Stelmach warns Ottawa on oil sands
Report suggests ending tax breaks for producers

DEAN BENNETT

Canadian Press

March 5, 2007

EDMONTON -- Alberta Premier Ed Stelmach has urged caution on a Commons committee report that suggests more federal involvement in the oil sands and a reduction in tax benefits for producers.

"Everyone forgets that over the next 20-year period, about $51-billion, 41 per cent of the income, flows to the federal government," he said yesterday.

"They actually make more on the oil sands than we do.

"There's also tremendous sharing of that wealth with other provinces. It means jobs. It means jobs in Ontario. It means jobs in Quebec. It also means jobs in the Maritimes. So when they start thinking about starting to dicker with the investment climate, they've got to think it through because it's going to affect Canadians."

The Premier was responding to a leaked draft report of the Commons natural resources committee. In it, the panel suggests that Ottawa cancel its generous tax treatment of the Alberta oil sands industry that would put it on the same footing as the rest of the energy sector.

The tax break -- the accelerated capital cost allowance -- was implemented to spur oil sands technology and is now estimated to be worth $1.4-billion annually.

It has been a flashpoint of contention as oil sands operators now reap record revenues.

There is speculation that the tax break may be revoked in the budget set for March 19.

The report says that while Alberta owns and operates the oil sands, Ottawa may need to step in through fisheries and environmental protection legislation to address the industry's impact on the environment.

The report also calls for a firm limit on greenhouse-gas emissions from the oil sands.

Mr. Stelmach said the province is consulting with industry groups but won't be singled out.

"To go back to 1990 levels after all of the growth in the economy?" he said.

"We're not the only ones who are going to take the hit. I was very clear when we met with the federal government. There's the auto industry, there's the transportation industry. We've got to do this together.

"We all share a common goal but you can't take it out on Alberta."

He said a solution is crucial.

"These are vast resources and investments that come from outside Canada, from different countries, so a very predictable, stable investment climate is very necessary for us to sustain the kind of economy and growth that we're used to."

The oil sands sector has been expanding much faster than expected: Production was predicted to hit one million barrels a day by 2020, but surpassed that mark three years ago.