Oil is not subsidized at all, Mr. McGuinty

McGuinty & his dubious advisors: Bruce Lourie, Rick Smith

By Licia Corbella, Calgary Herald

News flash for Ontario Premier Dalton McGuinty: the oil and gas industry isn’t being subsidized by Ontario or any other taxpayers for that matter.  In fact, the “sworn enemies of corporate welfare,” the staff at the Canadian Taxpayers Federation, spent months hunting for these apocryphal subsidies to big oil and, try as they might, they found nothing. Nada. Zero.

“We looked and we looked and discovered that these often-cited subsidies to the oil and gas industry simply weren’t there,” admitted Derek Fildebrandt, acting federal director of the Canadian Taxpayers Federation.

“Dalton McGuinty is pretty sorely mistaken, so is Jack Layton when they say the oil and gas industry is getting billions of dollars in subsidies. It’s simply not true,” said Fildebrandt.

“There were some taxdeferral mechanisms with regard to capital costs on multibillion dollar plants, but the federal government closed those loopholes, so there is nothing now at all,” he added.

On Wednesday, during the annual Council of the Federation Conference that ended Friday in Vancouver, McGuinty said he was tired of Ontario subsidizing the West’s oil and gas industries.

“There is preferential tax treatment at present for people who want to develop oil and gas projects. I’ve got nothing against that. But what about some good tax treatment as well for people who want to develop cleanenergy industries in Ontario?” said McGuinty.

The only money the feds have provided the oil and gas industry was a $120-million grant from the Clean Energy Fund to help Shell Canada’s proposed $1.35-billion carbon capture and storage project at the Scotford refinery near Fort Saskatchewan. That will help Canada reduce its greenhouse gas emissions and clearly falls within the mandate of the fund.

Ultimately, the reason Canada is doing as well as it is when compared to the rest of the world has much to do with oil and gas activity in the West. Alberta, B.C. and Saskatchewan are currently the only net contributors to Confederation this year. It can be argued that Newfoundland is too, though it is still receiving equalization payments via a special deal established by former premier Danny Williams.

Ontario, on the other hand, will be receiving equalization – $2.2 billion more than it is contributing. Most of that money will come from Alberta as Alberta is, on a per-capita basis, the largest net contributor to the rest of Canada – by far.

According to figures com-piled by Alberta Finance and Enterprise, in 2010, Albertans paid about $14.1 billion more to the federal government than they got back in the form of services. That works out to $3,785 for every man, woman and child in this province.

In 2008, the last year that figures are available for all provinces, Ontario was not yet a “have not” province and contributed $14.4 billion more to the rest of Canada than it received back in federal grants and services.

That is equivalent to $1,113 for every Ontarian. In that same year, Alberta made a net contribution of $20.05 billion to Confederation, or a total of $5,577 for every Albertan. B.C. was the only other net contributor in 2008, providing $4.4 billion or $1,003 per British Columbian to the rest of Canada.

So, not only was Alberta the biggest contributor on a per-capita basis, but in real terms. All other provinces were net recipients.

Since then, partly because of McGuinty’s disastrous policies and largely because of the global recession that struck in 2008, Ontario has become a recipient of equalization.

Most Albertans are happy to share with their countrymen, but it’s rather galling when not only doesn’t the province get a quiet pat on the back, it gets a kick in the teeth instead.

“If McGuinty is going to complain about equalization, shouldn’t he be complaining about the other recipients? Isn’t it bizarre to complain about the contrib-utors?” asks Fildebrandt.

You’d think. But McGuinty is fighting for his political life as he faces an election in the fall and his popularity is down thanks largely to his Clean Energy Act, which has caused hydro bills to soar.

McGuinty was basically calling on the feds to subsidize green energy projects in Ontario that are already being subsidized by ratepayers and taxpayers with very little to show for it.

“McGuinty’s green energy pet projects are bankrupting Ontario and its businesses.

Our hydro rates have skyrocketed as a result and it’s hurting our economy because energy is significantly more expensive now,” said Fildebrandt.

Facing an election in the fall, McGuinty is trying to “deflect Ontarians’ attention away from his disastrous record” and his Green Energy Act, said Fildebrandt, by attacking “the one region that’s keeping the entire country afloat.”

McGuinty’s hypocrisy is breathtaking when you consider the multibillion bailouts the Ontario auto-sector has received in the past few year.

Perhaps McGuinty would enhance his image in the eyes of the Ontario electorate if he defended the poor outcome of his policies instead of arbitrarily lashing out with fictitious accusations directed at the only region of the country that’s keeping him afloat.

19 thoughts on “Oil is not subsidized at all, Mr. McGuinty

  1. On Wednesday, during the annual Council of the Federation Conference that ended Friday in Vancouver, McGuinty said he was tired of Ontario subsidizing the West’s oil and gas industries.

    I think what he means is that he does not want to pay for the oil and gas.

    It’s called the market system — you want, you buy you pay. Get used to it McGuinty — though it should be easy for you on your big fat stinking retirement pension which you will be collecting shortly.

    Appalling ignorance — and he is the captain of this ship of fools! Bahhh humbug!

  2. I think McGuinty left with his tail between his legs when confrunted with a few truths he had no courage to face! Forest fires indeed!

  3. The oil and gas industries are subsidized by not having to pay for the damage they do to the environment by emitting large quantities of pollution into the air and rivers.

    If I were to pump pollution into the air as a small business, I would be fined. If I were to pollute a river I would also be fined but for some reason oil companies keep getting away with it!!

    • Bill:

      Please substantiate that claim. It should make interesting reading — whatever papers you submit.

      Studies please — no news reports for this one.

    • Actual, most citizens are the ones pumping it into the air.
      No transportation in your business?
      The industry is largely only the facilitator

      • Yes the citizens are the ones pumping it into the air because they aren’t offered a cleaner choice. When was the last time you could fill up your tank with ethanol or electricty at your local gas station? For a few years you say? Why? Because the gov’t made it so and people like yourselves are trying to stop it.

    • Bill, You might want to know that Alberta is the only province in the country that has a carbon tax ($25/ton) and emmisions limits with increasing efficiency requirements.

  4. Surprise, surprise. McGuinty caught in another lie.
    Is it October 6th yet?

  5. The oil and gas industry may receive tax deferrals on exploration and development expenses (to encourage those activities), but if you added up royalties they pay to provincial governments, income taxes they pay to provincial and federal governments, and payroll and other taxes on their employees’ salaries, you’re talking multi-billions of dollars of revenue to both levels of government. It is nonsensical to only mention the tax credits (assuming this is what is meant by “subsidies”) without also counting taxes paid to all levels of government. The wealth created by the oil and gas industry in Canada is simply astounding. It helps us all continue to live in the manner to which we are accustomed to, in spite of a faltering Ontario economy.

    • If wealth is created from pumping something out of the ground and refining it then extracting electricity from wind, sun or water will also create wealth BOB. Only the latter, creates wealth for the long run where oil will probably become unaffordable some day.

      • You still have not substantiated your subsidies claim — until you do it’s hard to believe anything you say.

        Of course you could admit that you were wrong.

      • Wind has the least amount of energy that can be extracted of any of the sources you mention to produce electricity. Solar has some benefit but only during daylight hours. Since both of these sources only produce energy when the wind is blowing or the sun is shining it makes them very expensive and unreliable sources for electricity. Do the physics please!

      • Actually, wind and solar destroy wealth because they cost more to produce a unit of power than more economical means. When we are forced to pay hundreds of dollars more for power than is necessary, we have less to spend on other things we’d like to buy with our money, such as food, clothing, entertainment, or whatever. When our hard-earned money is wasted on unproductive government boondoggles, it is basically sucked out of the productive part of the economy and you get a “reverse multiplier” effect. This is how one “green job” ends up wiping out 2.2 jobs in the real economy (per Spain’s experience).

        It reminds me of some stats I saw out of old communist Russia. Their (government dictated) products were so inferior that they had negative value added. That is to say, the steel, energy, etc. that went into their Lada cars (for example) was worth more as raw materials than when it was transformed into a final product such as a crappy car that no one wanted!

        Back to oil…if it becomes so scarce that it becomes unaffordable as a fuel (we produce no electricity from oil today for that very reason, by the way) then the field will be open to all sources of fuel and all types of technology to replace it in the most economical fashion possible. The market should decide which fuel and technology this should be, not the government. The government doesn’t exactly have a stellar record of picking winning techonologies or industries!

    • Bill, not necessarily. If the value of the inputs are less than the outputs you are correct, and that is the model most successful businesses, including oil and gas, follow. But if the value of the inputs is more than the outputs either the businesses fail, or are kept alive by subsidies. And this is the model the wind industry follows.

    • I will be out a few dollars here but Alberta sends approx 139,000 per person in transfer payments to Ottawa. Ontario sends something like 80,000. Not an attack on Quebec but they actually don’t send anything per person when all is said and done. Where I am going with this is that Oil sends a lot of money to Ottawa….Quebec who may very well be the largest voice against the Oil sands benefits the most from it… I could be off a bit on the figures but I think you get my point.
      A barrel of oil has to be at $75 to make the oil sands viable while OPEC is more than happy with $50.
      The issue with the Oil sands is water destruction and the fact that this resource is not being protected for future Albertans, and in some peoples opinion is being given away far too cheap.

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