DROVER / HAUBRICH: Resource development is good for taxpayers

Gage Haubrich is the Prairie Director, and Devin Drover is the Atlantic Director for the Canadian Taxpayers Federation.It’s common sense that if you see a $100 bill on the ground, you pick it up. It’s free money.But some provinces are walking right on by that free money by refusing to develop their natural resources in the ground.The New Brunswick government is starting to think about cashing in.Premier Susan Holt just launched a review of the province’s decade-old ban on natural gas development.Holt needs to lift the ban for the benefit of taxpayers.That’s because the government is in dire fiscal straits and needs all the help it can get. The New Brunswick government is on track to borrow more than $1.6 billion this year and drive the debt up to $16.2 billion. Yet the government is sitting on a fortune beneath its feet and refusing to dig it up..The Alberta and Saskatchewan governments take in significant revenue from natural resources in their provinces, not to mention the jobs that development creates for taxpayers there too.Holt herself pointed out that development would bring in “a significant amount of money and a significant amount of jobs” in 2013.More than a quarter of the Alberta government’s revenue comes from natural resources this year; in Saskatchewan, it’s about 13%. That’s a significant amount of money that the government receives that isn’t taken from individual taxpayers.And that’s partly why taxpayers in those provinces pay so much less in tax compared to New Brunswick. A family making $75,000 a year in Calgary pays $1,955 in provincial taxes. That same family in Regina pays $3,054. In Saint John, they pay about $7,800. But that’s only part of the benefit. That’s because, if used correctly, resource revenues can give a government a second chance to right its fiscal wrongs.The Alberta government just released its first-quarter fiscal update. It received windfall resource revenue because of high oil prices. New Brunswick can’t receive that type of windfall with the ban in place.Alberta’s debt was set to soar above $100 billion for the first time in its history this year. But because of this revenue windfall and spending restraint from Alberta Premier Danielle Smith, the debt will come in $14 billion less than budgeted.That’s what resource development can do for a province..In New Brunswick’s case, 150 to 200 natural gas wells would boost the province’s economic output by up to $1.8 billion and generate up to $354 million in tax revenue, according to a 2014 economic impact study. Today, that tax take is worth up to $478 million. And that doesn’t count resource royalties.Now the government still needs to cut wasteful spending. But it’s easier to tackle a debt crisis if you aren’t tying one hand behind your back.There’s never been a better time to get the ball rolling on this. Tariffs and other international issues are wreaking havoc on Canada. A boost from new resource development is exactly what the economy needs.Plus, if New Brunswick starts developing its own resources, that means it can start on the path to becoming a have province and standing on its own two feet instead of on the shoulders of Western taxpayers through equalization payments.And if done right, in the long run, resource development can make your jurisdiction the envy of the world by starting a resources revenue heritage fund. A special savings fund where provinces deposit revenue they get from resources to save for the future.Alaska and Norway both have successful heritage funds. Last year, each eligible Alaskan received $1,000 in a dividend from the fund. Norway’s fund is worth about $3.2 trillion. Interest generated by the fund covers about 20% of Norway’s budget every year.Smith announced last year that she plans to grow Alberta’s heritage fund to at least $250 billion by 2050.There is free money in the ground, and provinces like New Brunswick need to follow the lead of western provinces and stop standing in the way of picking it up.Gage Haubrich is the Prairie Director, and Devin Drover is the Atlantic Director for the Canadian Taxpayers Federation.

DROVER / HAUBRICH: Resource development is good for taxpayers

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