Regina 鈥� With Premier Brad Wall taking his leave in January, Pipeline News spoke to him by phone on Sept. 8 about what it was like to lead the province through the boom and bust in the energy sector over the last 10 years.
Pipeline News: Saskatchewan鈥檚 oilpatch grew tremendously during much of your tenure, at least until the downturn hit in late 2014. What was it like to see that, from the office of the premier?
Brad Wall: Well, it was very good to see, from my vantage point. I expect it was even better to see from the vantage point of people working in the industry and benefitting from the activity.
Even here, lately, we鈥檝e seen at US$50 or less West Texas, we鈥檝e seen a lot more drilling activity and rigs. That鈥檚 always gratifying, seeing that happening. Jobs are 小蓝视频 created or sustained. Small businesses are 小蓝视频 engaged as contractors, and royalties are going to get paid. That, of course, funds quality of life.
We鈥檝e been fortunate over this last while, and we鈥檝e tried to stay out of the way of industry. We鈥檝e tried to practice 鈥渄o no harm,鈥� has sort of been the motto. We don鈥檛 want to get in the way of the industry when they鈥檙e creating jobs. Obviously we have environmental concerns and regulations that鈥檚 we鈥檙e very serious about. But in terms of the business climate, we want to make sure, I wanted to make sure this was an inviting place to invest and that we were competitive.
If you check out the stats, the last Fraser Institute report, we were the best environment, investment climate in the energy sector of all Canadian provinces and we鈥檙e still in the very top tier of all subnationals 鈥� states and provinces, just behind a few U.S. states. I think that鈥檚 been intentional on our part.
P.N.: Bill Boyd repeatedly gave the same speech, saying the premier instructed him to thank the oilpatch for the jobs and investment, and that the provincial government would not be changing royalties. You also gave similar speeches. Can you explain your thoughts behind that?
Wall: I did. I remember the very first speech I gave to the Petroleum Club in Calgary. I went and announced we would not be messing with royalties, basically. I got a huge ovation. It鈥檚 not very often the government says they鈥檙e not going to do anything at all and people clap. (laughs)
I think it was indicative both of what was elemental to our growth plan and also the commitment we had made.
We鈥檝e actually done a few things. I think industry鈥檚 recognized we sought to improve the permitting times, the turnarounds, the consistency of the government interface with the industry. We can always get better. I鈥檝e heard back many times, where the industry said, 鈥淭hat鈥檚 working.鈥�
This is a better place to do business than say, well, I鈥檒l say Alberta, because we鈥檝e worked on the regulatory side. That鈥檚 the feedback we鈥檝e had. And it was from enough that it was more than anecdotal.
But that is the speech. That鈥檚 the message. You can expect consistency and stability. Surprises are for birthday parties, not royalty structures. And for those who have massive investments on the line, we鈥檝e tried to practice what we preach.
Politicians don鈥檛 simply say thank you enough, to industry, when they risk. We鈥檝e used the word industry, but you and I know it鈥檚 a lot of small businesses that work here, in the province, in this sector.
We don鈥檛 say thank you enough. My dad was a small business person. I know what he was risking every day, to create a wage for himself, and also for others. That鈥檚 the foundation of the economy, it really is. It pays for everything else, and we should thank them.
P.N.: In 2008, early in your mandate, Saskatchewan had it鈥檚 biggest Crown land sales, ever. What was your reaction when you were told just how big it was?
Wall: It was hard to believe. The amount was hard to believe, much larger than we had budgeted.
We鈥檝e experienced the other side of that coin as well. What we budgeted is not at all what we hit for land sales. But for that year, it allowed us to do two things 鈥� long-term investments. We reduced operating debt and reduced taxes structurally. That鈥檚 the long-term, and we did some short-term things, some important capital projects that are one-term investments but have a long-term benefit.
Whether it was record Highways budgets or very specific things like your long-term care facilities, schools, hospitals.
When I saw that, when we looked at those numbers coming in, we immediately understood we can鈥檛 hardwire this into future budgets, but we can make some long term investments with this, be it lower taxes, lower operating debt, or major infrastructure.
P.N.: The downturn in recent years has been tough, not only on the oilpatch, but on the province鈥檚 finances and, in the last budget, much of the province as a whole. Can you explain what that has been like, from your perspective?
Wall: Well, it鈥檚 been a big challenge. We have, for the last couple of budget cycles, we went with the private sector forecasts on commodity prices whereby many were predicting the end to this trough some time ago. They鈥檝e been predicting the end to this trough. We鈥檙e into, I think, year four of it.
I just believe, and our team just believed, we can鈥檛 procrastinate or kick this can down the road. We have to begin to move off the dependence of resource revenue. We need to do this now, especially if prices are not coming back.
The good news is the sector is people are getting back to work, because the industry has figured out US$50 a barrel. So that鈥檚 the most important part. I鈥檓 gratified, I鈥檓 happy about that. I have neighbours that were out of work for 18 months. Their trucks are plated again. They鈥檙e working. Everyone鈥檚 making a little less, but people are working.
What has not changed, though, is the revenue picture for government. Our revenues are still off, because, obviously, they鈥檙e based on price. If the new normal for some period of time is people back to work at US$50, that鈥檚 great, but we better react as a province, because I am not prepared to do what other jurisdictions have done. I鈥檓 saying I鈥檓 not, our government鈥檚 not prepared to kind of procrastinate on this, and, 鈥淲ell, we鈥檒l wait, prices will come back.鈥�
Even if they do come back, we need to move off of the dependence on resource revenue. So we took some tough expenditure decisions, made some cuts, stopped some services like STC, and moved taxes away from income and towards consumption. I think that鈥檚 caused concerns as well, and I understand it completely. But I really believe this is an important measure. This is a bit like the Buckley鈥檚 Mixture. It tastes awful, but in the long term, we know these kinds of changes can work, and we will not have procrastinated on the fact the prices for oil are going to remain low for some time.
P.N.: Is there anything you would have done differently, with regards to the oilpatch? Looking back, do you think maybe we should have implemented a sovereign wealth fund?
Wall: I think we still should. I think, that鈥檚 part of, when you move away from resource revenue, and you don鈥檛 need those dollars for the operating of the government, then you can put them away for the long term.
You know, I鈥檓 not sure of a model like Norway鈥檚, where there鈥檚 great benefit, but if you put them too far away from the people who own them in the first place, then there needs to be some flexibility there. I do think, as a whole, since oil was discovered in Canada, provinces with oil, including us, should have been looking at this model a long time ago.
It鈥檚 part of our plan. We have our report from (Peter) McKinnon. When oil, when resource revenues hit a certain portion of budget again, they will automatically move towards a fund. That number can move up and down.
I think the steps we鈥檙e taking now to move off of resource revenue will allow the government, some future government, my successor or someone after that, can lead an approach where we begin it much sooner, where we put away money much sooner, if we do not need 鈥� if oil prices come back and we鈥檝e sort of weaned ourselves off of the great dependence off it, financially.
This has been a factor, by the way, for governments of every stripe, where you have hardwired your resource revenue to commodity prices that are budgeted. It鈥檚 hard to be critical, because the needs are there, and if there鈥檚 revenue coming in, and you know, there鈥檚 a need, generally speaking, you want to respond to it, whether it鈥檚 an economic or social need.聽聽
P.N.: Is there anything you would like to add?
Wall: This particular sector, I鈥檝e been so pleased and honored to be able to work with them.
You know, it鈥檚 very frustrating, the degree to which our own energy sector is vilified by fellow Canadians, and sometimes people in our own province who might 鈥� I鈥檒l be a bit partisan 鈥� folks across the way in the NDP, in our Saskatchewan NDP 鈥� there鈥檚 a few of them that believe in the Leap Manifesto. The Leap Manifesto is all about really hating, not just having concerns about the energy sector, but not liking. Wishing it would go away. Taking steps to make it go away.
I鈥檓 from Swift Current. I鈥檓 grateful for the sector. I know what it does for a community, and I know what it does for quality of life. I have friends who work in it. I hope that, as a government over the last ten years, we鈥檝e been able to send a signal to them that if they don鈥檛 feel valued elsewhere, they are valued by our government. We鈥檒l stand up for their interests. As long as we have the honour to form the government, I hope that鈥檚 the message we gave them and continued to give to them. I鈥檓 grateful for the chance to work with them over the years.聽
