The NDP’s historic win in Alberta could mark the beginning of a turbulent period for Canada’s energy sector, as the industry braces for a promised corporate tax hike and a review of the province’s oilpatch royalties.
The end of the Progressive Conservative dynasty in Alberta had an immediate effect on energy stocks, which brought the S&P/TSX composite index down by triple digits Wednesday morning.
Even though Alberta’s premier-designate Rachel Notley promised to work with the province’s energy sector in her victory speech Tuesday night, business leaders are worried, Calgary Chamber of Commerce CEO Adam Legge told BNN.
“An NDP majority – that was definitely a surprise,” Legge said Wednesday.
He said there is “a lot of concern in Calgary,” especially when it comes to corporate taxes and Alberta’s royalty regime, which uses a portion of the energy revenue in the province to fund things like education and health care.
Notley has called for a review of the complex royalty system to ensure that Albertans are getting their fair share of the oil and gas revenues. She has also promised to hike taxes for corporations and the wealthy in order to balance the books.
All that could lead more investors to sell off their energy stocks as affected corporations consider their next move. Some analysts say that energy companies might consider moving their headquarters out of Alberta down the road, although it’s still unclear exactly how an NDP government will affect the entire sector.
“We have to find a way to work with (the NDP) in a positive way to reflect the needs of business and our economy,” Legge said. But he said the New Democrats “must understand … that a royalty review would just be the wrong thing to do in a very fragile environment.”
In her speech Tuesday night, Notley specifically addressed Alberta’s energy sector and the province’s job creators.
“Our government will be a good partner and we will work with you to grow our economy and to secure a more prosperous future for every Albertan in every community,” she said.
But she said her government will focus on building a “diversified and resilient” economy in order to end the “boom and bust rollercoaster” that came with falling oil prices and Alberta’s dependence on its oilsands.
At a news conference Wednesday, Notley reiterated her commitment to working “collaboratively” with business leaders and energy sector executives. She said she will begin by making a “lot of phone calls.”
“I’m hopeful that over the course of the next two weeks, they will come to realize that things are going to be just A-OK over here in Alberta,” she said, promising more information about her government’s economic plan in the coming days and weeks.
During the election campaign, Notley said she would not support the Keystone XL and Northern Gateway pipelines.
Federal NDP Leader Tom Mulcair called her approach “very similar to ours,” and commended Notley for saying the stalled Keystone project “represents the export of Canadian jobs to the United States.”
“When you have raw natural resources, you try to add value here, you try to add the jobs here in Canada,” Mulcair told reporters on Wednesday
With files from The Canadian Press
