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Playing the Trump card to Alberta’s Advantage

December 23, 2016
Playing the Trump card to Alberta’s Advantage

This op-ed was published in the December 2016 issue of Oilfield PULSE Magazine and is available for other outlets to publish, free of charge.

The election of Donald Trump in the United States has implications far beyond that country’s borders – wall or no wall. The President-elect of the global superpower and Canada’s closest trading partner is wading into several policies of significance to the True North, and Alberta in particular.

Trump made clear early on in his presidential bid that he was supportive of Keystone XL. He vowed to give the pipeline a green light if elected, though he wanted a ‘better deal’ for the US. For Alberta, this almost certainly still represents more financial gain (specific to this project) than we’d muster under the anti-Keystone XL positions taken by both Hillary Clinton and outgoing President Barack Obama

In Alberta, one of our greatest economic challenges is getting our oil to market. Not every pipeline is created equal, but any pipeline means a flow of oil outward and a subsequent flow of dollars into Albertans’ pockets. 

Tasked with tackling a massive deficit – $14.5 billion when you account for infrastructure spending – Alberta’s NDP MLAs should jump at every opportunity to shovel cash back into the financial hole they continue to dig. Supporting pipelines should be a no-brainer.

For this reason, the approvals of Kinder Morgan and Line 3 were great news for the Alberta economy (provided the pipelines actually get built).

So it’s curious that Alberta Premier Rachel Notley was not more enthusiastic about the prospect of putting shovels in the ground for Keystone. When asked about supporting Keystone XL, following Trump’s election, the premier said she had other priorities.

Ultimately, however, the decision on the 830,000-barrel pipeline lies in Trump’s hands. Keystone XL was approved on the Canadian side in 2009. Approval for a pipeline is certainly not the same thing as seeing an actual pipeline built, but Trump’s clear support for Keystone XL is a positive for Alberta.

Following the approvals of Line 3 and Kinder Morgan, Premier Notley gave the OK to imposing Prime Minister Trudeau’s top-down $50/tonne carbon tax diktat in Alberta. Trump’s win renders this carbon tax completely irrelevant.

Any carbon taxes in Canada will be all pain and no gain. By virtue of our size, any reduction in carbon emissions will not make a dent in global climate change, yet they will certainly make Albertans and Canadians poorer. Trump vowed to scrap the Paris climate commitments and is staunchly against a carbon tax. Imposing an enormous carbon tax in Alberta will not help the environment, but with Trump as president, it will certainly compromise our ability to attract business.

Trump’s election was predicated on widespread scepticism over NAFTA, the North American Free Trade Agreement, which Trump held responsible for the loss of American jobs. The U.S. is Canada’s largest trading partner and vice-versa, so any disruption to our trading relationship could have major impacts.

If NAFTA was ripped up today, Export Development Canada suggests the impact could be as great as a 4 per cent of our GDP nationwide. However, Trump has said he wants to renegotiate NAFTA. Renegotiation could be great or it could be terrible. As of right now, it’s nearly impossible to know.

Perhaps the biggest economic concern for Alberta when it comes to Trump’s win is that of competitiveness. With Trump’s promises of tax cuts, the last thing governments in Canada should be doing is raising taxes.

Trump has promised to slash business tax rates from 35 per cent to 15 per cent. Contrast that with Alberta, where Premier Notley raised general business taxes by 20 per cent as one of her first moves in office. Alberta’s NDP government later cut small business taxes after small businesses were closing their doors in droves across the province, but other tax increases and a minimum wage hike easily swallowed up that small bit of tax relief.

Trump also campaigned on collapsing seven income tax brackets into three, which again stands in stark contrast with income tax hikes from both Prime Minister Trudeau and Premier Notley. Trudeau reduced income taxes in the middle bracket, but increased them for higher income earners, while Notley tore up Alberta’s single-rate income tax, which had long been central to the Alberta Advantage. All of these tax hikes compromise Canada’s competitiveness with our neighbours to the south.

There are a lot of unknowns regarding how Trump’s win will impact Alberta and Canada. But if policymakers realize the importance of remaining competitive and supporting economic development, perhaps we can play the Trump card to our advantage. 

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