The province said its oilsands strategic plan announced Thursday will benefit both industry and the environment, while sending a message to the world that Alberta's economic engine isn't going to throttle down anytime soon.
"I think it clearly sends a message to the rest of the country and the world that the oilsands are going to be developed, they're going to be developed for a long-time and they're going to be developed in an environmentally responsible way," said Lloyd Snelgrove, president of the Treasury Board and Minister responsible for the Oil Sands Sustainable Development Secretariat.
"So, the discussion isn't anymore are they going to be closed, are they going to be scaled down.
They're going to be developed."
Called Responsible Actions, the document is a 20-year strategic plan that will provide an integrated and coordinated policy approach to responsibly managing Alberta's oilsands areas (DOB, Feb. 12, 2009).
Industry reaction to the strategy was generally positive but low key.
"I see it as a roadmap. I think for us what's going to be critical is taking this roadmap and turning it into an implementation plan," said Greg Stringham, the Canadian Association of Petroleum Producers' (CAPP) vice-president of markets and fiscal policy, said.
"The government has already said they're going to start moving in that direction and we're anxious to sit down with them."
Stringham said the strategy addresses many of the key issues that were identified during almost two years of oilsands consultations conducted previously. However, much work remains to be done before full-scale implementation can occur.
"I think that on all of the various strategies in the report, we're going to have to sit down with (government) and say, 'How do we turn this into either policy or an action plan as we move forward," Stringham said.
"You start with a strategy, move to the objective and then you move to the implementation plan. I think that's what will occur."
One of Canada's largest oilsands producers is also taking a wait and see approach.
"At this early stage we are very supportive of having a long-term view for the industry," said Shawn Davis, Suncor Energy Inc. spokeswoman.
"We're looking forward now to sitting down with other industry members and the government to flesh out the details."
Until that process takes place, Davis said it's too early to offer effective comment on the package presented Thursday by the province.
"At this point in time it's a little difficult to comment on the details or practical applications because the report has a lot of over-arching strategies rather than specifics," she said.
"We are absolutely supportive of those over-arching strategies but it's really hard for us to say how (the strategy) is going to relate to our business, whether we're supportive or not supportive of the practical application of it, because it's just not in there at this point in time."
With some critics labeling the provincial government's newly-minted oilsands strategic plan no more than a 47-page public relations exercise with little substance, Premier Ed Stelmach was on the defensive yesterday.
"Some one said today, 'Where's the teeth?' Well this is the brains. It's laying out a long-range plan to work together in a coordinated approach so that we develop this world class resource responsibly," Stelmach told reporters in Edmonton.
"It's really a framework for a growing and greener economy."
The premier said that dialogue with industry and other stakeholders will be key to moving the strategy forward, although he offered no timelines and few details as to how and when those efforts will commence.
"This is the roadmap for the future and I'm confident that with working together with industry and all parties that have an interest in this area that we're going to manage our environmental impacts and social impacts as well," he said.
The head of an oilsands' group said industry is keen to work with government to begin discussions on how the plan will be rolled out.
"It allows us to get on with development of what is a pretty important resource," Don Thompson, president of the Oil Sands Developers Group, an industry organization, said. "We look forward to working with the government."
Stelmach was adamant that the timing of the release of the strategy had nothing to do with the pending Canadian stopover of United States President Barack Obama, who makes his first official visit to Canada on Feb. 19.
"(Work on the strategy) started two years ago and I don't think that President Obama even thought he was going to be a candidate two years ago. It's all speculation," he said.
With the strategy offering little immediate guidance, the premier was asked what the government was going to do to help bring back the industry, which because of the current market and financial crisis and low commodity prices, has seen a massive scale back of proposed projects of late.
Stelmach sidestepped the question and instead said the current downturn will allow the oilsands sector to catch its breath and prepare itself for when an economic rebound occurs.
"The oilsands operators are investing a considerable amount of money - billions - and are now taking this time during the downturn to maintain their plants and that's going to allow them to catch up," he said.
"As well, as some of the operating costs and other costs related to new development come down, we'll see the investment come back."
The Alberta Federation of Labour (AFL) was one of the more vocal critics of the Tory plan. It said that Premier Stelmach's promise to keep oilsands jobs in Alberta instead of shipping them down a pipeline to the U.S. seems to have been compromised.
"What this document says is that government will 'urge' and 'encourage' big energy players to diversify the industry. But what it doesn't say is that the government will actually intervene," says Gil McGowan, AFL president.
"This kind of limp language is cold comfort to the thousands of construction and energy workers who have lost their jobs over the past two months - and the thousands of others who will almost certainly meet the same fate over the next year."
McGowan said the report downgrades the government's promise to upgrade and refine more bitumen in the province to an "aspirational goal."
At the same time, the report says the government will "encourage the development of more outbound pipelines - which, up to this point, have been little more than bitumen superhighways, taking raw bitumen (and potential Alberta jobs) to refiners in the U.S. Midwest and Gulf Coast," McGowan said.
The AFL also believes the plan seems to accept the argument - "advanced by industry groups like the CAPP" - that Alberta actually needs to ship more raw bitumen to the U.S. in order to "find a better market price."
McGowan says that by embracing this argument, the government has basically given up on its previous promises to champion value-added jobs.
"The Tories can't have it both ways. Either you believe we should create value-added jobs here or you believe that raw bitumen should be shipped to the States," McGowan said.
"This report suggests the government has sided with the big upstream energy players who want to export more raw bitumen. As a result, everything else in the report dealing with the subject of value added jobs is little more than lip service."
The recommendations will do little to slow the pace of development or improve environmental controls, said Simon Dyer of the Pembina Institute, a non-profit Alberta-based group that researches environmental policy.
"It's a plan to do more planning," Dyer, the group's oilsands director, said. "It lacks specifics, timelines and accountability. There's nothing binding."
Daily Oil Bulletin, Fri Feb 13 2009
Byline: Paul Wells
The premiers of Alberta and Saskatchewan scuttled notions of a national cap-and-trade program Wednesday, warning other provincial and territorial heads they consider it a thinly-disguised attempt to siphon their provinces' petroleum riches.
"There's only one inter-regional transfer of wealth in this country and it's called equalization," Alberta Premier Ed Stelmach warned. "There won't be another one from the province of Alberta, and that's as straight an answer as I can give."
Although climate change is high on the agenda for the Council of the Federation's three-day meeting in Quebec City, attempts to find common ground among the 13 leaders derailed at the onset.
The two Prairie premiers placed themselves firmly at odds with Canada's most populous provinces, Ontario,
Quebec and British Columbia, which, along with Manitoba, support a national or international carbon trading market aimed at reducing greenhouse gas emissions.
Saskatchewan Premier Brad Wall, whose province is reaping the benefits of a burgeoning energy industry and other surging natural resource activity, vowed to battle alongside Alberta.
"We will fight aggressively against any initiative that would redistribute not just wealth, but opportunity, and threaten our 'have' status," Wall said.
"(Our prosperity) is good for the country," Wall said.
Prosperity, however, is only touching parts of the country these days.
As Alberta, Saskatchewan and Newfoundland contemplate what to do with huge budget surpluses and travel the country -- even the world at times -- to find workers to fill a bounty of jobs, recession fears are stalking other regions.
Ontario, home to roughly 40 per cent of Canada's population, is grappling with the loss of tens of thousands of auto industry jobs and the possibility of becoming a have-not province.
Although the federal equalization policy, which provides struggling provinces payments to provide comparable levels of public service, is not slated for discussion in Quebec City, talks on climate change are increasingly intertwined with worries about the economy.
Calls for harmonized greenhouse gas regulations are likely to remain unheeded in the fallout.
"Climate change requires a pan-Canadian approach -- not stop-gap measures, province by province," said Paul Moist, national president of the country's largest union, CUPE.
"We're worried. We can't have 10 versions of climate change plans."
Yet that is actually what's emerging in the absence of strong federal government leadership on the file, charged a new report from the David Suzuki Foundation on Wednesday.
The conservation group's climate change report card gave top marks to British Columbia, which recently introduced a carbon tax at fuel pumps and a cap on emissions from industrial stacks.
Manitoba ranked highly, too, and Quebec and Ontario garnered praise for their policies to reduce greenhouse gas emissions and proposed cap-and-trade system.
Alberta -- which produces the most greenhouse gases in the country -- rated dead last, according the Suzuki foundation. Saskatchewan was also cited as an environmental laggard.
"The worst offender (Alberta) has skyrocketing emissions and no plans to decrease them anytime soon," the report said.
Alberta Environment spokeswoman Kim Capstick dismissed the report card's assessment of the province's climate change performance.
She noted it failed to mention the province's blockbuster announcement last week to commit $2 billion to developing large-scale projects to capture carbon emissions and permanently bury them deep underground.
Another $2 billion has been set aside for transit projects encouraging Albertans to drive less.
"Once again we are not being given credit for the incredible work that is happening here, and I'm curious as to why," Capstick said.
Stelmach brought Alberta's carbon-capture plan to Quebec City, while Wall has details of a massive pilot project in Weyburn, Sask., where more than seven million tonnes of carbon dioxide have been injected into an oil field since 2000.
The pair are expected to deliver presentations on carbon sequestration technology to their provincial and territorial counterparts today.
Ontario Premier Dalton McGuinty, though, expressed doubts Wednesday that the technology is the best answer to Canada's growing greenhouse gas emissions.
"Carbon capture is something I remember President Reagan talking about," McGuinty said in Quebec City.
"Billions and billions have been invested in this worldwide, and we're not there yet."
Meanwhile, labour mobility and trade is also expected to grab the spotlight today at the Council of the Federation conference.
Alberta Federation of Labour president Gil McGowan is warning major changes to Canada's internal trade rules are afoot.
He said the premiers are on the verge of signing off on new rules that could give businesses the right to sue governments for policies that hinder profits.
Calgary Herald, Thurs July 17 2008
Byline: Lee Greenberg and Renata D'Aliesio
Ed Stelmach's refusal to act on the key issues of exporting bitumen and slowing the pace of development in the oil sands proves Tories have no real plan for managing the engine of Alberta...
If Albertans want to see what a real plan for the oil sands look like, AFL invites them to attend Black Gold, Clear Vision forums
Whether it's because he's been paralyzed by fear or ideology, Premier Ed Stelmach has failed to articulate a clear vision or strategy for managing the new engine of the Alberta economy - the oil sands.
But just because Stelmach and the Conservatives don't have a plan doesn't mean that options for a workable strategy don't exist. With that in mind, the Alberta Federation of Labour will unveil its own oil sands policy - called the "Black Gold, Clear Vision" framework - starting tomorrow at public forums around the province.
"The Stelmach government's do-nothing approach to the oil sands is failing Albertans," says AFL president Gil McGowan. "That's why we've gone to the effort of writing our own policy framework. We want to show our political leaders that it can be done - and that, in fact, it needs to be done."
"We've listened to the public and borrowed ideas from people like former Premier Peter Lougheed," adds McGowan. "This is the kind of work the government could and should have been doing itself. Frankly, this is our challenge to Ed Stelmach and his colleagues to get off their back-sides."
The AFL oil sands forums will be held in the following locations:
Fort McMurray - Wood Buffalo
8:00 p.m. - 9:00 p.m. (first session), Wednesday, February 27th
9:30 p.m. - 10:30 p.m. (second session)
• Tamarack Room, Sawridge Inn & Conference Centre, 530 MacKenzie Boulevard, Fort McMurray
7:30 p.m., Thursday, February 28th
• Baraka Room, Holiday Inn, 393 Gregg Avenue, Hinton
7:30 p.m., Friday, February 29th
• Salon A, Crowne Plaza Chateau Lacombe, 10111 Bellamy Hill, Edmonton
7:30 p.m., Saturday, March 1st
• Grand Ball Room, Ramada Hotel Downtown, 708 - 8th Avenue SW, Calgary
The AFL forums are open to the public, the media and candidates from all parties. The "Black Gold, Clear Vision" framework document will be officially released tomorrow and copies will be available at all the forums.
"I'd love to see the Premier at one of our events," concludes McGowan. "Then he could explain why doing nothing is the right strategy for the oil sands."
The Alberta Federation of Labour is an organization of 29 public and private sector unions representing 140,000 working Albertans. The "Black Gold, Clear Vision" forums are part of the Federation's "Show Us the Plan" election campaign aimed at encouraging Albertans to demand more from their politicians.
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For more information contact:
Gil McGowan, AFL President @ 780.483-3021 (office) or 780.218-9888 (cell)
Since the release of the Royalty Review Panel's report and final report (click here): big oil companies have been making threats about the "economic disaster" that will ensue in Alberta if the Stelmach government adopts recommendations to increase energy royalties.
Companies like Encana, Canadian Natural Resources Ltd., Exxon and Petro-Canada have all threatened to slash investment and lay-off thousands of workers if any changes are made to Alberta's now infamous penny-on-the-dollar oilsands royalty regime.
The AFL has been working on this issue for a long time and we know that these are empty threats. We need to stand firm and not be intimidated by Big Oil's scare tactics.
During the Klein years, the energy industry grew accustomed to getting its way and paying royalties which both the government's own expert royalty review panel and the provincial auditor general now describe as ridiculously low by international standards.
What that means is that ordinary Albertans - as owners of our province's energy resources - have been losing out on literally billions of dollars in revenue every year for almost a decade.
Instead of being available to pay for education, health care, infrastructure and other important public services, this money has been used to line the pockets of corporate investors and managers.
So the question isn't really "can we afford to increase royalties?" The real question is "can we afford not to?"
The bottom line is that, even if the proposed royalty reforms are implemented, oil companies will continue to invest heavily in Alberta - because it will still be one of the best places in the world for them to make money and because, frankly, they have nowhere else to go.
What you can do:
Contact your MLAs and the Premier. Tell them that working Albertans don't buy Big Oil's scare tactics - and neither should the government. Tell them that the royalty panel's recommendations should not be watered down and that, in fact, the government should go further. You can use this sample letter or write your own.
Learn more about the issue: See the Alberta Federation of Labour's presentation to the Royalty Review Panel. The Parkland Institute published a report, "Selling Alberta Short" on 17 October 2006 - both the report and the summary point out that the Royalty Review Panel's recommendations don't go far enough in helping Albertans get a fair share of resource revenues in this province.To see the report, summary and accomanying news release, go to the Parkland website. The Pembina Institute published a Resource Royalty Primer at the beginning of October - click here to read it.
Changes to royalty regime could threaten viability of natural gas; Industry appeals for status quo as it struggles with exploding costs
CALGARY - Wholesale changes to Alberta's royalty regime could threaten the viability of natural gas production in the province and raise rates for consumers, industry insiders told the Alberta government's Royalty Review Panel meeting in Calgary Wednesday.
Rising costs, falling prices and an uncertain regulatory environment are already leading to reduced rig counts, lower production and ultimately, lower government revenues, said Tailisman Energy Inc. CEO Jim Buckee.
"You have a zero-per-cent royalty you get zero; with a 100-per-cent royalty you also get zero," Buckee told the province's travelling review panel. "The current regime has worked and is best left alone."
Where previous sessions have focused on the government's share of oilsands revenues, Wednesday's discussions revolved around conventional royalties and how they relate to natural gas.
Buckee argued higher royalties would discourage activity at a time when high costs and falling prices are putting the bite on an already margin-squeezed segment of the oil and gas business.
According to the Canadian Association of Oilwell Drilling Contractors (CAODC), 107 of 885 rigs were working this week, down from 342 active rigs at this time last year.
Likewise, the number of new well licences issued by the province are off a third from last year.
According to Buckee, declining field activity is a leading indicator of the overall economic viability of natural gas.
Talisman, along with Canadian Natural Resources Ltd. and EnCana Corp. earlier this year reigned in gas spending in response to higher costs and lower prices. An additional financial load in the form of higher royalties will inevitably lead to lower drilling, lower production and in turn, lower government royalty payments.
If major oil companies balk at paying higher royalty rates on oilsands projects, then the Alberta government should consider developing the resource itself by working in equity partnerships with more co-operative companies, says Gil McGowan, president of the Alberta Federation of Labour.
"I think we should learn a lesson from other oil-rich jurisdictions, especially Norway. And that lesson is that if private sector firms aren't willing to develop our resources in the public interest we shouldn't be afraid to do it ourselves. Royalties are one way to guarantee returns for the public, but ownership is another."
McGowan's remarks were made as part of his presentation to the Alberta government's the government panel.
The hearings continue through today.
Alberta Government Should Consider Taking Equity Position In Oil Sands Projects, AFL Tells Royalty Panel
If major oil companies balk at paying higher royalty rates on oil sands projects, then the Alberta government should consider developing the resource themselves by working in equity partnerships with more cooperative companies, says Gil McGowan, President of the Alberta Federation of Labour.
"I think we should learn a lesson from other oil rich jurisdictions, especially Norway. And that lesson is that if private sector firms aren't willing to develop our resources in the public interest we shouldn't be afraid to do it ourselves. Royalties are one way to guarantee returns for the public, but ownership is another."
McGowan's remarks were made as part of his presentation to the Alberta government's Royalty Review Panel meeting in Calgary today.
-30-For more information call:
Gil McGowan, AFL President at 780.218-9888 (cell)
In the Old West, calling a man a coward was a shooting matter, and "Mr. Colt" usually had the final word.
It's unlikely, however, Alberta premier Ed Stelmach is toting a six-shooter or that he would even care if Gil McGowan, president of the Alberta Federation of Labour, would have called him a chicken-livered yellow belly.
Stelmach might pay attention, however, if thousands of Albertans did.
McGowan, who spoke Thursday in Lethbridge at a session of the Southern Alberta Council on Public Affairs, said Stelmach has lost his nerve and he wants Albertans to help him get it back.
The premier has backed down to big oil companies and is not, despite promises during the leadership race, doing anything about low oilsand royalties, out-of-control development and the shipping of raw bitumen out of the province, he said.
"Based on his performance so far, it seems that our new premier either didn't mean what he said during the leadership race when he promised to turn a page on the Klein era, or that he's lost his nerve," McGowan said.
He said he's prepared to give Stelmach the benefit of the doubt and assume he's lost his nerve. So he's driving a campaign to help the premier get a backbone.
"My goal is not to unfairly criticize the premier or to paint him as some kind of villain. Instead, my goal is to convince Ed that his initial instincts were correct and that he shouldn't backslide on the promises he made during the leadership campaign."
And if enough Albertans speak out, McGowan believes Stelmach will realize maintaining or only tweaking the status quo of the Klein era is not acceptable.
McGowan pointed out during the leadership race Stelmach said the one-cent-on-the-dollar royalty introduced and maintained by former premier Ralph Klein is too low and needs to be increased.
Stelmach also said it's not in the public's interest to let energy companies ship vast amounts of raw oilsands bitumen out of the province without refining or upgrading it, and he promised to do something about skyrocketing house prices and the rapidly rising cost of living.
"Those were the positions taken by candidate Stelmach, but it's amazing what a difference a few weeks can make. Today, the messages emanating from the premier's office sound a lot different from the ones that we heard . . . on the campaign trail."
McGowan said Albertans should be angry oil companies only pay one cent on the dollar for the right to exploit Alberta's resources, especially when the rate was designed to encourage investment when oil was selling for only $15 barrel.
"You should be mad because energy companies raked in more than $15 billion in oilsands revenue last year, but paid only about $700 million in royalties; less than the province collected from gambling.
"You should be mad because all that revenue that we've forgone as a result of the one-penny royalty could have been used to strengthen our health-care system, fix our crumbling infrastructure and to educate our children and grandchildren."
In addition, McGowan said Albertans should be angry because Canada's two biggest pipeline companies are raising billions of dollars to build huge pipelines with only one purpose; to take unrefined bituman from Alberta for processing south of the border. That means thousands of potential refining jobs will follow the pipeline into the U.S. And the jobs that are being created are given to temporary foreign workers who, in turn, are being used as pawns to lower wages and as an excuse not to train workers at home.
McGowan said Albertans need to tell Stelmach to do five things: block construction of the bitumen pipeline; guarantee a fair return for oil resources by scrapping the one-cent royalty; introduce leases for oilsands properties that require energy companies to create jobs in Alberta; tighten rules for temporary foreign workers; and to regulate the pace of oilsands development so there is more time to address the economic and environmental implications of development.
Lethbridge Herald, Feb 9 2007
Byline: Delon Shurtz
After over a decade of almost uninterrupted growth, Alberta is now entering the fifth year of an economic boom. Despite the mismanagement of the Klein government, which ran the province without any real economic plan, despite the ludicrously royalty rates and the obsession with tax cutting, our economy continues to churn out jobs.
Albertans deserve a larger return on their vast oilsands, a provincial committee seeking input on how to best develop the resource heard Wednesday.
The Pembina Institute for Appropriate Development argued that it's time for the province to revamp its royalty rates for oilsands even though oil companies warn changes could mean that Alberta could lose out on projects.
"Government leaders need to take a long-term approach to resource development and recognize that despite threats to reduce investments in the oilsands if fiscal policies are changed they are unlikely to walk away from the second largest oil deposit in the world," said Pembina spokeswoman Amy Taylor at the first day of hearings in Calgary.
The 19-member committee has been travelling the province to hear from Albertans on oilsands development. The hearing continues today at MacEwan Conference Centre at the University of Calgary before heading to northern communities next week.
A report on the panel's findings is expected in November.
The institute is advocating an immediate increase in royalty rates for new oilsands projects and a phase-in for existing ones. Currently operators pay one per cent of gross revenues until capital costs and a return allowance are recovered, after which the rate jumps to 25 per cent.
Originally designed to spur oilsands investment, Taylor said the royalty program should be reviewed with public input considering the level of investment currently being poured into the projects in Northern Alberta, where production is slated to triple to three million barrels a day by 2015.
"Oilsands are no longer considered a marginal resource," she said.
Gil McGowan, president of the Alberta Federation of Labour, likened the oilsands royalty regime to "putting the economy on steroids."
He said the province will continue to lose out on revenue as project costs continue to soar due to high demand for labour and equipment.
"The more expensive a project gets the longer we have to forego revenues," he said.
Other speakers who registered for a 15-minute opportunity to address the community said the government should slow development to curb the growth of carbon dioxide emissions and other negative environmental impacts.
Industry representatives also raised the point that the province must invest in the communities to help support the growth in the oilsands industry. Bill Clapperton, a vice-president with Canadian Natural Resources Ltd., said oilsands operators do their part by providing revenue through royalties and taxes as well as more jobs for the economy.
"The needs for infrastructure in the municipality are urgent in municipality of Wood Buffalo and Canadian Natural believes the government must maintain their traditional as helper and operator of public infrastructure," he said.
Calgary Herald, Thurs Sept 28 2006
Byline: Lisa Schmidt
Gil McGowan, President of the Alberta Federation of Labour, June 13, 2006
Sometimes life proceeds as expected - sometimes you get thrown a curve ball
Getting an invitation to speak at this conference was a curve ball
It would be an understatement to say it's unusual for management here in Alberta to come to labour for advice - especially management in the resource sector.
But the truth is there are actually a lot of things we can agree on. For example, we all want the Alberta economy to remain strong. And we all want individual Albertans to benefit from that prosperity.
And despite the stereotypes about unions - that we're always spoiling for a fight and never want to cooperate - the truth is we want to be constructive.
In that spirit of constructive engagement, I'd like to do three things this afternoon:
First, I'd like to begin by talking about the nature of the challenge that we face in the Alberta labour market - for the obvious reason that if you don't have a clear understanding of the problem, you'll have a hard time coming up with solutions.
Second, I'd like to offer suggestions about what, from a union perspective, employers should be doing - and what they shouldn't be doing - if they want to attract and retain employees.
Third, I'd like to step back and look at the big picture. In particular, I'd like to address the question: what can and should government and business, broadly defined, be doing to help makes the challenges presented by Alberta's tight labour market more manageable?
I'm big on metaphors and analogies - so I'll describe my mission is nautical terms: what I'd like to do today is talk about just how choppy the waves are in Alberta's labour market; what individual firms can and should be doing to avoid getting swamped; and what we can do collectively to calm the waters and keep all of our boats afloat&
So just how high are the seas?
Looking at the Alberta economy from a distance, it looks like an almost entirely unblemished good news story.
There is unprecedented demand for our most important commodities: oil and gas. And all signs suggest that demand will remain strong.
In the past, oil producers like Alberta were almost entirely dependent on the U.S. economy. If demand fell there, world price would fall. But this time around things are different - U.S. is not the only game in town. China, and to a lesser extent India, have emerged as major forces. So even if the U.S. economy slows oil prices may dip, but probably won't collapse.
We're also bumping up against the reality of declining world-wide petroleum stocks in a way that was the case in the 70s or 80s.
The result for Alberta has been staggering amounts of money being invested in our economy - particularly in oilsands development. Depending who you talk to, more than $100 billion in energy projects are on the books.
At the same time, after years of neglect, the government is finally spending substantial amounts of money on public infrastructure. This spending is welcome, and many would argue long overdue. But in an important way, they're competing with the private sector for resources.
All of this has led to record employment levels, strong job growth, strong consumer demand. And after 15 years of virtually zero growth in average real wage, over last three years we've been seeing wage increases that have been keeping ahead of inflation.
Some critics in the business community have complained about the increase in average wages. But, from our perspective, the real test of an economy is if it's working for ordinary people. So we strongly believe that rising incomes are something to be celebrated, not feared.
But, despite first impressions, the Alberta economy in not all good news - there are downsides.
First, the truth is that prosperity in Alberta is not universally shared. Energy is king, but it is not everything. Prices have been going up for oil and gas, but not for many of the other things we produce. Livestock, agricultural products, forestry products & the Alberta Advantage has not included rising demand or prices for these things.
Just last week, Stats Can released a report showing that farm incomes in Alberta have fallen by 50 per cent - 50 per cent in one year. The price for cattle about the same as it was during the BSE crisis. And the price for wheat, barley and oil seed, lowest in decades
In forestry, I've been talking to our members in the Hinton pulp mill and our guys who work in saw mills. Their employers aren't talking about growth. In many cases they're talking about lay-offs.
Wage increases are also not universally shared. The AFL represents 31 different unions in all sectors. One of our big private sector affiliates is UFCW, which represents thousands of retail workers. Their employers - companies like Safeway and Superstore - are not giving out double-digit wage increases.
And just this morning, I was on the phone with a group of school board workers in the Pincher creek area who are looking at a wage offer of 9 per cent - over five years.
It sounds like what workers came to expect during the last recession - but it's still the reality for many.
So, like the broader economy, the Alberta labour market, is a complex beast. The headline in today's Calgary Herald screams about a labour shortage & a shortfall for the city of 30,000 workers over the next ten years. It sounds ominous. But the truth is much more nuanced.
The construction labour market has been the subject of greatest attention lately. And there is no doubt that the industry is red hot & thanks mostly to oil sands development. But some important points need to be made about construction.
For example, construction is by its very nature cyclical. 60,000 trades people may be needed this year, but maybe only 10,000 the next year. That's the way construction works.
We're currently at or near the top of the cycle. But even here at the peak, within the construction labour market, we need to acknowledge that the situation is fluid.
The best you can say is that some trades are in shortage at some times & it depends on which trade and which time.
So right now for example, several major projects have recently been completed & the biggest example being the UE-1 expansion at Syncrude. The result is that hundreds of trades people who have been tied up in some cases for two or three years are now available for work.
The Alberta Building Trades Council just completed a survey of hiring halls around the province and what they found was that there are literally thousands of unionized trades people available for work.
So for those of us in the labour movement, something just doesn't compute. On one had we have employers screaming labour shortage and calling for desperate measures like radical increases in the use of temporary foreign workers. And on the other hand, we have thousands of unionized tradespeople people who are ready, willing and able to work - but who are still sitting on the sidelines.
That's why we have a hard time agreeing that there's a labour shortage in contraction - when the pool of unionized tradesmen is not being fully utilized.
Having said all that, there is no doubt that in many sectors and in many occupations we have a tight labour market.
As I said, this tight labour market is the natural result of a strong economy & and it's good for workers. But we recognize it does create challenges for some employers.
The challenge for employers - people like everyone in this room - is compounded by what I would describe as Alberta's labour market hierarchy.
There has always been a pyramid in the Alberta labour market & with the energy sector at the top.
They've always been able to pay more. But with oil at $70 barrel, the energy sector's ability to outbid other employers in other sectors has probably never been greater & and that's a challenge.
How, for example, do you compete with energy companies that are offering signing bonuses of up to $30,000; moving bonuses of $15,000 and annual retention bonuses of $25-30 thousand?
Interestingly, the challenge is no longer restricted to non-energy companies. Probably for the first time ever, energy companies are competing with each other. In fact, I don't think it's a stretch to say that the most popular past-time at Petroleum Conference around town this week will be staff poaching.
So how do you stay afloat in these stormy seas? You've been discussing this amongst yourselves for past day and a half & and I'm confident that you've identified many workable solutions. But for what it's worth, I'd like to present my list of do's and don'ts from a union perspective.
My first "do", perhaps not surprisingly, has to do with wages.
DO accept that the cost of labour has gone up & and DON"T attempt to defy the economic laws of gravity.
Not that long ago, I remember one of the buzz phrases used by employers was "cost certainty." They were always coming to the bargaining table and saying they couldn't proceed with this project or that project without guarantees that wages would stay flat.
That's was the rationale that the provincial government and Canadian Natural Resources gave when CNRL was granted special status under the labour code for the Horizon project. They said that government intervention to keep wages flat was warranted be Horizon was so important to the Alberta economy and because the company needed "certainty."
But as an acquaintance of mine, who happens to be an engineer and project manager for a big construction firm, pointed out: if you don't pay the going market rate, if you try to defy the economic laws of gravity, you loose out.
As he said, if you balk at paying the going market rate, workers vote with their feet & and you end up with what he described as the "bar stools and high schools" approach to recruiting.
This approach sets off a vicious cycle. In a tight labour market, with lower pay you get a lower quality of worker or no worker at all; you get declining performance; you get increased workplace accidents; you get delays and missed deadlines; you get angry clients, maybe lawsuits and you get lost business opportunities.
There was a time, not that long ago, when the Alberta economy and the broader Canadian economy was sluggish. In that kind of economy, employers could more easily get away with doing the minimum. They could more easily get away with layoffs and "outsourcing" & and with treating employees like Post-it-Notes, to be used and discarded.
But those days are over. Bragging about being the "low cost" provider doesn't mean being the smartest guy in the room anymore, if it ever did.
Now it means being the guy who is going to have chronic labour relations problems. It means being the guy who provides a sub-standard product. It means being the guy who's going to miss targets, disappoint investors and clients and who's going to loose out on the next contract.
The bottom line is that you need to value you employees. Part of that means viewing paying the going market rate as an inescapable cost of doing business.
Of course, paying them well is not the only way to show your people that they're valued. It's necessary, but not sufficient. That leads me to the rest of my list of "dos" & and some of these may surprise you &
For example & DO make a point of having on-site HR people &
Delegating day-to-day hr responsibilities to you foreman may sound like a great way to save a few bucks & but it'll cost you & why? & because most of these guys couldn't tell the difference between the Employment Standards Code and the DaVinci Code & because you might get a foreman who wants to be everyone's buddy on the morning shift and a foreman who's Attilla the Hun on the afternoon shift.
Employees hate that kind of inconsistency and petty unfairness. And in a tight labour market where employees have options, you can't afford to loose people because one of your manager like to play job-site Rambo.
Also DO think of the other half of your employees life & the half that they spend away from work.
This is particularly important given that so much of the work that's being done in Alberta today is in remote locations & where people are forced to be away from their families for long stretches & and where they don't have access to amenities.
The good news is that Albertans are hard workers & they don't mind putting in a hard days work in exchange for their paycheques.
But given a choice & and in the current sellers market workers have choice & employees will choose those employers that do more to make it easier for them to live a real life.
Whenever I want to understand what trades workers in particular really want out of their jobs, I sit down with my brother in law.
He's a journeyman electrician & and for the better part of the last three years he worked in Fort McMurray on Syncrude's UE-1 expansion.
He made buckets of money & more than he every imagined. But it came at a price. He has a wife and three young kids at home. For three years, almost never saw them.
So a lot of people in our family used to rib him about his huge salary. But you know what he really wanted? To be closer to his family.
His dream job is not another stint in the camps. He may end up doing that & but his real dream job is to get on with Epcor, the Edmonton power utility. Because it would allow him to live his real life - instead of the half life that works live in isolated camps.
So those employers that are in the bigger centres & where people can actually settle and build lives & you have an advantage & which you should play up. For those who have no choice but do put people into remote locations & ever effort you make to that isolation more tolerable and the time away from family shorter will pay dividends.
Another important item on my DO list is training.
Your employees want to gain more skills, they want to get better at their jobs, they want to contribute and they want to advance. To put it in a nutshell they want the prospect of a better future & and training helps them get there.
Training & whether apprenticeship or some other kind of on-the-job instruction & makes sense for both the employee and the employer.
For workers it makes sense because with their improved skills comes confidence, self-worth and hope for the future.
And for employers training makes sense because you get a bigger pool of trained workers to draw from. Training also makes sense because you get that most of elusive things: loyalty. I've seen it time and again & employers who train, get employees who stay.
But there's a problem & and I think all of you know what it is. For years now, both governments and employers have been neglecting apprenticeships and training.
Only recently has the provincial government ramped up spending to fund new apprenticeship spots at technical schools like NAIT and SAIT. That's great, but those spots are only part of the solution. We all know that these young people can't get their journeyman's tickets without being indentured & they can't become an answer to your labour market shortages until they get on-the-job training from companies like yours.
And that's where the system is falling down. According to a study that was done recently by Skills Canada and the Canadian Apprenticeship Forum, only 18 per cent of Canadian employers take on and train young apprentices - although 41 per cent had the capacity to do so because they already had qualified tradespeople on staff who could supervise training &
The Construction Owners Assoc of Alberta came up with similar numbers. Of the 20,000 trades employers in Alberta, only 11,000 have apprentices.
This is what economists call the free rider problem. Most employers agree that it's desirable to train more apprentices. But too many of them don't want to bear the cost themselves.
Instead, they assume that "the other guy" will do it. Unfortunately, the "other guy" usually makes the same assumption and the number of apprenticeship positions available - even if Alberta's hot economy - fails to meet demand.
The energy sector is a particularly big culprit in this regard. A few years ago, the federal government - through the tripartide petroleum industry sector council - produced a report on training in the energy sector. As part of that consultation, the council's steering committee consulted with a number of big energy CEO from right here in Calgary. And do you know what they said? The petroleum big wigs said: "we don't have to train. We pay more, so we can just take the people we need from other sectors." That was only three years ago.
This helps explain why thousands of the young people who enroll in the trades never finish. The numbers on non completion are actually staggering. Less than half of those who enroll are completing their apprenticeship in the expected timeframe & and more than 40 per cent have still not earned their certificates after 10 years.
Given the current nature of Alberta's labour market, this is a travesty. And it's direct result of employers shirking their responsibilities when it comes to taking on apprenticeships.
And unfortunately, it's not just apprenticeships. Employers in Canada spend less on on-the-job training than almost any other OECD country & including the US.
So when it comes to my list of DOs training is a big one. In fact, I present it to you as a challenge. We're all suffering because, employers have shirked their obligations in training & it's time to start holding up your end.
That leads me to my list of don'ts.
DON'T be afraid of unions & and don't allow yourself to fall prey to the snake oil salesmen, often dress up as reputable sounding lawyers, who promises fool-proof "union avoidance" strategies. Those strategies, make the snake oil salesmen money. But they often leave you with a legacy of poisoned labour relations. And for what? So you have bragging rights?
The truth is that in tight labour markets, having a union in your workplace can be a big advantage. The record clearly shows that there is lower turn-over in unionized workplaces. Unions can also be useful partners in recruitment. Build trades unions have formal connections with hiring halls in other parts of the country where there are higher rates of unemployment. Industrial unions don't have hiring halls with guys sitting on lists & but we do have networks.
Unions can also be important partners in developing retention strategies that are tailored to your workplace. And a union contract can actually help you achieve that elusive goal of "cost certainty" & at least in the short term.
At the beginning I promised to do three things & I promised to talk about how rough the waters were; how you could avoid getting swamped and finally; I promised to look at the big picture. In particular, I talk about the importance of understanding what has been causing all the waves in our labour market. And I promised to make some suggestions about what, collectively, we can do to calm the waters.
As I've said, a big part of the problem is the failure on the part of government and employers to invest in trades training.
But I also think at least part of the problem is that the provincial government has deliberately been administering steroids to our economy & in the form of unreasonably low royalty rates.
The interesting thing about steroids is that they work - at least in the short term. They can greatly improve performance. But in the same way that steroids are ultimately bad for the human body, economic steroids can be bad for the economy.
What I'm talking about of course is the Alberta government's now famous one-per-cent royalty rate for the oil sands.
Like the steroids that athletes use, the one-per-cent royalty rates have worked. Coupled with record high oil prices, the one-per-cent royalty has set off a gold-rush of development. Oil companies are flocking to the oil sands - and why not. With the one-per-cent rate the provincial government is essentially giving away ours resources. None of the big oil companies want to miss out on the party.
Why you might ask is this of concern to a union leader. This is a labour issue because these low rates - all this development comes after years in which government failed to invest in trades training and employers failed to hold up their end by taking on adequate numbers of apprentices.
The result is as frustrating as it was predictable. Because of the steroids, demand goes up for trades people, but because of the inattention training the supply struggles to keep up.
The bottom line is that the Alberta government and the Alberta business community are authors of the tight labour market they are now complaining about. They are reaping what they have sown.
And what do they offer as a solution? More of the same on training and temporary foreign workers, that's what.
We think a better approach would be to get business and government to make commitments to ensure our apprenticeship system actually works. In particular, we need to squarely address the reality that employers are not holding their end up when it comes to providing jobs and placements for apprentices.
It's probably also time to revisit the one-per-cent royalty. These kind of fire-sale incentives were never prudent - even when oil was at $15 a barrel. And they are certainly not justifiable when it's at $70 a barrel.
It's also important to keep in mind that the oil sands is a resource that we, as Albertans, own collectively. It's fine for the Premier to say we'll get our pound of flesh eventually. But with all due respect, he's wrong. Once that oil is gone at one-per-cent, we'll never see it again - and we'll never get another chance to get money for it.
And we're not talking about pennies here. We're talking about tens of billions of dollars lost. That's money that could be spent on public prorities like health care, education and infrastructure.
We're short of like a junky. Not only are we taking a drug that ultimately hurts us & we're flushing our money down the drain to get it &