• Thanks for stopping by. Logging in to a registered account will remove all generic ads. Please reach out with any questions or concerns.

The Politics of Governing Canada: Old and New

Not open for further replies.

Edward Campbell

Army.ca Myth
Reaction score
The (web site) headline above Globe and Mail columnist Jeffrey Simpson’s latest offering is:  The Conservatives are down and out in Quebec – and know it

Good - and good, in my view.

If the Conservative Party of Canada wants to displace the Liberals as Canada’s natural governing party or even if they just want a rough 50/50 balance à la the Democrats and the GOP in the USA then they must learn that there are two Canadas: Old Canada, East of the Ottawa River, and New Canada West of the Ottawa.

(This (Old vs. New Canada) is not a new idea, nor is it mine. I came across it some years ago in an article by, I think, Michael Bliss.)

The two Canadas are defined by several factors but, primarily:

• One is rich and the other not so much; and

• One is growing and the other is stagnating.

New Canada is rich and getting richer because it is growing faster and it is growing “smarter.” Old Canada is stuck in the mud. New Canada matters - politically, socially, economically – more and more; Old Canada matters less and less.

Québec dominates, almost overwhelms Old Canada; Ontario dominates New Canada.

Right now Old Canada has 107 seats in the House of Commons; New Canada has the other 201. After the next redistribution Old Canada will still have 107 but New Canada will have at least 234.

A party – Conservatives or Liberals - can muster a bare but working majority, now, with only 17 (of 107) seats in Old Canada and 139 (of 201) seats in New Canada – that’s 69% of the seats in New Canada, a significant, indeed major electoral feat, but certainly not unprecedented.1 After the next redistribution the Tories will only need 66% of the seats in New Canada (155 of 234) to secure a majority. In either case that means retaining a virtual stranglehold on the prairies and getting 58% of the seats in Ontario and 63% of the seats in BC – much better than the 48% (ON) and 61% (BC) they (Harper, et al) got in 2008.

But: increasing the Ontario seat haul by 20% is, I think, both easier and more likely than more than doubling the seat count in Québec.

The task will get easier and easier as this new century wears on: Old Canada will become increasingly irrelevant, except as an ongoing drain on the treasuries of New Canada.

Both the Liberals and the Conservatives must learn how to govern without Québec. That doesn’t mean that either party should write off Québec’s 75 seats (or Atlantic Canada’s 32 seats) – each must campaign hard, during and between elections, to buy Old Canada’s votes, but each must adapt to the fact that Québec’s demands for special status will never end and can never be satisfied. Thus, it is prudent for both parties to start ignoring special status for any one province – or to (further) decentralize the federation to a level with which even I would be content.2

Here, by the way, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail is Simpson’s column:


The Conservatives are down and out in Quebec – and know it


From Wednesday's Globe and Mail

March 25, 2009 at 12:00 AM EDT

Something quiet but profound has altered the Harper government's political strategy: Quebec doesn't cut it any more.

From day one of the first Harper government, Quebec was the epicentre of Conservative dreams, plans and spending. Quebec had all those seats beckoning Conservative victories. A French kiss, one author described the affair. Some kiss, some affair.

Billion of dollars were transferred from Ottawa to Quebec (and some other provinces) to resolve the invented issue of the “fiscal imbalance.” Prime Minister Stephen Harper made the spot decision to recognize the Québécois as a “nation” within a united Canada. There were speeches and programs and blandishments and emotive words such as “autonomy” used by Mr. Harper. All to woo Quebec.

As in all unnatural relationships, what began in hope degenerated into misunderstandings, then feuds. Who threw the first stone doesn't matter; stones were thrown on all sides.

Mr. Harper and his inexperienced crowd thought that, in the Action Démocratique du Québec, they saw Quebec francophones with similar ideas. So they played footsie with this ADQ crowd, even to the point of Mr. Harper's travelling to Rimouski to appear on a platform with the slippery Mario Dumont. The dalliance infuriated Quebec Liberals, whose boss, Premier Jean Charest, thought Mr. Harper should be playing footsie only with him.

After much caterwauling and nattering from Quebec about the “fiscal imbalance,” Mr. Harper had duly handed over billions of additional dollars for social programs – only to find that a campaigning Mr. Charest had taken the first tranche of the money and announced tax cuts to help his re-election bid. At which point, Mr. Harper hit the roof.

Further betrayals arrived. Mr. Charest, having pocketed the billions for the “fiscal imbalance,” sent his Finance Minister to announce at the beginning of the federal campaign that, no, Quebec's “demands” (Quebec is always demanding) had not been met.

With every Conservative candidate campaigning on having settled the “fiscal imbalance,” it was quite a blow to their credibility to hear Mr. Charest declare the matter unfinished. Of course, Mr. Charest had many other grievances and gripes that needed attention. So much for giving Mr. Harper a break in Quebec.
Then came the relatively minor squalls over culture and juvenile sentencing that blew up in the campaign. They betrayed the Harperites' lack of touch when dealing with Quebec sensitivities, as well as Quebeckers' preference for de facto sovereignty-association that they manifest by refusing to participate in governing Canada while demanding more from it through the Bloc Québécois. Then came Mr. Harper's attack on “separatists” during the coalition farce last December.

The Conservatives are now down and out in Quebec, and they appear to know it. The Liberals, through no serious efforts of their own, are on the rise.
Conservatives don't wake up trying to figure out how to placate and impress Quebec, that game having failed. Instead, they seem to have understood that any majority will come with improvement in Ontario and British Columbia.

A more solicitous attitude has been shown by the Harper government toward Ontario, where the recession has hit harder than any other part of Canada.
Ontario's unemployment rate is now higher than Quebec's. Ontario's manufacturing sector, especially its automotive heart, is staggering. Ontario is hollowing out; its fiscal position is eroding sharply (more sharply than Quebec's); tomorrow's budget will spill red ink.

And yet, here's the dilemma: Despite a staggering economy, growing unemployment and a fiscal nightmare, Ontario taxpayers, via Ottawa, are still going to ship billions of dollars to Manitoba, the four Atlantic provinces and Quebec.

Last week's Quebec budget had $8-billion in equalization payments, amounting to 12 per cent of total revenues. Notwithstanding this bonanza, and the fact that payments had almost doubled, the budget contained a chapter complaining about how unfair equalization was to Quebec. Call it Gallic gall.

New Brunswick's equalization payments, announced in a budget a week ago, amounted to 18 per cent of total revenues. No whining there, mercifully.

Part of Quebec's complaint was the Harper government's cap on equalization's growth, a change that will help Ontario, the paymaster that can't afford the bill any more but can't get up from the table without paying it.

Equalization will not go away, not even in my idealized version of Confederation, and Québec will continue to need a substantial amount, but the proportion of New Canada’s wealth that it must “share” with Old Canada will steadily decline over the decades.

Although Ontario is, for the moment, a sort of sick man of Confederation, it has the potential to return, soon, to being the economic engine of Canada – helping it to return to its accustomed place can earn electoral gratitude for a national political party.

Finally, immigration is changing the face of Canada and neither Québec’s historic grievances not its claim to a distinct status resonate with new Canadians as they did with earlier generations.

It is possible to govern without Québec; it is time the Conservatives took stock of the option. New Canada is the key to electoral success.


1. John Diefenbaker captured 78% of the seats in 1958, Brian Mulroney got 75% in 1984 – so 68% is not beyond the realm of possibility.
2. And I would be happy with a very loose confederation of five provinces (British Columbia (consisting of the current BC and the Yukon), Saskatchewan (formed form the existing AB, SK, MB and, remaining as territories, the North West Territories and Nunavut), Ontario (as now), Québec (as now but with “territorial” status for the Ungava peninsula) and Atlantic Canada (formed from NL, NS, NB and PEI (with Labrador as a territory). In my federation the national government would have exclusive rights over fiscal and monetary policy (including securities regulation), foreign and defence policy, constitutional issues, domestic and international trade and commerce, telecommunications and broadcasting, customs (including import standards) and immigration, interprovincial transport and not much else. The provinces would have exclusive control over health and social services, education, aboriginal matters, and, and, and … ad infinitum.

Edit: format (line spacing)
Further edit: punctuation - brought to you by the Committee for an Independent Comma


Army.ca Veteran
Reaction score
With today's announcement that the Tories are doing away with "two-for-one" sentencing, they are definitely targeting urban and sub-urban BC ridings, who are increasingly frustrated with the revolving-door legal system in this province.



Army.ca Legend
Reaction score
There is little reason why the CPofC cannot win a small majority with only negligible help from Quebec. The secret agenda thingy has for the most part been squashed in Ontario, and Iggy isn't all that he could be in people's eyes....in fact, he's proving to be closer to a closet conservative.  Maybe Jack could sell him a used car or something.....


Army.ca Legend
Reaction score
E.R. Campbell said:
2. And I would be happy with a very loose confederation of five provinces (British Columbia (consisting of the current BC and the Yukon), Saskatchewan (formed form the existing AB, SK, MB and, remaining as territories, the North West Territories and Nunavut), Ontario (as now), Québec (as now but with “territorial” status for the Ungava peninsula) and Atlantic Canada (formed from NL, NS, NB and PEI (with Labrador as a territory). In my federation the national government would have exclusive rights over fiscal and monetary policy (including securities regulation), foreign and defence policy, constitutional issues, domestic and international trade and commerce, telecommunications and broadcasting, customs (including import standards) and immigration, interprovincial transport and not much else. The provinces would have exclusive control over health and social services, education, aboriginal matters, and, and, and … ad infinitum.
Edit: format (line spacing)

You know Edward, that sounds very familiar somehow:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Edward Campbell

Army.ca Myth
Reaction score
Sorry to revive a necrothread but here, reproduced under the Fair Dealing provisions of the Copyright Act is more evidence that the Old Canada/New Canada split is still alive and well, even if Philip Cross, formerly the chief economic analyst at Statistics Canada and currently writing for the CD Howe Institute, says that Ontario has slid down into Old Canada:


Government stifles business in Ontario and Quebec, report says

OTTAWA — The Globe and Mail

Published Wednesday, Jun. 25 2014

Canada is becoming a country of two solitudes when it comes to business investment.

Provinces are increasingly falling into one of two camps, according to a report being released Wednesday by the C.D. Howe Institute. In the West, business spending powers the economy. In much of the rest of the country, government spending is swallowing an ever greater share of economic activity, most notably in Ontario and Quebec.

The report puts a new spin on the “dead money” debate and why Canadian companies have been running up growing cash reserves since the recession.

The C.D. Howe report theorizes that governments in parts of the country may be crowding out and dissuading private investment.

Canada’s corporate cash holdings have continued to grow in recent months, according to Statistics Canada. Non-financial companies had cash holdings of $630-billion in the first quarter, up from $621-billion in the final three months of last year.

Part of the reason is that some provinces are creating a more business-friendly environment, while others are scaring away investment, argued the report’s author, Philip Cross, the former chief economic analyst at Statistics Canada and member of the C.D. Howe Institute’s Business Cycle Council.

“It’s not a case of dead money and companies not willing to invest,” he said in an interview. “You can see that in certain provinces, they are willing to invest like mad men.”

It’s more than just about the Alberta oil sands and other resources projects, Mr. Cross said. “The West has had resources for a long time. What unlocked them were good policies,” he said.

Mr. Cross said the blockage lies in Quebec, Ontario and much of Atlantic Canada, where high deficits and the prospect of higher taxes are crowding out access to capital and discouraging business investment, according to Mr. Cross.

And efforts to kickstart business investment with government money clearly are not working, he explained. “If I was a firm in Ontario, what I’m planning for next year is a hike in minimum wages, higher income taxes and the introduction of a new pension plan,” he said. “I’m dealing with all these things and I’m not planning on the future of my firm.”

Private-sector investment has grown rapidly in all four western provinces, particularly since the resource boom took off in 2003. In Alberta, business investment as a share of GDP reached 25.5 per cent in 2012, the highest of any province. Public-sector investment has stabilized at less than 3 per cent.

In much of the rest of the country, there has been a “marked shift” the other way. In Quebec and Ontario, for example, private-sector investment slumped to 7 per cent of GDP in 2012 from 10 per cent in the 1990s. Government spending in Quebec is now the highest in the country at 5.7 per cent of GDP. In Ontario, it’s roughly 4 per cent, up from 3 per cent in the mid-2000s.

A separate report released Tuesday by Toronto-Dominion Bank presents a much rosier picture of the investment environment. Senior economist Randall Bartlett is predicting that business investment is poised to “rev up” in Canada over the next two years after a long slump.

He says six things will drive investment – the strengthening U.S. economy, a rebound in corporate profits, stronger corporate balance sheets, shrinking spare capacity, low interest rates and growing business optimism.

Business investment will lead GDP growth over the next couple of years, expanding at an annual rate of 4 to 5 per cent through the rest of 2014 and in 2015, the report said. “As investment increases, so does productivity, and ultimately wages and incomes in the long term,” Mr. Bartlett said.

Now, obviously, I was tempted to put this in one of the Ontario election threads, because it should be clear to us all that Ontario is, within Canada, "too big to fail." I was also tempted to put it in the 2015 Election thread because I suspect that M. Trudeau and the Liberal Party of Canada actually approve of what's happened in Ontario and Quebec ~ statism run amok.

But I really do think that we have a different political (cultural?) split: conservative* Old Canada and liberal* New Canada. I think that Darrell Bricker and John Ibbittson explain, better than others, what we see, today, in The Big Shift - the test of a good theory is, after all, that, first, it explains what we can see and measure.

I also believe that Canadian Political Liberalism, the policies and programmes proposed by the Liberal Parties of Canada, Ontario and Quebec from circa 1960 (the Quiet Revolution and the famous (infamous?) Kingston Conference) are the source of many, even most of our current problems. The output of Kingston put Canada, but especially Ontario (whihc had PC governments) and Quebec, on a course of unaffordable social spending ... it's not that social spending is bad, it's not. But we cannot spend now and expect our grandchildren to foot the bills, and that's the course upon which Mike Pearson set us and it's the course which Pierre Trudeau steered so aggressively and it is the plan which apears to appeal, again, to Justin Trudeau and his handlers. It is the wrong plan, in my opinion.

* I'm clearly using liberal and conservative in their proper contexts, not the way the nescient dingbats in the US media/political classes define them.

Edward Campbell

Army.ca Myth
Reaction score
Andrew Potter, in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Ottawa Citizen, writes that the Liberals are undoing a few of the planks of what many people believe was Prime Minister Harper's (nefarious) master plan for Canada but he suspects that they, too, have bought into the main plank: they must govern without the resources to do as they and their supports wish:


Liberals will find key to undoing Harper's agenda in his infamous 'firewall' letter


Published on: November 20, 2015

It didn’t take long for the new Liberal government to start undoing the changes Stephen Harper made to the way the country was run over his nine years as prime minister. Many of these changes were in the tone and style of governance: Trudeau unmuzzled scientists, said nice things to public servants, promised more access and openness to journalists.

Aside from the change in tone, Trudeau also took a few quick steps to reverse some of Harper’s key policies. Most notably, he immediately reinstated the mandatory long-form census, barely in time for the 2016 survey. Interestingly, the minister who oversaw the cancelling of the mandatory census, Tony Clement, could not bring himself to criticize Trudeau’s move, saying that in retrospect “I think I would have done it differently.”  (On a related note: Conservative interim leader Rona Ambrose has come out in favour of an inquiry into missing and murdered aboriginal women. We may eventually discover that not a single member of Harper’s cabinet privately supported anything they did.)

Yet as Maclean’s magazine’s Paul Wells has argued at some length, Harper’s agenda was to a large extent about simply being in power. The longer he was in power, the longer Canadians had to get used to the idea of a Conservative government, and to get used to the changes he had made, to the point where they would eventually seem like just part of the furniture of the world. And so while it might be all champagne and high-fives in the salons of the Laurentian Elites right now, it will take more than a census and sunny ways to roll back the clock on the Harper decade.

For the Liberals and their supporters, the key to undoing the Harper agenda is understanding just what that agenda was in the first place. And here’s a hint: It wasn’t social conservatism. It wasn’t neo-con militarism. And it wasn’t economic libertarianism. Nor was it to merely torment the Eastern swells (though that was probably a pleasant after-effect). No, to see what Harper was up to, and to grasp how effective he was, it’s necessary to go back to the most important document he wrote before become prime minister: the infamous “firewall letter.”

The firewall letter and its failure

The firewall letter was conceived in the aftermath of the 2000 federal election, in which Jean Chrétien won a third majority principally by convincing Ontarians that Albertans were untrustworthy.

Addressed to Alberta premier Ralph Klein and signed by six people (including Harper and his adviser at the time, Tom Flanagan), it was a plea for Alberta to take charge of its own future. The goal was for Alberta to carve out a place for itself in Confederation, using its existing constitutional powers, that would insulate the province from an “increasingly hostile government in Ottawa.” The letter’s proposals included creating a provincial pension plan (like the QPP); a provincial police force (like the SQ or OPP); collecting its own provincial income tax (as Quebec does); forcing Senate reform back on to the national agenda; and taking over complete provincial responsibility for health care.

Apart from this list, the letter demanded that Klein do whatever he could to reduce the transfer system that saw Alberta send $8 billion a year to other parts of the country. In its concluding paragraph, the letter says, “It is imperative to take the initiative, to build firewalls around Alberta, to limit the extent to which an aggressive and hostile federal government can encroach upon legitimate provincial jurisdiction.”

According to Tom Flanagan, the idea behind the letter was entirely Harper’s. (Flanagan has also said that Harper had hoped to find partners in other provinces to push this agenda, although it is not clear what became of that hope.) Yet it is worth noting the contrast between the inflammatory anti-Ottawa rhetoric and the actual demands, which are pretty mild in retrospect (the effect of implementing all of them, aside from the question of transfers, would be to make Alberta more like Quebec than Saskatchewan, though even these demands were ignored by Klein.)

If you’re Stephen Harper, you would draw a number of conclusions from this episode. For starters, you would take note of the fact that the great mass of Canadian opinion – even inside Alberta – had little time for explicit talk of provinces building firewalls. Albertans are among the most patriotic people in the country, and it is little wonder that a pitch suggesting they should act more like Quebecers did not go over so well.

More importantly, Harper also probably realized, even as he was drafting the letter, how little the province could do using its own powers to protect itself from the sorts of things that Liberal Ottawa was inclined to do. Because here’s the thing: To someone with Harper’s ideological convictions, what is truly offensive about Liberal-run Ottawa is not that it controls the Mounties or the CPP or collects Alberta’s income tax. It is that it is inclined to use its capacities to engage in large-scale, centralized social planning (or social engineering, to use the invidious terminology).

And so Stephen Harper probably realized that to properly protect Alberta from an “aggressive and hostile” – that is, socialist – federal government, he would have to go to Ottawa. There, pulling directly upon the levers of federal power, he could build a firewall from the other side. And it could be a far stronger and more effective firewall than you could ever build from Alberta, while having the virtue of being pitched as a principled and patriotic vision of Confederation.

Not ideology, but tactics

Once you realize that Harper’s agenda was to build a firewall around Alberta from Ottawa, a lot of what he did while in power starts to make more sense. More specifically, a lot of what seemed like high-level ideology is revealed as simple tactics. A case in point is climate change. It is one thing to insist (as Harper rightly did) that Canada should not go it alone on emissions reduction. It is something else entirely to indulge in barely concealed denialism.  But once you realize that any comprehensive deal on emissions that would actually do anything worthwhile would involve leaving a lot of oil in the ground in Alberta, forever, then denialism becomes more comprehensible.

But these sorts of tactical forays only work as long as the Conservatives are in power. To build a lasting firewall, one that would persist and endure during years or decades of non-Conservative rule, it would be necessary to make more fundamental changes to the way Ottawa works and to its capacities.

There are three main pillars a Canadian federal government needs if it wants to engage in centralized, large-scale, long-term, social planning, policy development and execution: Data, expertise, and money. Data in the form of the social and demographic makeup of the country and the relevant long-term trends. Expertise in the form of informed research and evidence-based policy. And money, to either pay for programs directly, or to use the spending power to bribe and cajole the provinces into adopting national policies, standards and services.

The corollary is: If you want to permanently hamstring the feds’ capacity for centralized social planning, you need to kneecap all three of these pillars:

Data: It wasn’t privacy, as Tony Clement said, or freedom, as Max Bernier argued, that was the real rationale for killing the mandatory long-form census. It was to throw a whole lot of noise into the demographic signal that the census had been giving for decades. That is also why Statistics Canada as a whole was gutted over the course of the Harper years. Without accurate data, social planners are flying blind.

Expertise: No government in living memory has been as hostile to experts and to evidence as the Harper government. But as Laval economist Stephen Gordon recently argued, it wasn’t all forms of expertise and evidence that gave the Tories hives – plenty of their economic initiatives were rooted in the best available evidence. What the Tories were allergic to was expertise that steered the evidence in directions they didn’t want to go – “committing sociology,” in Harper’s wonderful turn of phrase. That is why scientists were muzzled, policy shops were shuttered and bureaucrats were ignored.

Money: Here is the meat in the sandwich. When it comes to social planning, the ultimate source of Ottawa’s power is the spending power. And this is where Harper had his greatest success. By the end of his tenure as prime minister, Ottawa’s spending, as a share of GDP, had fallen to levels not seen since the middle of the 20th century. And the spending that does remain is overwhelmingly devoted to either just keeping the lights on or takes the form of transfers to the provinces and individuals.

Harper’s policy genius here was the two-point cut in the GST, which currently costs the federal treasury about $12 billion a year. Harper’s political genius was the creation of an all-party and pan-Canadian consensus around the virtues of a balanced budget at that historically low level of federal spending.

No data, no experts and no money. Starve the beast, but make it blind and deaf at the same time. This is Harper’s “Ottawa Firewall” in a nutshell.

‘Flat-tire federalism’

As long as Harper was in power, this firewall against centralized social planning was bound to be highly effective. The question is, what remains of this agenda with a Liberal majority in power in Ottawa?

The long-form mandatory census is back, just under the wire. Another missed census in 2016 would have gummed up the data for generations, but as it stands, it looks like the 2011 asterisk will remain just that.

The scientists have already been unmuzzled. The public servants have been asked for their advice. The policy shops are staffing up and stocking the shelves and will be open for business soon.

But what about the money? This is where things get tricky for the Liberals. Their commitment to running three relatively small deficits to build infrastructure and kick-start growth caught everyone in the chattering classes off guard, and turned out to be a political winner.

But the promise was to return to balance by the last year of their mandate. That is, they accepted the basic premise of balanced budgets at more or less current levels of federal revenues (their tax plan calls for additional revenues of just $3 billion). This isn’t nearly enough, and there is not enough economic good weather in the offing for Ottawa to grow its way to good times.

An Ottawa with lots of data and lots of policy ambitions but no money is going to be pretty ineffectual.  At some point, the Liberals are going to have to tackle the revenue problem. Without money, without the fiscal capacity to get things done, all the data and expertise and policy advice is just squiggles on a page and vibrations of air molecules.

A federal government that is nicer, less controlling, more transparent but still broke is not one that has much capacity to bother the provinces with socialist schemes. And if that’s where things remain, then Harper’s long-term victory will be cemented, regardless of who is in power.

I think Mr Potter is barking up a dead horse (or whatever) with the Firewall Letter; it's irrelevant. Ditto the muzzling of scientists, etc, although he's on the right track: Prime Minister Harper wanted to dictate to the civil service more than he wanted to be advised by it ... especially on social policy issues.

It was, always, all about the money. Prime Minister Harper planned to and has emasculated government. There simply isn't enough money available to Prime Minister Justin Trudeau to recreate the Prime Minister Pierre Trudeau years, and there is no appetite in the country for higher taxes to give benefits to someone else.

It is a "New Canada," but not in the way Prof Michael Bliss meant; this New Canada is more cautious with taxing and spending.

Edit: capitalization

Brad Sallows

Army.ca Fixture
Reaction score
Potter has joined the chattering class concensus pretending that things like the long-form census and the activities of federal scientists really matter.  He's correct only about one pillar: money.

To look over where the federal government spends money - transfers, DND, costs of most other federal agencies - is to realize that nearly all of it depends not at all on knowing much more about people than what we get from the "short form" and income tax filings.  I suppose a handful - less than 10 - of the nearly 300 billion a year spent by the federal government, and similar proportions of provincial and municipal spending, depend on the kinds of conclusions that can only be reached by mining long-form census data and various "studies".

Nothing beats getting your panties in a knot over fly sh!t in the pepper.


Army.ca Legend
Reaction score
This could go in the "economic superthread" as well, but setting and applying taxes is a political descision, and the effects on the average consumer (much less the oil companies) seems set to unravel the "Alberta Advantage" and crater Western Canada's economic growth for decades to come. The worst part is this is essentially an "own goal".


Alberta’s Oil Sands Brace for Carbon Tax

Our northern neighbor is putting a price on carbon. More specifically, Alberta—Canada’s most hydrocarbon-rich province—plans to roll out a carbon tax in 2017 with the intention of raking in $2.25 billion annually. The province estimates that the tax will cost households more than 300 CAD in the first year, and almost 500 CAD in 2018. But it’s the oil sands industry that will be eying this plan with the most trepidation, as high-cost production, already hit by cheap oil prices, now seems set to be saddled with a new tax. As Bloomberg reports, oil companies are hoping they can innovate their way out of this new problem:

[P]roducers from Suncor Energy Inc. to Royal Dutch Shell Plc are counting on technology to help make bitumen a low-carbon fuel. The pressure is mounting as Premier Rachel Notley’s new policies are poised to be matched by federal as well as global efforts to curb CO2 pollution at United Nations talks in Paris next week. […]

The changes won’t be cheap or easy. Oil-sands producers in northern Alberta have become some of the largest carbon emitters in the industry because they burn huge amounts of natural gas to make steam used to melt bitumen and pump it to the surface.
Most of the technology that would significantly put a dent in their carbon emissions — such as using electromagnetic waves and solvents instead of steam — is still years away from being deployed on a large scale. The challenge is to reverse annual carbon output that’s quadrupled since 1990 to about 70 megatons.

Despite flagging prices, oil sands production is expected to increase 25 percent by 2017, adding more crude to an already oversupplied market. That’s because of the relatively high-cost nature of these projects—so much money has already been invested that for many firms, pulling out just isn’t an option. It’s in this climate of borderline desperation that the province is now crafting this carbon tax policy.
It’s far too early to divine what this means for Alberta’s energy future, though it should be noted that the province’s ability to cope with these trying market conditions has huge implications for Canada’s aspirations for joining the North American hydrocarbon renaissance. U.S. shale producers have typified the kind of innovative spirit these oil sands companies are hoping to imitate, but that won’t be easy for them to do: With shale wells being typically short-lived and (no pun intended) smaller-bore, while oil sands projects are massive in scope and capital expense, the two kinds of production could not be more different.
Not open for further replies.