Planning for the mission comes as oil prices have fallen below $44 (U.S.) a barrel for the first time since March and the Toronto Stock Exchange’s oil and gas subindex has sunk more than 40 per cent in 12 months.TODD KOROL/Reuters
Alberta's new NDP government is planning a charm offensive in the continent's financial capitals to battle investor skepticism over its ability to run a massive energy-fueled economy.
The province's rookie Energy Minister, Marg McCuaig-Boyd, plans to visit Toronto, Montreal, New York and Boston in the fall to explain the government's energy and economic policies and priorities to major investors.
The election of Rachel Notley's New Democrats to a majority in May, ending more than four decades of Progressive Conservative rule, worried some in the business community that the Alberta energy sector will become a cash cow for an ambitious and costly social agenda.
Fear on Bay Street and Wall Street was fuelled by the party's campaign promises to raise corporate taxes by a couple of percentage points and to put oil and gas royalties under the microscope.
However, Ms. McCuaig-Boyd said in an interview that her government's approach to the economy, which has been battered by the collapse in oil prices, is guided by three "pillars" – prosperity for Albertans, stability for industry and certainty for investors.
The trip to centres of finance, being considered for September or October, addresses the latter, she said. It follows similar meetings in recent weeks with energy and investment-industry leaders in Calgary and Edmonton.
"We'll talk to investors about what our plans are and assure them that we are open for business, and do what we can to encourage investment to stay here in Alberta – and to come to Alberta," Ms. McCuaig-Boyd said from her constituency office in Fairview, Alta.
Planning for the mission comes as oil prices have fallen below $44 (U.S.) a barrel for the first time since March and the Toronto Stock Exchange's oil and gas subindex has sunk more than 40 per cent in 12 months. The sector has shed thousands of jobs since the downturn began.
The trip is the latest example of how the left-leaning party is trying to show it is aware of the energy sector's importance to the economy, and does not aim to put the province at a financial disadvantage as it sets a new political course.
It could be an uphill battle. On the federal campaign trail last week, Conservative leader Stephen Harper sought to stoke fears about the Alberta NDP, calling its impact on the economy a "disaster."
Ms. McCuaig-Boyd said Mr. Harper was out of line. "We're very thoughtful in everything we do. We're not anti-business. We represent people who have had to work hard and be fiscally responsible. I don't think he's giving us our due at all.
"I've been NDP all my life; I've been a big supporter. We sometimes get bad press and I don't agree with it at all."
Among other moves to build business cred, the NDP appointed Dave Mowat, chief executive of ATB Financial, the government-owned bank and major lender to the energy sector, to head up the panel reviewing the royalty structure. The rest of the members are expected to be named this month.
Ms. Notley conscripted former Bank of Canada governor David Dodge to advise on how to finance spending on such infrastructure as roads, schools and hospitals as wounded energy markets squelch revenues and point to a deficit in the upcoming budget of more than $5-billion (Canadian).
There is friction, however. Last week, Canadian Natural Resources Ltd. reported that the 20-per-cent corporate tax increase forced a one-time charge of $579-million to account for future tax liabilities, which resulted in a net loss in the second quarter. The higher rate will restrict money available for future employment, the company said.
In addition, the government has drawn criticism in some quarters for eschewing its predecessor's active promotion of oil-pipelines proposals through shuttle diplomacy, notably TransCanada Corp.'s long-delayed Keystone XL project.
Ms. McCuaig-Boyd said it would be pointless to try to push the contentious project in Washington anyway, with the U.S. presidential election ramping up. The NDP is supporting the energy sector's ambitions to improve access to markets, however, the minister said.
"We can certainly advocate for market access with our neighbours and help create the climate that's going to make it easier for pipelines to be built," she said. "They're still the safest and most economical way to transport our product to market, so I think being a strong advocate for the industry helps. Certainly, that's critical – if we can't move our product, we're hooped."
She pointed to TransCanada's Energy East pipeline to the Atlantic coast as being an all-Canadian solution "that's worth the effort." The $12-billion development faces a number of potential hurdles, including concerns held by Quebec Premier Philippe Couillard.
On royalties, Ms. McCuaig-Boyd said she has heard from energy executives that all costs, including taxes, a higher levy on carbon emissions, operating expenses must be considered at the same time, especially with the industry under severe pressure.
"So we're going to be doing that in our review. We're going to be talking to all groups. We don't want to tweak something at the expense of some other part of the industry, so we want to make sure that we're very thoughtful and honest as we go through," she said.
Jeffrey Jones