I write this column as I return from the Global Petroleum Show that took place in Calgary, Alberta. The trip, as part of a Quebec delegation exhibiting and holding supplier meetings at the show, allowed me to gauge the reaction of a segment of Albertans (read, oil patch executives) to the recent election of the province’s first NDP government, lead by Rachel Notley. The comments I am going to share with you are a rather pleasant surprise, given the chortling and dismissive amusement displayed by many columnists in the mainstream media in the election’s aftermath.
First, there is no panic. From a taxpayer’s standpoint, there is general acceptance that the Alberta portion of the income tax will increase for anyone in the upper middle-class and above. This was inevitable, as ex-PC Premier Jim Prentice’s proposed budget increased taxes and fees in any case. What will be different for Notley is that the revenue increases her finance minister is likely to propose will do away with the Prentice basket of nicks and cuts and replace them with a more transparent set of higher income tax rates for Albertans earning more than $125,000. Corporate tax rates are going up from 10% to 12% as well. Ironically, this is honest fiscal policy from the NDP, making things simple rather than requiring an iPhone app to figure out how the PC’s 2015 Alberta budget was going to affect its residents.
There is also an upcoming review of the royalty rates charged by the government to the oil companies for crude extraction and the general expectation is that the income from this levy will increase as well. The chief negotiator of the 2007 royalty rate review chastised the people of Alberta this week for allowing both the government and the oil producers to void or ignore significant segments of the 2007 agreement, resulting in reduced revenues for the province. Albertans are unlikely to be so complacent this time and will follow the negotiations closely, motivated by an expected $7 billion budget deficit for fiscal 2015-16. Notley is taking a go-slow approach with the oil patch, consulting key players and controlling the rhetoric from within her caucus of neophyte MLAs and ministers.
On Tuesday, June 9th, I attended a matchmaking forum between Canadian suppliers to the oil industry and representatives of the producers, at which an Assistant Deputy Minister of Energy made a speech welcoming the participants and commenting on current market conditions. What was remarkable about the speech is how bland and predictable it was; stressing cooperation, recognition of the challenges that a low oil price brings, encouraging suppliers and producers to cooperate and innovate to reduce costs, increase uptime and continue the dynamic development of Alberta’s oil industry. The non-excitement quotient of this speech was high enough to lead me to conclude that the government is taking a go-slow approach to policy change and is not using occasions like this one to test the political waters with trial balloons on new policy initiatives. I did not hear a single comment about that speech after the session, which indicates that it was a resounding success and met its objectives entirely.
When a government comes to power to its own surprise and has only four MLAs with parliamentary experience, one should expect that the civil service is the real force of power behind the legislature and will be managing day to day affairs as the government figures out what it wants to do. Notley’s problem here is that since the PCs were in power for four decades, there is not a single top civil servant appointed byany other party. Notley’s cabinet is going to take advice from departmental heads who, at least at the outset, do not share the philosophynor the vision of the governing party, and there are no replacements in sight. It is reasonable to speculate that the NDP would attempt to bring in top civil servants from neighboring provinces like BC and Saskatchewan where there have been NDP governments. However, if I were an Albertan career civil servant and I was going to have my authority usurped by a drop-in from another province, I would be tempted to slow down the wheels of government and undertake other actions to make life difficult for my NDP minister. Notley has brought in notable NDP political operatives like Brian Topp, but this is for political advice; Brian Toppwill not become the new Deputy Minister of Energy in Alberta.
There is a way to counter the authority of the civil service; bring in chiefs of staff with the political weight to counter the authority and policy continuity from the departmental heads. Ezra Levant of the National Post wrote an excellent piece on the new chief of staff to Alberta Energy Minister Margaret McQuaig-Boyd, a neophyte MLA who was previously an educator. Her chief of staff is now Graham Mitchell, a Toronto-based anti-oilsands activist who was also the director of training at the Broadbent Institute. Mitchell has previously lobbied against the Enbridge Northern Gateway Pipeline. He will face off against Energy Deputy Minister Grant Sprague, appointed to that position by Alison Redford in July 2013. He had previously worked at the Executive Council (the Premier’s office) and held positions within the Department of Justice in Alberta since 1997. He has the legal, policy and departmental experience to present an effective opposition to whatever radical changes that Mitchell has in store. Suffice to say that Minister McQuaig-Boyd will be a bystander to the closed-door debates between these two for a couple of years until she learns the ropes. Most ministers will be in similar positions of asymmetrical competency, so 10 of the 12 chiefs of staff to Notley’s cabinet ministers are coming from outside the province.
The situation at The Ministry of the Treasury Board and Finance is similar. Minister Joe Ceci was a policy manager for a community-based charitable organization and was a Calgary Alderman for 15 years. There is no mention of any sophisticated economic or financial management in his CV. His Deputy Minister is Ray Gilmour, also appointed to the job by Redford in September 2013. Prior to Ray’s current appointment, he served as Deputy Minister of Alberta Infrastructure, Deputy Minister of Alberta Sustainable Resource Development and Deputy Minister of Alberta Municipal Affairs. His opponent on the political side will be Ceci’s new Chief of Staff Nathan Rotman, who managed Olivia Chow’s unsuccessful mayoral campaign against John Tory. Rotman arrives with political experience, but not in Alberta, just like nine of his contemporaries. The sparks are going to fly inside most departments and it is only a matter of time before the discord spills over into the public realm and the media feeding frenzy begins.
Controlling the professional civil service is critical to the success of any government. I remember Bernard Roy as Brian Mulroney’s Principal Secretary in 1984. Roy was a man of great intelligence, a gentleman and a sophisticated strategist but not an Ottawa insider. The management starts from the top – it was only later in Mulroney’s government that he started appointing insiders like Derek Burney, Stanley Hartt, Norman Spector and Hugh Segal to the expanded position of Chief of Staff, (created in 1987) to run his office and in effect, direct his will in government. With these brilliant men who also understood the workings of Ottawa, Mulroney had the most transformational second term of any modern Canadian PM. The acid rain treaty and free trade with the US, the GST and the move to a current account surplus, Canada’s critical role in the abolition of South African Apartheid, and the Meech Lake and Charlottetown constitutional accords all occurred under their watch. Mulroney will be remembered as a great PM because he got around to finding the right team to advance his vision and motivate the civil service to implement the government’s program. Will Notley learn her lesson early enough? I am afraid that Toronto, Ottawa, BC and Manitoba transients cannot be used to put her stamp on Alberta’s government, and it’s going to be interesting to watch the situation evolve over the first year of her mandate.
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