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If Every Norwegian's a Millionaire, Why's Alberta in Hock?
Norway cut a proper deal with oil corporations. Canadians got screwed.
By Mitchell Anderson, 15 Jan 2014, TheTyee.ca
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Turning the Kroner: Not only did oil make Norwegians wealthy, it paid for a first-class social safety net Canadians lack.
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Feeling poor? A recent news item showed that Norway's massive pot of petroleum money, now totaling CA$909.364 billion, has made every citizen a millionaire in Norwegian kroner. That works out to about $178,000 for every man, woman and child in the country. By contrast, every Canadian lumbers under an individual debt of $17,000 as Ottawa is in hock to the tune of $600 billion.
Not only is Norway ahead of Canada by $1.5 trillion, it has fully funded social programs that Canadians can only dream of.* Norwegians enjoy universal day care, free university tuition, per capita spending on health care 30 per cent higher than Canada and 25 days of paid vacation every year. By owning 70 per cent of their own oil production and taxing oil revenues at close to 80 per cent, Norway is now saving about $1 billion per week.
The so-called "Calgary School" of economic thought would say this stunning socialist success story is impossible in the same way that scientists used to believe that bumblebees cannot fly. Out in the real world, Canada is being trounced on the field of comparative fiscal management.
Last year, the Fort McMurray School District voted on a proposal to shorten the school week to four days. Why? Because the communities that include some of the largest petroleum reserves on the planet couldn't afford school bus drivers five days a week. The motion was voted down not because this situation is insanely stupid, but because trustees worried that tar sands workers couldn't access daycare during a shortened school week.
Misguided true believers
Alberta has run consecutive budget deficits since 2008 and since then has burned through $15 billion of its sustainability fund. In spite of Alberta's vast petroleum wealth, the province has not contributed a penny to the now moribund Alberta Heritage Fund since 1987. The belief that all tax is bad has led Canada's three western provinces to the bizarre position where they proudly collect less resource revenues on behalf of their citizens than any other jurisdiction in North America.
In spite of this remarkable fiscal failure, Alberta true believers are having another round of ideological Kool-Aid. The Canadian Taxpayers Federation has just launched a provincial debt clock while at the same time campaigning against tax increases. They calculate Alberta's debt at more than $7 billion and increasing by $11 million every day. In socialist Norway, national wealth is heading in the opposite direction at more than 10 times that rate, with savings of $142 million per day.
The anti-tax worldview has migrated from Calgary to Ottawa, where it is being imposed on the rest of the country. In 2009, Prime Minister Harper stated flatly, "I don't believe any taxes are good taxes." Not merely a remarkably ignorant statement from someone who holds a Masters degree in economics, this position indicates Canada's elected leader is opposed to the very project of government -- not unlike hiring a hijacker as an airline pilot.
True to his ideology, Harper's collective cuts to the GST, corporate taxes and personal income taxes now total about $45 billion per year in forgone government revenue. Canada is eliminating up to 30,000 public sector jobs in a supposed effort to balance the budget and currently collects less public revenue as a proportion of GDP than even the U.S.
This austerity program seems to extend to virtually every government program except those promoting resource extraction and hectoring environmental groups. Ottawa is spending $22 million to hire a high-priced ad firm to promote the Alberta oil sands. Last year, the Harper government somehow found an extra $8 million in a belt-tightening budget to have the Canada Revenue Agency investigate non-profits for inappropriate political lobbying (they found nothing). Meanwhile, Canadians are told we can no longer afford mail delivery.
I had the privilege of travelling to Norway in 2012 to research a series for The Tyee on the country's remarkable petroleum success story. Many of the experts I interviewed expressed surprise and sadness that Canada had not done more with our vast resource wealth. One veteran oil engineer said, "We had oil, but you have oil and everything else."
Our national niceness seems to have infused our dealings with resource interests, whereas Norway's Viking chutzpah allowed them to negotiate much tougher terms with the world's most powerful industrial sector.
This prophetic cultural divide has left our remarkably lucky country -- blessed with everything from potash to diamonds -- slashing services and public sector jobs in an effort balance the books. Meanwhile in Norway, every citizen just became a millionaire.
*Correction: Jan. 17 at 12 p.m. Figure changed from $1.4 trillion to $1.5 trillion. [Tyee]
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