Alberta Federation of Labour President Gil McGowan assails Notley Government’s royalty ‘mistake’

Posted on January 31, 2016, 3:02 pm
6 mins

PHOTOS: Alberta Federation of Labour President Gil McGowan. Below: Mr. McGowan with federal NDP Leader Thomas Mulcair; Calgary Sun columnist Rick Bell.

Many progressive Albertans who were shocked and troubled by the Notley Government’s dramatic reversal on petroleum royalty policy on Friday will now feel they’ve found a high-profile champion.

Just before midnight Saturday, a Calgary Sun columnist filed a story on the Internet in which Gil McGowan, president of the Alberta Federation of Labour and a candidate for the New Democratic Party in last fall’s federal election, ripped the NDP government for its decision to leave the controversial royalty program it inherited from the Progressive Conservatives essentially intact.

The NDP decision left many who had believed fervently for years Albertans are not getting their fair share from their province’s natural resources suddenly adrift and leaderless in the face of a classical Canadian political elite consensus in which all major parties in the Alberta Legislature take essentially the same position on a controversial issue.

GilMulcAs the Calgary Sun’s Rick Bell put it with his characteristic present-tense delivery: “When the cause you’ve been fighting for has been betrayed you don’t take it sitting down. You stand up. On Saturday, Gil McGowan stands up.”

At the heart of Mr. McGowan’s critique of the government’s announcement and the panel report that recommended it is the view it is both bad economics and bad politics. “Some people say the NDP have come face to face with reality. I say what happened can best be described as the government being captured by industry,” Mr. McGowan told Mr. Bell.

“I honestly think the government has made a profound political mistake,” he said. “We don’t believe progressive governments have to become conservative to deal effectively with economic issues or to succeed politically. That’s a fallacy.”

Insiders in the government of Premier Rachel Notley believe they had no choice, given the weight of public opinion against anything that might upset the province’s fragile economic teakettle in the face of collapsing international oil prices.

But no one was calling for a money grab while the economy is suffering, Mr. McGowan responded. “No one on the left or the right in Alberta is suggesting the government engage in a cash grab at this time when prices are near historic lows.”

BellRegardless, you can be confident the government will be extremely unhappy with Mr. McGowan for speaking his mind, especially his suggestion that the NDP has been captured and co-opted by the industry.

It remains to be seen where other leaders of Alberta’s labour movement will come down on this – whether they will side with Mr. McGowan’s public position or the NDP government’s. You can count on it there will be some animated meetings taking place in labour circles this week.

You can also be confident that despite his measured tone in the Bell interview, Mr. McGowan is pretty angry too. “Virtually none of our concerns or suggestions are reflected in the royalty report,” he told the Sun columnist. “Those ideas were passed over in favour of a plan that could have been introduced by a PC or Wildrose government.”

In fact, Mr. McGowan emphasized in the interview, the AFL consulted well-known energy economists and “we put forward a case for creative, progressive alternatives to the ones put forward by the oil industry and assorted conservative parties. We had high hopes at least some of those progressive alternatives would have found their way into the final report.” None of them did.

Whether the government’s plan is the right one or not under current circumstances, it would be astonishing if Notley’s advisors didn’t try hard in advance to win the support of the AFL and other traditionally supportive stakeholder groups for the government’s position.

Mr. McGowan told the Sun he expects to meet soon with the government. “This is not the end of the issue for us,” he stated. Whether the government will now be very receptive to his message is another matter.

Other union leaders who may also have doubts about the policy but have their relationship with the government on other issues to consider can be expected to proceed very cautiously before making public statements.

At least now no one who is being honest – and that, of course, excludes many right-wing critics of the Alberta NDP – can claim that Ms. Notley’s government is in the pocket of the “big labour.” Au contraire, it would seem.

This story will be updated if new information becomes available. This post also appears on Rabble.ca.

25 Comments to: Alberta Federation of Labour President Gil McGowan assails Notley Government’s royalty ‘mistake’

  1. Lars

    January 31st, 2016

    “We were right all along”, says Brian Jean about this decision.

    That should tell any right-thinking person that it was a bad one.

    Reply
    • Expat Albertan

      January 31st, 2016

      As I’ve said previously, you can bet your life the the Wildrose would have LOWERED royalty rates if they were in power, so, despite the disappointing decision by the Notely government, it is a victory in the context of what surely would have happened otherwise.

      Reply
      • Sam Gunsch

        February 2nd, 2016

        Speaking of what conservatives would have done, WRP or PCs, here’s what AB conservatives have given away since Lougheed.

        http://thetyee.ca/News/2016/02/02/Alberta-Royalty-Review-Disaster/

        AB’s conservative leadership has a sad history of asset giveaways to industry.

        excerpt:

        In another submission, the economist Mark Anielski reported how the province would have benefited if it had kept Lougheed’s approach to a robust and healthy royalty regime.

        “Had Alberta maintained a 30 per cent royalty rate on the share of the value of the oil and gas produced between 1971 to 2014, Albertans would have generated $471.4 billion in oil and gas royalties. Had 50 per cent of these royalties been invested in the Alberta Heritage Savings and Trust Fund with annual average return of five per cent per annum we would now have an investment account worth over $481 billion.”

        https://letstalkroyalties.ca/wp-content/uploads/2015/11/11-11-2015_Historical-Analysis-of-Albertas-Oil-and-Gas-Royalties.pdf

        so…Alberta’s conservative leaders, and their partners/cheerleaders in the RW media/thinktanks, and Calgary’s BigOil corporate towers can take credit for Alberta’s public treasury missing out on over $450B.

        And WRP conservatives might have done worse had their hard right market fundamentalism been in charge. Always remember it was BigOil, and BigOil sponsorship of WRP launch that fatally hammered Stelmach over the Our Fair Share royalty review.

        Reply
  2. student

    January 31st, 2016

    I have to say, wait for the budget. The NDP might ‘redeem’ themselves if they could creatively find some way to bring in child care or school lunches or something like that.

    Wildrose: We don’t want school lunch program. Now that’s gotta make the NDP look good.

    Reply
  3. Sam Gunsch

    January 31st, 2016

    excerpt: “Some people say the NDP have come face to face with reality. I say what happened can best be described as the government being captured by industry,” Mr. McGowan told Mr. Bell.’

    IMAO…It’s more than being captured by industry… AB public policy choices are severely constrained by the political dominance of AB public opinion by RW media, corporate groups, RW thinktanks, and two RW political parties.

    Combined with the AB economic malaise due to expected low oil price scenario’s until 2018 or 2019, if one assumes the pessimistic forecasts are accurate.

    Hard right conservatives lost electoral power in 2015, but after decades of propaganda against gov’t intervention in the economy, they have retained most of their political control over economic policy choices.

    Even Lougheed’s popularity was hit hard in the early 80s by oilpatch decline. Too much of Calgary and rural AB depends on fossil fuel jobs. Fear is being felt, being fanned and is again constraining AB political change.

    Stelmach on royalties ran into the same bad luck with the worldwide recession hitting commodity prices just as he was about to implement his ‘Our Fair Share’ royalty increases.

    And the energy industry, with new WRP assistance, successfully propagandized Calgary and rural AB that their job losses were due to Stelmach’s royalty review, which hadn’t even begun. And as we all know, it worked. Stelmach’s image of hurting the industry.

    NDP fear the same dynamic would hit the re-election chances. And they are probably not wrong.

    With the prospect of sustained econ downturn due to 2-3 years of low oil prices, NDP couldn’t do both the climate plan agenda to try to generate social license for pipelines AND at the same time anything that would be described as a royalty increase, if it wanted to retain any electoral chance in Calgary in 2019, IMAO. The Stelmach royalty blow-back career-ending lesson has not been forgotten by NDP.

    Reply
    • Sam Gunsch

      January 31st, 2016

      edit by addition for clarity: ‘due to Stelmach’s royalty review, which hadn’t even begun’

      oops… Should have read… ‘hadn’t even begun to be implemented.’
      ==============

      What AB political scientists have to say about the NDP royalty review will be quite interesting. Will they note? how Stelmach and now NDP have been disciplined/constrained by markets and in AB, by oil/gas/tar RW political and media cheerleaders, as described by Charles Lindblom…

      https://en.wikipedia.org/wiki/Charles_E._Lindblom

      excerpt: In his best known work, Politics And Markets (1977), Lindblom notes the “Privileged position of business in Polyarchy”. He also introduces the concept of “circularity”, or “controlled volitions” where “even in the democracies, masses are persuaded to ask from elites only what elites wish to give them.” Thus any real choices and competition are limited. Worse still, any development of alternative choices or even any serious discussion and consideration of them is effectively discouraged.

      Reply
  4. Karen Falder

    January 31st, 2016

    Gil McGowan is right to take the stand he has and to speak out against what is, undeniably a betrayal of principles. There is a definite distinction between pragmatism and capitulation and the Notley government’s decision is most decidedly the latter. Frankly, I don’t understand the thinking behind it. I hope it does not reflect a fear of the electorate because that would be to sell Albertans short. It would also be to disregard the change that is in the wind, in Canada and south of the border. Most egregiously, it suggests they have not learned the lesson of the Obama administration, that to compromise core principles, solely to placate the ideological rantings of the radical right, will not invoke a similar spirit of compromise in return. Either banks are too big to fail, or they’re not. Either Albertans have a right to receive a fair return for their resources, or they don’t.

    The pragmatic, and my view correct approach, would have been for the government to acknowledge the current realities in the oil patch and settle for the status quo for now, but then to use the moment to re-affirm the principle of a fair return for Alberta’s resources for the benefit of Alberta’s citizens, and lay the groundwork for assuming a stronger position and insisting on a higher return when and if profits in the oil patch rebound. How would this not be a win/win? They would at the same time display a willingness to work with the opposition and the commitment to standing up for the fundamental principles they espouse and for which they were elected.

    Reply
  5. TENET

    January 31st, 2016

    It is a good thing that Gil McGowan stood up. It is so much easier for me to kick him in the ass!

    Rachel Notley was born from good roots. She was weaned on social justice and social democracy before Gill was potty trained.

    McGowan has been too self absorbed to notice that our Premier has been assailed from all sorts of madmen and misogynists in the social media.

    Global economics have sent our province into a tailspin. Our Premier and her caucus have worked to the brink of total exhaust exhaustion.

    AFL members fear for their livelihoods, their next pay cheque, and how they will be able to provide for their families. By contrast, their president has been coasting, slurping up all the perks of office, doing nothing novel or constructive, and certainly not racking up any unpaid overtime during this crisis.

    New Democrats would be wise to dump this dilettante and AFL member better take a sober second look.

    Reply
    • Gail

      January 31st, 2016

      I agree it is terrible that Notley and her party are getting so much threatening push back from the Wildrosers and people whipped up by Rebel Media but those threats on social media are threats. They should be treated like the threats they are and the people making them dealt with accordingly. Just look at the recent trial that Ms. Rempell went through with a man making threats against her on social media which is an example of what should be happening. We have to ask ourselves why the same isn’t happening to the people threatening Ms. Notley and her party members.

      Reply
  6. January 31st, 2016

    The idea that individualism and “letting the market police itself” has discredited itself. The social economy has been disregarded far too much in the North American experience of the past few decades. If we were to look at the strength and wisdom of companies based on economic democracy – we would see that the results are far better than the bleakness that comes from allowing privatization to dominate public policy. If pharmacology graduates were able to join worker co-ops that allow freedom of speech and open collaborations with other organizations – the science of drug research would be able to progress at a much better rate – which would be in the interests of patients and insurers. In seriously depressed economies – the social economy is able to prove that its core principles work better than laissez faire predatory capitalism. Take a look at the experience of Spain during this period of severe depression in the country generally. In the region where the social economy predominates, employment is increasing. http://www.mondragon-corporation.com/eng/mondragon-cooperatives-in-industrial-sector-create-1000-jobs-in-2014/

    In North America, if postal banking were to be revived, it would be a major stabilizing force that would enable municipalities to have a trustworthy place to keep tax revenue. Since 2013 it is now policy that commercial banks that have been overtaken by investment banks – such as the relationship between Dominion Securities and the Royal Bank of Canada, the 2013 Canada Economic Action Plan pages 140-150 shows that the bank now has the power to confiscate depositors’ savings in order to pay for derivative gambling losses, that the bank speculates on. Public Banks could operate under the idea of public regulation – that is governed by the criminal code and the common law of contract that required – in the days of sanity – that banks must always put the interests of clients first. In Nov 2014 at the Brisbane summit of the G20 – this horrific new predatory policy was adopted within the G20.

    The practices that we once had – like using the Bank of Canada as a nationalized lender between all level of government instead of having to borrow on the private market – and creating over a trillion dollars in interest payments to outside lenders from 1974 to 2012 – this recklessness could be ended and public interest based policies could be restored – if we are able to get the public aware of what is really conservative policy – rather than allowing private interests to undermine the health of society and the long term economic wellbeing.

    Reply
  7. Newsknine

    January 31st, 2016

    This is a sad situation, but quite predictable, based on our history. The royalty review has described, accurately, I think, as a primer on how the industry actually works today, and the way it works is much changed from three or four years ago, when the Alberta left’s ideas about royalties were formed. It would be very helpful if Gil McGowan sat down and carefully read the report, and considered what it means. Clearly, the government has, and based on that understanding, it has set the course it announced last Friday. You can accuse the government of being hijacked by the industry, or by Calgary sharpies, if you wish. But another interpretation would be that Premier Notley has engaged in real, evidence-based policy making, and has come up with a plan that looks forward to the changing environment that is ahead for oil and gas, and not backward to a set of circumstances that no longer exist. In the last two years, for example, our main customer for our petroleum exports has become our biggest competitor. Fracking, and technology to refresh existing oil plays which had been deemed uneconomic, are now rolling out. A policy which insists that companies be efficient in their operations, instead of using inefficiency as a way to get a royalty holiday, are overdue, which the policy addresses. There’s more like this between the covers of the report. I know AFL and other unions in the province have no connection to the upstream energy sector, which is a shame. But that shouldn’t prevent us from finding out what is really going on before we go public. Read the report, folks, and then decide what you think.

    Reply
  8. Gail

    January 31st, 2016

    It is not a belief that Albertans have not gotten their fair slice of the royalty pie, it is a demonstrable fact by looking at the royalty rates in Alaska and Norway both of which are higher than those in Alberta. Mr. McGowan is making some sensible points.

    Reply
  9. January 31st, 2016

    The government had no choice. It appointed the review panel and is honour-bound to accept its conclusions whether it likes them or not. I respect the process and do not want to see the Harper approach (ignore the experts, go with your guts) adopted in Alberta.

    Reply
    • Gail

      January 31st, 2016

      It isn’t honour-bound to accept the conclusions anymore than Stelmach was honour-bound to accept his review’s conclusions. This review committee was much more timid than the last one which did recommend royalty increases dependent on where the oil price was at – ie if the price was low the royalty was low; if the price rose so did the royalty rate.

      Reply
  10. Dave at the border

    January 31st, 2016

    As much as I would like to see an increase in royalty rates, with the oil industry currently in nothing more than survival mode, Notley is making a wise choice. What is to be gained by antagonizing the oil industry when it played ball with her on the carbon tax issue.

    It will never be easy to get the oil industry to accept higher royalty rates, but doing it at present will gain the government nothing and just get the far right excoriating her for a socialist money grab. There will eventually be better times to change royalties. In the meantime, it would be a good idea for the government/industry to advertise the present royalty scheme. From what I can see it is very complicated but at least everyone would know what is involved in taxing oil extraction before asking for changes.

    Reply
  11. anon

    January 31st, 2016

    We collectively own the resource. Why is it a money grab to expect a greater return?

    Royalties at 30% plus as with Lougheed are one way to get more. 80% equity taken as per the Norwegians is another way. The former gives us money, the latter gives us money, jobs, insight, and control.

    With Iran coming back on stream, Iraq ready to produce again, US and international fracking, the Yanks do not care about Alberta, so now is the time to take it back. The Norwegians have a better way.

    Lougheed set up Alberta Energy Co with just such a thought in mind. The Klientastrophy sold it off. Time to fix that.

    Reply
    • Pogo is dead

      February 1st, 2016

      The only thing you have wrong is: “so now is the time to take it back”. I would say that now’s the time to start taking it back as a strategic endeavor. Do we do that by using what’s left of the heritage trust fund to buy a stake in Suncor? I would say that’s the right move, combined with buying back into our utilities. If our drunken master King Ralph “the dropout” hadn’t sold our infrastructure it would be much easier and vastly cheaper to move away from coal. Not to mention all the real dollars we’ve lost to profiteering utility capitalism.
      The current government needs to get cracking on two way power metering and government owned last mile fibre optics.
      What they did with royalties is predictable and gives them breathing space on a budget that is nothing but red ink. Rachel Notley has my vote in perpetuity. She’s playing like it counts and my fingers are crossed for her.
      When previous regimes give all the high cards to bad actors and then expect to win a hand when it counts?
      …”looking around the table Jimmy realized that the patsy was him, so instead of calling he folded and looked for a new deal”

      Reply
        • anon

          February 2nd, 2016

          Incompetence not “incompetance” – just proved my point 😉

          Reply
      • anon

        February 2nd, 2016

        Notley has my vote as long as she wants it.

        Harper has established, and the Supremes have agreed, that Parliament is supreme and can legally seize assets without compensation to the owners – ugly but true. So that is one option.

        The other is to simply make taking/surrender of 80% equity to a Crown entity a condition of the issuing of a lease and/or renewal of an operating licence. No money involved in either case, and certainly no problem on new leases. If the privates don’t like that, use our own Crown to hire people and do the work. Waste and incompetance of part of the human condition and are kept secret in the private sector and more transparent in the public sector – not much difference between the two as far as I have experienced.

        The oil will not disappear and it will always have considerable value as a petrochemical feedstock and its use for liquid fuels will not decline until battery technology takes a real leap forward. When 18 wheelers are battery-electric, then we can really start to worry about liquid fuels.

        Electricity is another matter. The coal boys hate gas turbine electric generators almost as much as the Transmission line guys since distributed generation (gas turbine, wind, photovoltaic) make them irrelevant. Add in smart grid tech connected to urban commuter electric cars and Notley’s agreement on connecting to Manitoba hydro and a whole lot of carbon production from electric disappears and a whack o’ cash stays in the local economy.

        Reply
  12. Kevin Logan

    February 1st, 2016

    Centre left politics used to be all about the “art of the possible,” however now its simply ” the art of capitulation.”

    Nothing underscores more the capitulation than this nugget…

    “The system also allows companies to include its recently increased carbon taxes among the costs it deducts from its operations before they pay royalties to the province.”

    Found here: http://business.financialpost.com/news/energy/alberta-spares-oilsands-companies-in-new-royalty-regime-based-on-revenues-not-oil-prices?__lsa=7095-931e

    This is not pragmatism, this is not done in order to remain electable. Its total and complete capitulation, a wholesale sell out with no excuse. It’s worked up by backroom boys like Topp who works with the likes of Boessenkool (Kool Topp Guy) who is leading the unite the right charge to replace the Notley government after one term.

    They need the NDP to take the heat for taxing the shit of average Albertans, in order to not only balance the budget on their backs but ensure you cannot blame the conservative establishment for the regressive tax regime and the disappearing Alberta Advantage. All the while continuing to serve unparalleled sense of entitlement exercised by the players in Alberta’s patch.

    David Emerson chaired the committee that laid out the path we are seeing Notley’s government role out. I warned about this 3 years ago here: http://commonsensecanadian.ca/oil-china-and-why-david-emerson-wants-alberta-to-start-paying-taxes/

    Clearly a full spectrum dominance of these conservative high level players exists right across the political spectrum and dominates all political parties.

    Reply
  13. February 1st, 2016

    The $3 million spent on the review could hardly have been better spent to the opposition’s benefit had the money just gone right into Wildrose and PC party coffers. It’s one thing to declare that one was right all along and another thing for the NDP’s own hand-picked body of experts to come along and declare that one was right all along!

    Reply
    • Dill Dough

      February 3rd, 2016

      You’re why two rights don’t make a wrong.

      Reply
  14. Farmer B

    February 1st, 2016

    Since Obama came to power the US has increased oil production by 3.4 million barrels per day, an over 70% increase in production.
    Canada produces 3.7 million barrels per day. Since 2010 the US has built over 19000 km of pipelines for transporting oil and other
    petroleum based products. But Obama is still celebrated by environmentalists. In Canada we can’t get a pipeline built and anyone
    who speaks positively about increasing oil production is considered a neanderthal. Social programs need revenue to function, putting
    up windmills and solar panels and doubling or tripling the cost of electricity won’t help it will only hurt those who can least afford it. I
    think as Canadians we have to wake up and celebrate our good fortune of being resource rich and realize that all Canadians benefit
    from their utilization.

    Reply

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