Canada: What are we doing with our resource wealth?
Profit from ‘Stateoil’, the #4 ranked oil company in the world and 70% owned by the Norwegian Government, has made all Norwegians Crown millionaires (Link to Article) (Link to Ownership). When our family visited Norway in the 1970s, hundreds of oil rigs were being built. The North Sea oil boom was well underway and from that date forward, Norway kept tight control of their share of the resource.
What can Canada learn?
As a result of a FB post made by the daughter of a Cold Lake High School friend about free university in Norway, and an earlier post I made about the quality of ‘birth to death’ social services in Oman as compared to Canada, a few folks were inspired to take me to task. My position in both cases was that Canada and the Provinces need to make better choices regarding the use of our natural resources. Let’s take a look at how Norway manages its resources.
The country is proportional in population, size (Norway is about a 1/3 smaller) and resource wealth as Canada, yet by every measure Norway does a better job of managing their resources. This benefits the entire population. The little Kingdom (yes, it is a Kingdom) is a constitutional democracy with a social democratic system of government, not much different from our own.
Taxes (on which I was mostly taken to task) are admittedly high, just as in many Scandinavian countries, but Norway’s across the board social support system is second to none in the world. Importantly, those high taxes do not mean the citizens have a lower standard of living. When you deduct the benefits received through their social system, they are in much batter shape than the citizens of Canada, Australia and many other similar countries. For better or worse, in sickness and in health, the Government of Norway is tasked with seeing to the collective need of the entire population. Corporations play an important role, but the Government makes sure the people get equitable returns as the resources clearly belong to the people not the corporations.
Collectively, Norwegians are a frugal lot and I doubt any ‘right’ thinking Norwegian would long suffer a Government that began to waste their resource wealth as they run their country into debt. As you can easily confirm, Norway is now among the richest in the world. To gain that advantage, they maintain a controlling interest in all their nature resources. They have purchased sizeable chunks of the oil patch in Alberta and other resources around the world. Their goal is to take advantage of the high value of these resources as a means of securing the future for their citizens.
In Canada our system differs markedly in that the Provinces are largely responsible for managing our resource base and to do this they have entirely turned them over to private corporations. The only direct value they receive is through taxation and the companies often squeeze the government for low taxes as well as sizeable grants when they wish to expand. British Columbia and Alberta sit as prime examples of how to squander the wealth. In B.C, by the time we approached the collapse of our massive forestry and fishing resource, we had accrued millions if not billions in debt, rather than billions in savings. You might suggest that is the fault of government, but government was squeezed as noted above. It often seemed government was so closely aligned with the needs of corporations, they sold the farm.
Alberta has done same with their oil. They were once the richest province in Canada (perhaps they still are on paper at least) and at one time in the not to distant past they had set aside a sizeable ‘heritage’ fund. In spite of all this, today they have accumulated billions in debt and along the way they have slashed their social service network to the core. All this was done in a province that is considered among the most ‘right’ thinking in Canada.
Many have no idea why we have allowed this wholesale rape of our resource system. As in Norway we should be collectively preparing for our future by reaping the benefit of our resources while they last, rather than selling them off to the highest bidder. We also need to be weaning ourselves of dependence on fossil fuels. Read some of the stories on what Norway is doing.
Perhaps for to long we have bought into the American ideal that everything can be solved within a ‘free enterprise’ system where government intervention is reduced to the lowest common denominator and any form of taxation is a burden to heavy to bear. We have all witnessed the rapid descent of the United States from being a world leader to a country that is unlikely to ever again show such leadership. It won’t be to long before China owns more of the United States than do the people of the United States. Canada is moving along the same path as ‘state managed’ rich countries buy up large swathes of our natural resources.
What we are left with is debt and as we well know, debt is an albatross around the neck of an individual, just as it is with a nation.
Harold McNeill
References:
An excellent summary of the importance of using resources wisely during the boom times is provided by Alan Gleb of the Washington based Centre for Global Development during a recent visit to Canada. Link here: Oil Myths vs Read Problems
Comparison of Norway and Australia. Similar comparisons could be made to Canada.: The Role of Sovereign Wealth Funds in Managing Resource Booms
More on Norway’s Sovereign Wealth Fund (Link Here)
General outline of Canada’s resource wealth. A tongue in cheek article in McNeill Life Stories: Pax Canadiana
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