed says
Former premier says the Klein government should have staggered development, put more conditions on oil companies
Jason Fekete, CanWest News Service
Published: Sunday, September 03, 2006
CALGARY - Former Alberta premier Peter Lougheed has sharply criticized the government of departing Premier Ralph Klein for failing to properly plan oilsands growth, creating a "mess" that is depriving the province of royalty revenues.
The Klein government's strategy to encourage unparalleled investment in the oilsands sparked an overheated economy due to several concurrent projects in the Fort McMurray area, Lougheed said during an interview with The Herald.
That has driven up the price for labour and materials, with construction costs for oilsands operations soaring more than 100 per cent in some cases.
Perhaps most importantly, he said, it is delaying by several years the time frame for when the ventures will become profitable. It has amounted to what Lougheed calls "a mess."
And with the government receiving payout on the projects only after capital costs are covered, he said Albertans are missing out right now on their share of the public resources.
"Having all these projects go concurrently is going to substantially reduce the return to the owner -- and we're the owner," said Lougheed, who was Alberta's premier from 1971 to 1985.
"The new premier has to look at how they're going to have a more orderly development in the oilsands."
That development should have one oilsands project completed before another one starts up, to prevent cost escalations and delayed payment of royalties.
"The real essence of it has to be a better plan," Lougheed said.
On Thursday, Klein dropped a political bombshell after his final day in the legislature, acknowledging "there wasn't a plan" for Alberta's petro-fuelled economy, and that he only recognized as little as six months ago the "phenomenal growth" taking place.
The shoot-from-the-lip premier also admitted the boom is proceeding too quickly and that a "proper" economy should be sustainable.
"We were prepared for sustainable growth, but not the kind of growth that occurred," said Klein, who will retire by December after 14 years in power.
"Perhaps, given more time, (growth) can be handled. But I don't have more time."
About 90,000 newcomers arrived in Alberta last year alone, according to government data. Scorching growth in the oilsands and the battle for trained workers is producing a labour crunch that's rapidly driving up construction costs, housing prices and the inflation rate.
University of Lethbridge political scientist Peter McCormick said the Klein Tories could have planned "big, new ideas" had they been better prepared for the economic surge.
But Klein's major vision for the province, he said, was always to eliminate the deficit and pay down a debt that totalled about $23 billion in the early 1990s.
Once the provincial mortgage had been burned by 2004, Klein seemed rudderless and unable to properly plan the province's future, McCormick said.
"He didn't have the vision of government taking charge," he said. "It was a reactive government, rather than a proactive government."
Provincial Conservative leadership hopeful Lyle Oberg -- a recent Infrastructure and Transportation minister who oversaw major projects -- agreed the government was too slow in addressing growth. "This is the time to remedy this, to get ahead of the game," Oberg said.
But he disputes claims that Alberta's economy is out of control, and isn't so sure the next premier should overhaul the royalty structure or slow oilsands development.
"The danger is slamming on the brakes," said Oberg.
He said he is willing, however, to review the royalty scheme to ensure it's a "win-win scenario."
Lougheed, whose battles with Ottawa over the National Energy Program in the early 1980s are part of Alberta lore, said the province's current economy is leaving a lot of losers and few winners.
In particular, farmers, small-business owners and people of fixed incomes are struggling to keep pace.
"If you overheat an economy and you affect citizens generally in terms of the costs of everything they buy . . . you're to the detriment of the citizens today," he said.
Lougheed said "he wouldn't have envisioned" that the Klein government would have permitted so much oilsands development without more conditions, like greater requirements for companies to help fund capital projects in the mined areas.
During his time in office, Lougheed said his government established conditions for Syncrude to work in an orderly way with the government to develop the provincial facilities necessary in northeast Alberta.
"What conditions, if any, did the province put on the oilsands projects?" he asked of the Klein government.
Political scientist McCormick argued that Klein's long-held plan of letting the market prevail failed Albertans when it was clearly time for the government to step in and help manage the economy.
The government's inability to adequately plan in the last few years is best epitomized through the allocation of the $400 prosperity cheques earlier this year to nearly all Albertans -- at a cost of $1.3 billion to the provincial treasury.
"That's always been the most splendid measure of the lack of vision of the government," he said.
© The Edmonton Journal 2006
Former premier says the Klein government should have staggered development, put more conditions on oil companies
Jason Fekete, CanWest News Service
Published: Sunday, September 03, 2006
CALGARY - Former Alberta premier Peter Lougheed has sharply criticized the government of departing Premier Ralph Klein for failing to properly plan oilsands growth, creating a "mess" that is depriving the province of royalty revenues.
The Klein government's strategy to encourage unparalleled investment in the oilsands sparked an overheated economy due to several concurrent projects in the Fort McMurray area, Lougheed said during an interview with The Herald.
That has driven up the price for labour and materials, with construction costs for oilsands operations soaring more than 100 per cent in some cases.
Perhaps most importantly, he said, it is delaying by several years the time frame for when the ventures will become profitable. It has amounted to what Lougheed calls "a mess."
And with the government receiving payout on the projects only after capital costs are covered, he said Albertans are missing out right now on their share of the public resources.
"Having all these projects go concurrently is going to substantially reduce the return to the owner -- and we're the owner," said Lougheed, who was Alberta's premier from 1971 to 1985.
"The new premier has to look at how they're going to have a more orderly development in the oilsands."
That development should have one oilsands project completed before another one starts up, to prevent cost escalations and delayed payment of royalties.
"The real essence of it has to be a better plan," Lougheed said.
On Thursday, Klein dropped a political bombshell after his final day in the legislature, acknowledging "there wasn't a plan" for Alberta's petro-fuelled economy, and that he only recognized as little as six months ago the "phenomenal growth" taking place.
The shoot-from-the-lip premier also admitted the boom is proceeding too quickly and that a "proper" economy should be sustainable.
"We were prepared for sustainable growth, but not the kind of growth that occurred," said Klein, who will retire by December after 14 years in power.
"Perhaps, given more time, (growth) can be handled. But I don't have more time."
About 90,000 newcomers arrived in Alberta last year alone, according to government data. Scorching growth in the oilsands and the battle for trained workers is producing a labour crunch that's rapidly driving up construction costs, housing prices and the inflation rate.
University of Lethbridge political scientist Peter McCormick said the Klein Tories could have planned "big, new ideas" had they been better prepared for the economic surge.
But Klein's major vision for the province, he said, was always to eliminate the deficit and pay down a debt that totalled about $23 billion in the early 1990s.
Once the provincial mortgage had been burned by 2004, Klein seemed rudderless and unable to properly plan the province's future, McCormick said.
"He didn't have the vision of government taking charge," he said. "It was a reactive government, rather than a proactive government."
Provincial Conservative leadership hopeful Lyle Oberg -- a recent Infrastructure and Transportation minister who oversaw major projects -- agreed the government was too slow in addressing growth. "This is the time to remedy this, to get ahead of the game," Oberg said.
But he disputes claims that Alberta's economy is out of control, and isn't so sure the next premier should overhaul the royalty structure or slow oilsands development.
"The danger is slamming on the brakes," said Oberg.
He said he is willing, however, to review the royalty scheme to ensure it's a "win-win scenario."
Lougheed, whose battles with Ottawa over the National Energy Program in the early 1980s are part of Alberta lore, said the province's current economy is leaving a lot of losers and few winners.
In particular, farmers, small-business owners and people of fixed incomes are struggling to keep pace.
"If you overheat an economy and you affect citizens generally in terms of the costs of everything they buy . . . you're to the detriment of the citizens today," he said.
Lougheed said "he wouldn't have envisioned" that the Klein government would have permitted so much oilsands development without more conditions, like greater requirements for companies to help fund capital projects in the mined areas.
During his time in office, Lougheed said his government established conditions for Syncrude to work in an orderly way with the government to develop the provincial facilities necessary in northeast Alberta.
"What conditions, if any, did the province put on the oilsands projects?" he asked of the Klein government.
Political scientist McCormick argued that Klein's long-held plan of letting the market prevail failed Albertans when it was clearly time for the government to step in and help manage the economy.
The government's inability to adequately plan in the last few years is best epitomized through the allocation of the $400 prosperity cheques earlier this year to nearly all Albertans -- at a cost of $1.3 billion to the provincial treasury.
"That's always been the most splendid measure of the lack of vision of the government," he said.
© The Edmonton Journal 2006
Interesting times...
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