Tuesday, July 29, 2014
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Tar sands not paying off like columnist suggests

Opinion Letters

(Re: 'Group wants to slay the golden goose' in the May 21 edition of the Examiner)

Sun Media columnist Lorne Gunter asks a question of “First Nation environmentalists and lefty think-tanks” who oppose the proposed Energy East pipeline, the Northern Gateway pipeline, the Keystone XL pipeline, and ultimately the tar sands development that these pipelines support.

In some stretch of fantasy, he correlates the “$10 billion annually” that Ottawa spends on Canada’s 400,000 First Nation people with some imaginary revenue generated from the Tar Sands projects.

Thus his question, “Just where do you imagine that money is going to come from?”

Mr. Gunter refers to this exploitation of resources as 'the golden goose” and suggests that its demise would result in “the hundreds of billions in lost tax revenue”.

Our First Nations, like the rest of Canada, would be hard pressed to depend on tar sands development for tax revenue. The myth that tar sands are an economic powerhouse fuelling our economy is simple not true.

The Government of Canada currently has revenue of approx $257 billion. Almost half ($125 billion) comes from personal income tax and less than 14% ($35 billion) comes from corporate tax and a much smaller amount comes from ‘other taxes and duties’, a tiny portion of which includes royalties on oil production.

So how much of this revenue is generated by tar sands? In 2009 the tar sands sector generated zero dollars in corporate tax revenue. That includes both provincial and federal taxes.

If you include royalty income and personal income tax paid by individuals employed by that sector, the total contribution to provincial and federal coffers was less than $2 billion - of which the federal government received a meagre $217 million. That is less than 0.1% of the Canadian government’s total revenue that year of $218.6 billion.

Of course, 2010 was a better year for the tar sands. It generated almost $3 billion in total tax and royalty revenue for federal and provincial coffers. Ottawa’s share of that $3 billion was a mere $845 million. That works out to less than 0.4% of the total federal government revenue that year of $237.1 billion.

And it is still less than 10% of Ottawa’s spending on First Nations.

So to answer Mr. Gunter’s question, the revenue to support First Nation programs in Canada will probably come from the same places it always does. . . general revenue.

Of course the question is irrelevant anyways, because there should be little or no correlation between revenue from tar sands and First Nation funding.

And for those who argue that First Nations receive the royalties from tar sands extraction, 81% of the mineral rights in Alberta are owned by that provincial government. Only a portion of the remaining 19% is held in trust for First Nations.

So perhaps a more relevant question might be, what portion of the $210-billion annual spending on health care in Canada will be funded by tar sands revenue?

Unfortunately, very little.

Mike Fox


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