Implement the policy in use and proven by another country to make Australia debt free.
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Politicians should be asked why they can’t implement this. The template shown here is how. Nothing complicated, just management skills are required.
It is an old policy that since its conception has seen all political parties agree to it. It makes so much income that only about 3,2% of the profit is used in the annual budget. The rest is invested. As invested in Australia many billions of USD $ in Government bonds as well as publicly listed companies.This can be seen in the transparent report on this web page. https://www.nbim.no/en
After watching the film on the same web page and experiance the transparency regards the investments, any Australian politician that do not adapt to this policy do not in my mind have Australia in their heart.
What Canada and Alberta could learn from Norway
Should Canada adopt the same energy model that made Norwegian citizens theoretical millionaires?
Written from an interview with prominent Vancouver business leader Leonard Schein
What is Norway’s energy model?
To understand Norway’s energy model, it’s helpful to go back to 1962, when excitement ignited about the possibility of oil in the Norwegian Continental Shelf (NCS). A year later, Norway claimed sovereignty over the NCS and deemed any natural resource found there the property of the government. This initial government response forms the basis of the very different philosophies between Norway and Canada on natural resource ownership. While Norway claims ownership over oil in its land, Canada assumes that any oil in the ground belongs to the companies that extract it.
The disparate philosophies of the role of government in the oil industry seem to be at the crux of Norway and Canada’s very different paths in the industry. In 1972 the Norwegian government established its own oil company, Statoil, which was awarded 50% of all petroleum production licenses. (Currently the government owns 67% of Statoil, and the other 33% is public ownership.)
At this time the government also put up 50% of the equity for the costs of exploration, but would also keep its equity share of the profits. At first, the oil companies balked at this proposal and took their efforts elsewhere, but the Norwegian government took a ‘take it or leave it’ stance and about a year later the oil companies agreed to Norway’s terms. In contrast, in 2007 an independent Alberta Royalty Review Panel advised that the total government take (Alberta and Canada, taxes and royalties) should be increased, and Alberta could still remain an attractive investment destination. The total take was increased temporarily, but after criticism from the oil and gas industry, royalties were rolled back again in 2010.
Conserving the source
Ever since the first drilling took place, Norway has consciously staggered the extraction of its oil resources. Only a specific number of areas were allowed for drilling at a time, and only a few licenses for extracting were awarded at a time. It seems that Norway rightly predicted that as the world’s population increased, the demand and price for oil would also increase. Early management and long-term planning of the industry is paying off. The average amount of oil per day Norway produced in 2013 was 1.54 million barrels. Canada’s daily production in the same year was 3.36 million barrels a day.
How does Norway have so much money when it has less oil than Canada?
In 1990, the Norwegian government set up a sovereign oil fund, the Government Pension Fund Global, as a place to store the profits from its oil riches and save for future generations. The fund is largely financed by high oil taxes (oil companies are taxed up to a whopping 78% on their profits from Norway oil), and the government only spends 4% of the fund’s assets per year. In January 2014, the fund’s value exceeded 5.11 trillion crowns ($905 billion USD) making it worth a million crowns per person, or about $177,000 USD per Norwegian. By January 2015, it will be worth over one trillion dollars. In addition, Norway has no government debt or deficit, and education is free from pre-school through post graduate university.
Where is Canada’s comparable bounty you ask, which produces twice as much oil as Norway? Alberta is in debt and has a deficit. As of September 1, 2014, the debt has climbed to over $10.6 billion. Schein says that former Alberta premier Peter Lougheed made a positive move when he set up the Heritage Savings Trust Fund in Alberta in 1976 to save and invest some of the oil revenues. 30% of oil royalties were supposed to be added yearly to this fund, but unfortunately it was only active for little more than a decade – after 1987 no new royalty revenue was added into the fund and governments of Alberta have regularly raided the savings trust fund. When Lougheed left office in 1985, it had $16 billion and all these years later, as of June 2014, it has $17.5 billion, a far cry away from the Norway fund that has $905 billion. Alberta is taking from the fund and not adding to it without plans for the future, and it’s a non-renewable resource. What will Alberta do when it no longer has its revenue from a non-renewable resource?
Will this model work in Canada?
The question Schein wants to see discussed is – are Canadians willing to make changes to shift to a model similar to Norway? It would require some big changes, including standing up to pressure from the oil and gas industry. Schein thinks it’s not only possible but important that we begin making these changes immediately. The State of Alaska is now taking a 25% equity position in their LNG resource. They are learning from Norway, why can’t Canada or Alberta learn from Norway, and now Alaska, Schein asks? ”We should be thinking about climate change and planning for the future. We need to look beyond a 4-year election cycle”.
There’s a philosophy here that government cannot be involved in the oil industry, but the vast majority of non-english speaking countries play a very big role in their oil industry.
According to Schein, Alberta and Canada needs to do the following:
Alberta should set a 2-3 year deadline of allowing bitumen to be transported out of Alberta. Alberta should then require all bitumen to be refined in the oil sands and they should take an equity position in the refinery. If the bitumen is refined in Alberta, it would mean, for example, that the Northern Gateway and Keystone pipeline would not need to be built. Twin pipelines would not be needed to send back the natural gas condensate so that bitumen can be diluted in order to travel in a pipeline.
Revisit the original principles of the Alberta Heritage Savings Trust Fund and follow the Norway example of keeping the income in the fund for when the oil industry no longer generates revenue.
Refine oil domestically within the provinces instead of shipping crude products that are then upgraded elsewhere.
Create a national energy policy to encourage non-fossil fuels and tax carbon
Increase royalty on oil production. On Alberta’s government website, it proudly states Alberta charges oil companies less in royalties than just about any other country in the world (currently around $7/barrel when the price of oil is around $100/barrel). Canada sells oil to the United States for less than we import oil. We should refine our own oil and ship it east. Then we wouldn’t have a need to import more expensive oil.
He argues we would create more jobs, have a better economy now and in the future, and finally deal with climate change and global warming. Canada and Alberta need to learn from Norway’s huge success.
Leonard Schein is the founder and former President of Festival Cinemas (which operated The Ridge Theatre, Fifth Avenue Cinemas and The Park Theatre), founder of the Vancouver International Film Festival and is chair of the board of directors of the Canadian Cancer Society. While he is known for his work within the film industry, he also has a reputation for supporting community outside of film and standing up for social justice. One of his biggest issues of concern now is how Canada is managing its oil industry.
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