One Comment About Taxation – Canada Needs to Support Our Oilsands – With Good Tax and Economic Policies

 

I grew up in Fort McMurray, AB, long before it became a political talking point. For me, it was home and the spirit of community was everywhere: we’d celebrate the “Blueberry Festival” in the fall, spend the long summer days at Gregoire Lake and freeze our butts off during the Winter Carnival. It was a place where hard work, entrepreneurship, community and opportunity were not abstract concepts, but daily realities.   

 

My family was part of that fabric. In the late 1970s and early 1980s, my family owned a go-kart track in an energy-fuelled but entertainment-starved town. In the winters, we did whatever it took to survive – delivering milk and cutting birch for firewood. It was hard, honest work – and great until Pierre Trudeau’s National Energy Program devastated Alberta’s economy and the oil and gas industry.

 

Those experiences shaped my view of business. Put simply, entrepreneurial activity matters.  It creates opportunity, supports families and contributes the economic output that ultimately funds the public services that Canadians rely on. That was true in Fort McMurray decades ago and remains true today on a much larger scale through the expanded oil sands. That’s why debates about the oil sands – often detached from economic reality – are frustrating.

 

Recently, Conservative Party leader Pierre Poilievre appeared on Joe Rogan’s podcast and defended Canada’s oil sands against the now-familiar claim that they are environmentally irresponsible. He pushed back against a narrative shaped for years by NGOs, activists and some celebrities who offer ill-informed but dramatic commentary.

 

As an example, after a 2017 flyover of the oil sands, actress Jane Fonda remarked that the open-pit mines made her feel like her “skin was being peeled off”. Rock legend Neil Young has made similar shallow comparisons. These comments generate headlines, but do not advance understanding. They conveniently ignore the fact that the Canadian oil sands take great care in protecting the environment – which has significantly improved over time – and that it is among the most responsibly produced oil in the world.

 

More importantly, activists conveniently ignore a basic economic reality: global demand for oil persists and that is highlighted during times of global strife like the current Iran conflict.  The question is not whether oil is produced, but where.

 

Lost in much of this rhetoric is the economic importance of the oil sands and the broader energy sector. In 2024, Canada’s oil and gas industry employed approximately 900,000 people and contributed over $8 billion in taxes (not including tens of billions more in royalties) to the federal and provincial governments and represented approximately 7.8% of Canada’s nominal GDP. Canada also has the world’s 4^thlargest proven oil reserves with 97% of those reserves being in the oil sands. These are jobs, income, businesses and government revenues that benefit Canadians from coast to coast to coast.

 

In a report released last week, it was concluded that increasing Canada’s pipeline capacity could have a significant upward impact on Canada’s GDP. In other breaking news, water is still wet. But seriously, market access is critical. The recent Memorandum of Understanding between the Province of Alberta and the federal government regarding pipeline expansion is a welcome step – and clearly in the national interest for all Canadians – but time will tell if the federal government is indeed serious.

 

Despite the constant rhetoric and ill-informed attacks, Fort McMurray has demonstrated what resilience looks like. The devastating wildfires of 2016 forced the evacuation of the entire city and ultimately became the costliest natural disaster in Canadian history. Yet the community rebuilt quickly. Oil sands operations resumed. That kind of resilience reflects a culture rooted in hard work, entrepreneurship and an understanding that economic activity truly matters.

 

From a tax perspective, opponents of the oil and gas industry often claim that the sector receives “subsidies” and should be stopped. That is a convenient misunderstanding of how Canada’s tax system works. The commonly cited provisions – Canadian Exploration Expense (CEE), Canadian Development Expense (CDE) and Canadian Oil and Gas Property Expense (COGPE) – are not government handouts. To benefit from these deductions, companies must first incur cash outlays on qualifying activities such as exploration, development or property acquisition. The tax rules then allow these companies to recover portions of their costs through calculated deductions. To be clear, these deductions do not exempt companies from paying tax on their profits. They are simply timing differences, not transfers of government funds.

 

The ability to deduct legitimate business expenses is not unique to the oil and gas industry – it is a fundamental principle of the Canadian tax system that applies to ALL businesses. Such deductions are permitted under the same general rules that apply to all businesses: they must be incurred for the purpose of gaining or producing income, must be reasonable in the circumstances and not be personal or capital in nature. Singling out oil and gas companies for criticism is a selective narrative, not a principled tax policy argument.

 

Tax policy shapes behavior in very real ways. When governments introduce uncertainty, complexity or targeted hostility, investors respond by quietly delaying decisions or moving capital elsewhere. One example is the layering of an industrial carbon tax on top of an already high-cost, highly regulated industry. Oil is a globally traded commodity priced on world supply and demand – not on the carbon intensity of a particular barrel.  Is there a premium market for “decarbonized oil”? No.

 

The resulting risks are predictable – higher costs, reduced competitiveness and a shifting of investments to other jurisdictions.

 

Canada has an opportunity to produce energy responsibly, supported by sound tax policy, efficient infrastructure and a competitive investment environment. That approach recognizes a simple truth: economic prosperity is not an obstacle to progress – it makes progress possible.

 

In the meantime, I’ll be tracking the twists and turns of tax and economic policy – and fine-tuning my go-kart driving skills at the nearest track, where performance still matters more than politics.

 

One Comment About Leadership – Leaders, Don’t Confuse Your Audience

 

Have you ever listened to a leader – in a speech or even a one-on-one conversation – and walked away wondering what they actually meant? Politicians are famous for this, especially when trying to appease a broad audience. The result is often a classic “word salad.”

 

In my view, that reflects a lack of leadership. Why? Because the person is afraid to be clear. They don’t want to alienate anyone – so they end up saying nothing of substance.

 

I have a word for that kind of communication: gutless.

 

As Sir Winston Churchill once said: “You have enemies? Good. That means you’ve stood up for something, sometime in your life.”

 

Does that mean you should go out and try to make enemies? Of course not. But it does mean you should be clear, direct, and willing to be misunderstood by some in order to be understood by most.

 

Good leaders don’t hide behind word salads. They say what they mean – plainly and sometimes bluntly.

 

If your audience leaves confused, that’s on you. Not them.

 

One Comment About Economics  – Moody’s Bond Rating Downgrades British Columbia Debt

 

Last week, Moody’s bond rating company (no relation or connection with me or my firm) downgraded the debt of British Columbia following a recent budget that projects record deficits, numerous tax increases and no credible plan to return to fiscal balance. Bluntly, B.C. is a fiscal trainwreck. And it would not be surprising to see other rating agencies follow.

 

So, what does a downgrade mean for B.C. residents? Simply put, it means the government will pay more to borrow money. When lenders perceive higher risk, they demand higher interest rates. On tens of billions of dollars of debt, even small increases translate into significant additional costs.

 

Were those higher borrowing costs fully contemplated in the recent budget? That’s doubtful. If not, the projected deficits will be even worse than advertised – leaving less money available for core public services.

 

At some point, this becomes a compounding problem: more debt leads to higher borrowing costs, which leads to even larger deficits. That’s not sustainable.

 

Unless there is a meaningful shift toward fiscal discipline, the outlook for British Columbia’s finances – and ultimately its taxpayers – is not pretty.

 

Bonus Comment – Often Attributed to Alexander Hamilton – Founding Father of the United States – About the Importance of Standing For Something

 

“If you don’t stand for something, you will fall for anything.”   Exactly. Leaders, stand for something and communicate that clearly!

 

Amazon Books: https://www.amazon.ca/Making-Life-Less-Taxing-Attention/dp/B0GGTNMV2Q/ref=sr_1_1?

Apple Books: https://books.apple.com/ca/book/making-life-less-taking-version-2/id6758958890

Hope you enjoyed this edition of 1-1-1. If you’re not already part of the In the Mood Network, now’s the time. Please sign-up today.  Whether it’s through consulting, coaching, speaking, or writing, my work is about planting acorns: deliberate, principled actions that challenge the status quo and grow into something far bigger. The goal? Bold reform. Stronger foundations. And a country that values hard work and common sense.