The North West Sturgeon Upgrader: Good Money after Bad?

The North West Upgrader (NWU) project illustrates the risks of government-led efforts to diversify Alberta’s economy. What began as a low-risk, low-cost project to encourage domestic bitumen upgrading has morphed into a multi-billion dollar boondoggle with high risks for Alberta taxpayers. Originally, the Government of Alberta (GOA) intended to collect bitumen from producers in lieu of royalties and sell it to provincial upgraders, adding value to the commodity and creating jobs and revenues in Alberta. The private sector was to build and finance the new upgraders, as well as assume the market risks of low margins. The 2008 financial collapse effectively killed that plan. With just one prospect (NWU) remaining, the Stelmach government decided to be more than the middleman. The GOA committed to retain ownership of the bitumen up to the point of sale, pay NWU a toll for the processing, and then sell the upgraded product. Under a new “take or pay” arrangement, the GOA assumed liabilities estimated at $19 billion over the 30-year contract with NWU, as well as the market risk of having to sell the upgraded product at below costs. As four different premiers and six different energy ministers cycled through Edmonton, construction costs soared to over$8 billion. The original $6.5 billion cap on the GOA’s liability for construction costs disappeared, and the GOA—and by extension, Alberta taxpayers— are now on the hook for$26 billion in processing payments — the equivalent of $63 per barrel. Falling oil prices are further undermining the prospects for the investment to break even. Written from a rare insider’s perspective, this paper analyzes the lack of effective government oversight and due diligence surrounding the North West Upgrade. Rather than being an exception, NWU fits the larger and longer pattern of failed “forced-growth” diversification initiatives in Alberta and other provinces. Alberta politicians should think long and hard before succumbing to the next version of the “refine it where you mine it” diversification siren song

Export Pipelines and Provincial Rights: How Best to Get to the West Coast and Asian Markets

The passing of former premier Peter Lougheed provided an occasion to remember not just his fierce defense of Alberta against the predatory policies of then prime minister Pierre Trudeau, but the substance of that defense: strong provincial rights based on the constitutional principle of equality of the provinces

No Statecraft, Questionable Jurisprudence: How the Supreme Court Tried to Kill Senate Reform

In the Senate Reform Reference of 2014, the Supreme Court of Canada declared the Harper government’s proposed reforms to the Canadian Senate unconstitutional. The court ruled that the Federal Government could not legislate non-binding, consultative elections for selecting senators, nor legislate term limits for senators without the consent of at least seven of the 10 provinces. It also ruled that abolishing the Senate would require the unanimous consent of all 10 provinces. The court’s ruling is widely understood to have put an end to the Senate reform movement of the past three decades and to have constitutionally entrenched the Senate status quo. My analysis criticizes the court for failing to play a constructive role in facilitating the political reform of an institution that has ceased to serve any useful political purpose (other than patronage) and for unnecessarily condemning Canadians to endure this dysfunctional second chamber for at least another generation. In earlier analogous cases of political deadlock and constitutional ambiguity— the Patriation Reference of 1981 and the Quebec Secession Reference of 1997—the court exercised “bold statecraft [if] questionable jurisprudence” to craft compromise rulings that facilitated subsequent resolutions by elected governments. But not in this case. The court could have easily reached a more constructive conclusion following its own “living tree” approach to constitutional interpretation. The court ignored its own “foundational constitutional principles” of democracy and federalism—values that would be enhanced by provincial Senate elections. Indeed, the court has now given greater constitutional support for secession referendums in Quebec than it has for democratically elected senators. I suggest that there is still an exit strategy for the Harper government out of this judicially created dead end: simply turn the appointment of future senators over to provincial premiers, and let the dynamics of partisan provincial politics push the future selection of senators toward democratic elections

The Siren Song of Economic Diversification: Alberta’s Legacy of Loss

Former Alberta premier Peter Lougheed is celebrated for his defence of the province and Western Canada during the energy wars of the 1970s, and deservedly so. Prime Minister Pierre Trudeau was a formidable opponent. He was able and willing to use the full arsenal of federal powers to redirect soaring western energy revenues away from Alberta to Ottawa. For those of us in Western Canada, it is unpleasant to imagine what the outcome of this struggle would have been if a lesser man than Peter Lougheed had been at Alberta’s helm. But there is another aspect of the Lougheed legacy that is less remembered because it is less celebrated—also deservedly so. These were Lougheed’s ambitious economic diversification projects. Between 1973 and 1993 (when Ralph Klein became premier), the Lougheed-Getty “forced-growth” economic diversification projects are conservatively estimated to have cost Albertans $2.2 billion. While former premier Don Getty got most the blame for these losses (as many occurred during his watch), most of these programs began earlier. Lougheed’s push for government-led diversification of the Alberta economy was a policy hallmark of his 1971 electoral breakthrough, and marked a sharp break from three decades of Social Credit laissez-faire policies. The Lougheed-Getty diversification fiascos are of more than just historical interest. While the subsequent Progressive Conservative (PC) regime of Premier Ralph Klein (1993–2006) followed an explicit philosophy of “government is not in the business of business,” the more recent Stelmach (2006–11) and Redford (2011-14) governments have not. Both have embraced government-sponsored “value-added” and diversification initiatives, including the North West Redwater Partnership upgrader and two new endowments to provide “funding for social and cultural innovation, and agricultural innovation.”† As Alberta’s fifth premier in the past nine years, Jim Prentice, takes the helm and tries to restore some stability to Alberta’s public finances, it merits revisiting the Lougheed-Getty experience for lessons learned. Our read of their record cautions against going down the same road again. While we identify several successes (e.g., Syncrude, Alberta Energy Company, and the ethane-based petrochemical industry), these were mostly in the hydrocarbon energy sector, and so contributed little to diversifying Alberta’s economy. Our analysis identifies the largest dollar losses (the “Dirty Dozen”), several of which suggest that failure to control costs is endemic to government-led projects. Last but not least, the sheer number and diversity of government-funded projects reflects an unhealthy culture of corporate cronyism. With billions of dollars sitting in the newly created Alberta Heritage Savings Trust Fund earmarked for “diversification” and “capital projects,” the temptation to spend became irresistible. The Heritage Fund, rather than serving its original purpose of a long-term “rainy-day account,” became a giant slush fund for ministers’ pet projects. The result is that, in real dollars, the Heritage Savings Trust Fund has a lower net worth in 2015 than it did in 1987. By the time Klein won the leadership of the PCs in 1993, his predecessors had racked up over$23 billion in net debt. Klein is widely celebrated by some (and criticized by others) for the harsh budget cuts he made to eliminate the structural deficit he inherited. Less well known is that the Klein team also terminated almost all the Lougheed-Getty diversification and stimulus programs. In their stead, the Klein governments—under the leadership of treasurers Jim Dinning and Stockwell Day—pursued a diversification policy based on macroeconomics: making Alberta the most taxcompetitive jurisdiction in Canada. This “build-it-and-they-will-come” approach was intended to attract both financial and human capital. This approach has enjoyed modest success thus far, as witnessed in the growth of the financial services sector and the relocation of many corporate head offices to Calgary. It is clearly a lower-risk path to sustained prosperity than the ill-fated, government-led “forced-growth” initiatives of the Lougheed-Getty era

Policy Advice to Alberta’s New Premier

On September 6th, 2014, members of the Progressive Conservative Party of Alberta elected Jim Prentice as leader of their party, and Premier of Alberta.The School of Public Policy assembled its key thinkers in economic, taxation, energy and natural resource policy to provide unsolicited but important advice to Premier Prentice on some areas of policy that matter most to Alberta, and that will demand the Premier’s attention as he takes office.These are opinion pieces, are not peer reviewed, and reflect the views of their authors alone

Environmental SLAPPs in the UK: threat or opportunity?

Strategic lawsuits against public participation (SLAPPs) brought against the environmental movement in the UK since the 1990s are examined. SLAPPs, a form of Green backlash, have been mobilised across a wide range of policy areas that have seen vigorous campaigning and protest by the movement, including roads, GMOs and, more recently, climate change. SLAPPs are typically regarded as a threat, designed to close down democratic free speech and protest. However, in the UK, there are some notable cases where the environmental movement has been able to use agency to convert what may appear as a legal threat into a positive legal or media opportunity

Search for composite and exotic fermions at LEP 2

A search for unstable heavy fermions with the DELPHI detector at LEP is reported. Sequential and non-canonical leptons, as well as excited leptons and quarks, are considered. The data analysed correspond to an integrated luminosity of about 48 pb^{-1} at an e^+e^- centre-of-mass energy of 183 GeV and about 20 pb^{-1} equally shared between the centre-of-mass energies of 172 GeV and 161 GeV. The search for pair-produced new leptons establishes 95% confidence level mass limits in the region between 70 GeV/c^2 and 90 GeV/c^2, depending on the channel. The search for singly produced excited leptons and quarks establishes upper limits on the ratio of the coupling of the excited fermio

Search for charginos in e+e- interactions at sqrt(s) = 189 GeV

An update of the searches for charginos and gravitinos is presented, based on a data sample corresponding to the 158 pb^{-1} recorded by the DELPHI detector in 1998, at a centre-of-mass energy of 189 GeV. No evidence for a signal was found. The lower mass limits are 4-5 GeV/c^2 higher than those obtained at a centre-of-mass energy of 183 GeV. The (\mu,M_2) MSSM domain excluded by combining the chargino searches with neutralino searches at the Z resonance implies a limit on the mass of the lightest neutralino which, for a heavy sneutrino, is constrained to be above 31.0 GeV/c^2 for tan(beta) \geq 1.Comment: 22 pages, 8 figure

Search for lightest neutralino and stau pair production in light gravitino scenarios with stau NLSP

Promptly decaying lightest neutralinos and long-lived staus are searched for in the context of light gravitino scenarios. It is assumed that the stau is the next to lightest supersymmetric particle (NLSP) and that the lightest neutralino is the next to NLSP (NNLSP). Data collected with the Delphi detector at centre-of-mass energies from 161 to 183 \GeV are analysed. No evidence of the production of these particles is found. Hence, lower mass limits for both kinds of particles are set at 95% C.L.. The mass of gaugino-like neutralinos is found to be greater than 71.5 GeV/c^2. In the search for long-lived stau, masses less than 70.0 to 77.5 \GeVcc are excluded for gravitino masses from 10 to 150 \eVcc . Combining this search with the searches for stable heavy leptons and Minimal Supersymmetric Standard Model staus a lower limit of 68.5 \GeVcc may be set for the stau mas

Hadronization properties of b quarks compared to light quarks in e+e- -> q qbar from 183 to 200 GeV

The DELPHI detector at LEP has collected 54 pb^{-1} of data at a centre-of-mass energy around 183 GeV during 1997, 158 pb^{-1} around 189 GeV during 1998, and 187 pb^{-1} between 192 and 200 GeV during 1999. These data were used to measure the average charged particle multiplicity in e+e- -> b bbar events, _{bb}, and the difference delta_{bl} between _{bb} and the multiplicity, _{ll}, in generic light quark (u,d,s) events: delta_{bl}(183 GeV) = 4.55 +/- 1.31 (stat) +/- 0.73 (syst) delta_{bl}(189 GeV) = 4.43 +/- 0.85 (stat) +/- 0.61 (syst) delta_{bl}(200 GeV) = 3.39 +/- 0.89 (stat) +/- 1.01 (syst). This result is consistent with QCD predictions, while it is inconsistent with calculations assuming that the multiplicity accompanying the decay of a heavy quark is independent of the mass of the quark itself.Comment: 13 pages, 2 figure