Ted Morton taught constitutional law at the University of Calgary for 35 years served as minister of Finance and Energy in the Alberta governmentWe can already see the usual suspects trash-talking Premier Danielle Smith for going to Florida to make the case to President-elect Trump why he should not impose any import tariffs on Canadian oil and gas. According to these “patriots,” seeking a special exemption for Alberta’s exports but ignoring the impact of Trump tariffs on the Ontario and Quebec economies is a “betrayal” of the Rest of Canada and makes Smith a “traitor.”Yet these same “patriots” are curiously silent on Ottawa’s threat to impose a new export tax on Albert oil and gas. Curious, but predictable. For the past decade, they haven’t said a word about the destructive impacts of the Trudeau-Guilbault climate policies on the economies of Alberta and Saskatchewan — the carbon tax, the cancelling new pipelines, a mandatory cap on CO2 emissions from the energy sector. Their patriotism seems curiously limited to the Laurentian heartland.The good news is that Trump is highly unlikely to impose import tariffs on Canadian oil and gas. The US needs it as much as we do. They already know what Smith is telling them: New tariffs would not only make everything more expensive for American consumers but weaken energy security for NATO and America’s other allies around the world.The bad news is that even if Trump leaves us alone, Trudeau may not. We now have learned that if Trump imposes tariffs on all Canadian imports other than oil and gas, Ottawa is considering an export tax on Canadian oil and gas. That’s right, an export tax that would generate billions of dollars, paid for by Alberta producers. Such a tax would have a devastating effect on the Western energy industry, but provide billions of dollars of new revenue for Ottawa. To do what? Maybe to try to win next Fall’s federal election by promising subsidies for the tariff-ravaged economies of Ontario and Quebec?Sound familiar? It should. It is almost a perfect replica of the natural gas export tax that Pierre Trudeau imposed to help the Liberals win the 1980 federal election. As Trudeau’s campaign manager explained, the Liberal strategy was simple: “Screw the West. We’ll take the rest.” And they did — a majority government but without a single seat from Alberta, B.C. or Saskatchewan.Alberta Premier Peter Lougheed described the Trudeau gas tax as “a declaration of war … an outright attempt to take over the resources of this province.” And before it even took effect, Lougheed used the province’s reference power to challenge the legality of the export tax. He hired one of Alberta’s best lawyers, Jack Major (subsequently appointed to the Supreme Court,) to argue that the tax violated Section 125 of the Constitution Act. Section 125 prohibits either level of government from taxing the “lands or property” of the other. To meet the requirement of “provincial property,” the Lougheed government drilled three gas wells on Crown land just 20 miles from the Montana border, and then told the Court that they planned to build a pipeline to export to sell that gas in the US. The land, the gas and the pipeline all qualified as “property” of Alberta.The Alberta Court of Appeal ruled unanimously, 5-0, that the federal export tax was unconstitutional. Ottawa of course appealed their loss, but before the appeal could be heard, the Lougheed government used the ruling to strike a compromise deal with Trudeau which included dropping the export tax.Alberta’s legal victory wasn’t soon enough to prevent the Trudeau Liberals from winning the 1980 election. But when the Supreme Court subsequently upheld the Alberta court’s ruling, these legal victories gave Lougheed and the other Western premiers the political leverage to successfully demand a new constitutional provision as part of the Constitution Act 1982. Section 92A. states that all provinces have exclusive jurisdiction to “make laws in relation to exploration … development, conservation and management of non-renewable natural resources.” Lougheed considered this one of the most important achievements, because it meant that there could never be another NEP. But now there is.The good news: Smith and her UCP government are already poised to use the Lougheed playbook to defeat the next Trudeau and his energy export tax. Rather than collect cash royalties from Crown leases, the Smith government is prepared to take the actual oil and gas “in kind.” That is, for every $100 dollars in royalties that a company owes, the Alberta government will take ownership of $100 dollars-worth of oil or gas. Both sides of this transaction are left whole financially, but the Alberta government now owns the ”property” and can sell domestically or for export, without any federal taxation. As Alberta government “property,” it is not only protected by section 125 and Lougheed’s 1981 constitutional precedent, but by section 92A as well.Because of his unflinching and successful defence of Alberta’s energy economy from predatory federal policies, Peter Lougheed is remembered as one of Alberta’s greatest premiers. All Alberta “patriots” should now be prepared to support Premier Smith for using the precedents and powers that Lougheed left us to defeat the next federal assault.Ted Morton taught constitutional law at the University of Calgary for 35 years and is now an executive fellow at the School of Public Policy. He also served as minister of Finance and Energy in the Alberta government. His most recent book is Alberta Strong and Free.
