David Finch is a public historian and the author of more than 20 books on the history of the Canadian West.
Alberta At A Crossroads, the most recent Alberta royalty review, sets the gold standard.
With Alberta's environmental reputation on the line, a new provincial government in power and the price of oil falling, leaders banded together for the first time in a generation to create a document that provides stability and security.
Alberta governments have conducted royalty reviews every decade since 1931, the year after the province gained control over its natural resources. Wise leaders in government, the civil service, industry associations and corporations have collaborated many times on royalty reviews.
But shortsighted naysayers still cry wolf every time, yelling: "Don't kill the goose that lays the golden egg!"
Reviews have been conducted by governments of many different stripes: The United Farmers of Alberta in 1931, the Social Crediters from 1941 to 1961, the Progressive Conservatives from the 1970s through 2007. And now a New Democratic government.
Each time the reviews have been done properly, they have contributed to Alberta's prosperity, international reputation and investor confidence.
Social Credit royalty reviews in 1941, 1951 and 1961 brought together the best minds in business and the predecessor to the Canadian Association of Petroleum Producers, with government technocrats to review and update the facts.
Given that the price of oil didn't change much during this period, the royalty rate didn't increase much either.
Premier Peter Lougheed's royalty review in the 1970s – in the midst of an oil-price explosion – was also fact-based, thorough and helped guide public policy. And it resulted in a near quadrupling of the royalty rate and other take from the booming oil patch. As was appropriate for the times.
Industry supported the next royalty review, in 1986, wholeheartedly under premier Don Getty. The collapsing world oil price was changing the economics of the oil patch – especially the oil sands – and a thorough, educated and collaborative review of royalty rates resulted in a new system that encouraged investors to develop Alberta's bituminous sands.
Alberta went without a proper royalty review for the next two decades, guided by a flippant premier.
"We do get our pound of flesh," Ralph Klein replied in 2006 when asked about a royalty review his government had promised to do in-house in the 1990s. "I don't know if it was completed or not; nor do I give a tinker's damn whether it was completed or not. I've always been satisfied that our royalty regime is proper and right."
That same year, Mr. Lougheed advised Albertans to "think like an owner."
The royalty review commissioned by premier Ed Stelmach in 2007 pleased no one; without a working model for conducting an excellent review, its consultation process was flawed. It came to inappropriate conclusions and had to be revised immediately, in a process that included closed-door consultation with industry.
Those behind Alberta's 2016 review learned important lessons from this history.
First, that the brightest and best minds in industry, academia and government must be called upon for the benefit of the public good. The 2016 royalty review panel members and the people who served on the subcommittees are some of the best in society.
Next, updated information is crucial. Technology, markets, regulations and society change quickly so all partners need to work from the same knowledge base. Investor confidence is based on solid facts.
Crisis times should not be the impetus for royalty reviews. Timely reviews – every 10 years at least, perhaps even twice a decade – are essential. Ignorance, short-sighted condemnation and emotional outbursts are only proof of the seminal importance of high-quality reviews; timely information casts out fear.
Neither free market nor command and control ideologies provide a useful answer to the Alberta resource revenue question. Some capitalists cry wolf every time the provincial government conducts a royalty review. And some radicals claim the government is not capturing a fair share on behalf of the people in exchange for their Alberta birthright. Both ideological perspectives are wrong.
Alberta's and Canada's resources have always been developed by innovative, balanced and visionary partnerships between government and industry.
Canadian Pacific Railway was a nation-building venture, made possible only by federal government grants and private-sector ingenuity. Encana is a descendant of the CPR land grants, which also came with mineral rights.
Many Alberta institutions began as partnerships between the provincial government and private companies in aid of the public good.
Bituminous sands development would have been impossible without the support of the University of Alberta and the Alberta Research Council starting in 1921. Premier Ernest Manning provided access to petroleum markets through the pipeline system so Suncor could begin producing oil commercially in 1967 in the face of opposition from conventional oil producers. And Mr. Lougheed invested taxpayer funds into Syncrude so it could begin production in 1978.
Mr. Manning believed that common carrier pipelines were in the public interest – allowing access to markets for all Alberta petroleum products – so he mandated the creation of Alberta Gas Trunk Line in 1954. It became Nova and is now part of TransCanada Pipelines.
Mr. Lougheed believed the people of Alberta needed their own window into the oil industry and created the Alberta Energy Co. in 1973, exclusively owned by the Alberta government and Alberta investors. Prime minister Pierre Trudeau created his oil company, Petro-Canada, two years later in 1975.
Most recently, the Alberta government has invested in the North West Upgrading Sturgeon Refinery, which is scheduled to open soon – yet another in a series of important projects that can help the province diversify its economy.
Alberta resource projects have all benefited from being monitored by the international gold standard for oversight, the Alberta Energy Regulator, which dates to 1938.
The development of Alberta's natural resources is a public-private partnership as old as the province and deserves to be sustained by collaborative royalty reviews.
Finally, all partners in the resource development process must commit to bringing their best to the table. No more cheap shots in the news media, political name-calling, grandstanding or incomplete and biased comparisons with resource revenue systems in other jurisdictions.
Alberta is indeed at a crossroads. The 2016 royalty review allows us to stand proud on the world stage. Why does it always take a crisis to bring out the best?