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Alberta’s new government has implemented, or plans to implement, many policy changes that will affect the oil and gas sector. Some of these changes include increases to the corporate income tax (CIT), increases in the carbon levy, and a panel review of the province’s oil and gas royalties and climate change policies.

The 2015 edition of the Global Petroleum Survey was conducted from May 29, 2015 to July 31, 2015, presenting a unique opportunity to assess how Alberta’s policy changes have affected investor confidence. 

Alberta experienced a large negative shift from 2014 to 2015 in the Global Petroleum Survey. On the Policy Perception Index, a comprehensive measure of the extent of policy-related investment barriers within each jurisdiction, where a high score reflects negative sentiment on the part of respondents and indicates that they regard the jurisdiction in question as relatively unattractive for investment, Alberta’s score deteriorated from a value of 26.57 in 2014 to 34.21 in 2015. The province’s rank in 2014 was 16th (of 156 jurisdictions), deteriorating to 38th (of 126) in 2015.

The investment driver that experienced the largest shift in negative sentiment from 2014 to 2015 was political stability. In 2014, only 5% of respondents viewed political stability as a deterrent to investment; that increased to 51% of respondents in 2015.

Another large negative shift was in the fiscal terms policy category, which includes the royalty framework. In 2014, only 14% of Alberta’s respondents found this factor to be a deterrent to investment; that rose to 39% in 2015.

These negative shifts may not bode well for Alberta considering that the province’s immediate geographical competitors are perceived to be either attractive jurisdictions to invest in, or are improving.

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Global Petroleum Survey 2015

This report presents the results of the Fraser Institute’s 9th annual survey of petroleum industry executives and managers regarding barriers to investment in oil and gas exploration and production facilities in various jurisdictions around the globe. The survey responses have been tallied to rank provinces, states, other geographical regions (e.g. offshore areas) and countries according to the extent of such barriers. Those barriers, as identified by the survey respondents, include high tax rates, costly regulatory obligations, uncertainty over environmental regulations and the interpretation and administration of regulations governing the “upstream” petroleum industry, and concerns with regard to political stability and security of personnel and equipment.

A total of 439 respondents participated in the survey this year, providing sufficient data to evaluate 126 jurisdictions.

The jurisdictions were assigned scores with respect to each of 16 questions pertaining to factors known to affect investment decisions. The scores are based on the proportion of negative responses a jurisdiction received with regard to each question. The greater the proportion of negative responses for a jurisdiction, the greater were its perceived investment barriers and, therefore, the lower its ranking. This ranking is used to generate a Policy Perception Index. Jurisdictions are then sorted into clusters based on the size of their proved reserves allowing for an apples-to-apples comparison of policy perception in the context of available reserves.

Of 14 jurisdictions with large petroleum reserves, the five that rank as most attractive/least deterrent to investment are Texas, United Arab Emirates, Alberta, Qatar, and Kuwait. The five least attractive of the large-reserve jurisdictions for investment on the basis of their Policy Perception Index scores (Libya, Venezuela, Russia—Other, Iran, and Iraq) account for over half of the proved oil and gas reserves all the jurisdictions included in the survey. Alberta is the only Canadian jurisdiction with large reserve holdings.

In the group of 38 jurisdictions with medium-sized reserves, the 10 most attractive jurisdictions are: Oklahoma, North Dakota, Norway—North Sea, West Virginia, Louisiana, Norway—Other, Wyoming, US Offshore—Gulf of Mexico, United Kingdom—North Sea, and Pennsylvania. Syria, Ecuador, Ukraine, Indonesia, and Yemen, appear to pose the greatest barriers to upstream investment among medium reserve-size holders.

The only Canadian jurisdiction in this group is British Columbia which ranks 17th (of 38).

Of 66 jurisdictions with relatively small proved oil and gas reserves, the top 10 performers are Netherlands—Offshore, Alabama, Mississippi, Kansas, Arkansas, Saskatchewan, Manitoba, South Australia, New Zealand, and Montana. Those in this group deemed the least attractive for investment on the basis of poor Policy Perception Index scores are: US Offshore—Pacific, Bangladesh, Timor Gap (JPDA), Myanmar, and Argentina—Mendoza. Ontario, Nova Scotia, New Brunswick, Yukon and the Northwest Territories each rank near the middle of the small reserve holder group.

When considering policy independently from the size of jurisdictions’ reserves, historically the primary focus of this survey, we find that the jurisdictions with Policy Perception Index scores in the first quintile, suggesting that obstacles to investment are lower than in all other jurisdictions assessed by the survey, are all located in Canada, the United States, and Europe. According to this year’s survey, the 10 most attractive jurisdictions for investment worldwide are Netherlands—Offshore, Alabama, Oklahoma, Texas, Mississippi, Kansas, Arkansas, Saskatchewan, North Dakota, and Manitoba. All of these jurisdictions were among last year’s top 10 most attractive jurisdictions with the exception of Netherlands—Offshore. The only jurisdiction displaced from the top 10 was Wyoming.

The 10 least attractive jurisdictions for investment (starting with the worst) are: Libya, Venezuela, Syria, Ecuador, US Offshore—Pacific, Russia—Other, Bangladesh, Quebec, Ukraine, and Timor Gap (JPDA).

Analysis of the 2015 results indicates that the extent of negative sentiment with regard to factors driving petroleum investment decisions (disregarding the extent of proved oil and gas reserve holdings) decreased in most world regions. The United States continues to remain as the most attractive region in the world for investment, followed by Canada, which surpassed Australia to become the second most attractive region in the world for upstream petroleum investment.

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Toward Free Trade in Canada

Canada can increase its global competitiveness by liberalizing interprovincial trade and commerce. This report outlines five key areas for action. The sooner the country takes these steps, the sooner it will reap the many benefits.

  1. Strengthen the institutional framework of the Agreement on Internal Trade (AIT). The first focus should be on expanding the secretariat.
  2. Implement policies that facilitate greater labour mobility between provinces and harmonize apprenticeship and training programs. Taking these steps will help deploy skilled workers when and where they are needed.
  3. Create a single national system for corporate registration and reporting. Such a system will facilitate greater investment by foreign and domestic enterprises in the Canadian market and eliminate costly duplication.
  4. Promote market access and regulatory coherence in provincial energy and environmental policies to help promote sustainable growth.
  5. Encourage dairy exports and the establishment of a common Canadian market to enable Canada to benefit from growing global demand for dairy products.
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The poor access to medical services and middling outcomes and safety in Canada’s health-care system despite high spending suggest a need for reform of health-care policies. Yet, while Canadians seem open to the possibility of fundamental reform, faulty perceptions of how other countries deliver and finance universal health care still exist, while misperceptions and unfounded beliefs about particular policies plague the popular debate. This paper seeks to correct and inform one such misperception: the belief that private, for-profit institutions are incompatible with universal-access health care.

According to at least two recent polls, many Canadians consider for-profit provision of health care to be incompatible with universality. For example, a 2013 poll commissioned for the Fraser Institute found Canadians believe strongly that private for-profit health care is incompatible with the goals of Medicare. Similarly, a 2012 Ipsos Reid poll found that 80% of Canadians preferred a not-for-profit model of health care when presented with a binary choice between a not-for-profit and a for-profit model. The Ipsos Reid poll also found that 53% of respondents preferred a mixed model incorporating both when this was included as a third option. This all suggests that Canadians are open to a mix of policies as long as they are perceived to be compatible with a universal-access health-care system.

In answering the question of whether for-profit providers are compatible with universal-access health care, we examine the health-care systems of six nations with universal health-care systems: Australia, France, Germany, the Netherlands, Sweden, and Switzerland. Each of these nations spends a proportion of their GDP on health care comparable to that spent in Canada, and each provides similar or superior access to, and quality of, care in comparison with Canada. In order to determine the compatibility of for-profit institutions with universal health care, we look at the presence of for-profit hospitals and for-profit health care insurers in each of these nations.

Private for-profit health-care insurers are found in all six nations. Notably, private for-profit companies compete to offer the primary (mandatory) health-care insurance package in the Netherlands, offer a private substitute for public health-care insurance in Germany, and offer a private option alongside the public system for patients in Australia and Sweden. In France and Switzerland, private for-profit insurers play a complementary or supplementary role, though for-profit companies in Switzerland may compete to offer the primary (mandatory) health-care insurance package on a not-for-profit basis.

Private for-profit hospitals are also found in all six nations. While universally accessible services are generally provided through public hospitals in Australia and Sweden, governments also contract with private for-profit hospitals for the provision of universally accessible services including, in Sweden, acute care. In the Netherlands, in-patient hospital care is provided by independent not-for-profit private corporations while independent treatment centers that provide same-day non-emergency treatments can operate on a for-profit basis. In Germany, France, and Switzerland, universally accessible hospital care is delivered by public, private not-for-profit, and private for-profit hospitals.

These policy approaches are distinct from those pursued in Canada, where private for-profit parallel insurance is disallowed and where a small number of private, for-profit hospitals can be found in a climate that does not encourage their formation. It is important however to remember the reality in other areas of Canadian health care: private (and for-profit) companies provide medical laboratory services, long-term care, supplementary extended health insurance (which is not the same as parallel health insurance), and even diagnostic and surgical procedures (which differ from hospital services). So, in some sectors, Canada’s health-care system already allows private for-profit involvement.

While the proliferation and extent of services offered by private for-profit institutions in Australia, France, Germany, the Netherlands, Sweden, and Switzerland varies, all have incorporated for-profit hospitals and insurers into their universal health-care policy framework. This reality should dispel the mistaken notion that private, for-profit institutions (in either the insurance or hospital sector) are incompatible with universally accessible health care. On the contrary, their presence is the norm among high performing universal health-care systems.

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Expanding Choice in Ontario's Public Schools

Providing families with greater opportunities to choose between schools has emerged as a powerful way to improve education. In addition to enhancing student achievement, school choice stimulates innovation, encourages efficiencies, promotes diversity, and typically leads to increased satisfaction among parents and the public. For these and related reasons, more than two-thirds of OECD countries have adopted policies increasing the school choices available to their families.

With the exception of Ontario, Canada’s larger provinces have been part of this trend, each offering funding to non-public independent schools that make them more affordable to interested parents. Ontario does not do this: Commitment to a strong public system, polarized views on Ontario’s Roman Catholic separate schools, and opposition to funding independent faith-based schools have helped keep this way of encouraging school choice off the Ontario policy agenda.

But school choice does not depend entirely on providing government support for independent schools. As demonstrated in many OECD countries and several Canadian provinces, choices within the public system are a possibility. This paper explores how this may be achieved in Ontario by addressing the question, “could school choice be expanded in Ontario’s public schools?”

The paper considers three kinds of school choices currently available within Ontario’s public school system. The most numerous are the Catholic separate and Francophone schools operated by their own school boards, but only available to eligible families. French immersion schools provide a form of choice open to all where available. Additional choices, provided locally, are offered through various alternative and specialized schools operated by some school boards.

School choice in Ontario can be extended to more families by expanding locally provided options through two complementary initiatives: (1) open enrolment and (2) school diversity. Open enrolment would give parents the right to enrol their children in any public school they are qualified to attend, replacing school assignment by postal code with realistic school choice. Policies establishing open enrolment in other Canadian provinces such as British Columbia have demonstrated the real world benefits of open enrolment and can provide a framework for reform in Ontario.

Choice is pointless without meaningful options. Meaningful school choices within Ontario’s public system will necessarily be created at the local level by individual school boards. To this end, legislative changes are recommended to empower and encourage boards to establish a wide range of alternative schools and programs in response to requests from parent and community groups. Adoption of a broad definition of alternative schools similar to that in place in Alberta would allow boards to establish schools using a specific teaching philosophy or emphasizing a particular language, culture, subject-matter, or religion. Any religiously oriented alternative school would necessarily be required to conform to Ontario regulations and jurisprudence.

In such cases and all others, the key point is that the nature of alternative schools would be decided by elected school boards through discussions with parent and community groups. Schools could feature art, music, hockey, or some other activity, emphasize a particular language, embrace Montessori, traditional or progressive educational approaches, be infused with Aboriginal or other cultural values, emphasize math, science, or literature, or take some other acceptable form, subject to provincial curricular and operational requirements.

A rich diversity of such schools would introduce a measure of increased competition into the public system which could be expected to have a positive effect on academic achievement and parental and public satisfaction. Education professionals, especially teachers, could also benefit from opportunities to join more motivating work environments.

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Economic Development in Jeopardy

The Saik’uz First Nation and Stellat’en First Nation v. Rio Tinto BC Court of Appeal decision opens the door for future aboriginal title litigation against private parties—litigation that was previously only brought against provincial and federal governments.

Following the BC Court of Appeal decision, First Nations no longer have to prove aboriginal title before bringing damages claims against private parties, such as resource companies. Simply claiming aboriginal title is enough to bring forward litigation against private parties. In provinces like British Columbia, where over 100% of the province is currently under claim, this puts all current and future economic development projects in jeopardy.

Specifically, this judgment could put the Kitimat aluminum smelter and the Kenney Dam, which has been operating for over 60 years with the support of Haisla First Nation, in jeopardy. Just as the Tsilhqot’in decision resulted in increased litigation against the Crown, this judgement will now result in litigation against private parties regarding aboriginal title, which prior to this case was unprecedented.

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Report Card on Quebec's Secondary Schools 2015

The Report Card on Quebec’s Secondary Schools 2015 ranks 454 public, private, Francophone and Anglophone schools based largely on the results from provincewide tests in French, English, science, mathematics and history. The Report Card provides parents and educators with objective information that’s difficult to find anywhere else, which is why it’s the go-to source for school performance in Quebec.

To see the detailed results of all schools ranked, go to

The below PDF document contains both French and English.

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In this issue:

Demographics, Taxes, and the Future
by Brennan Sorge, featured high school student contributor
Canada’s aging population and the policy reforms required to reduce the increasing tax burden on future generations.

The Book Corner
Economic Principles for Prosperity
by Robert P. Murphy, Jason Clemens, Milagros Palacios, and Niels Veldhuis
Key economic principles and common myths of the Canadian economy.

How much does your family spend on Health Care Insurance?

Fraser Forum
An Adult Conversation About the Oilsands.

by Ken Green
For humans to thrive, we must consume vast quantities of energy.

Video Gallery
Economic Freedom of the World

How increased economic freedom can improve conditions of those living in poverty.

Rejecting the Union Disadvantage
by Matthew Lau
A look at Canada’s outdated labour relations laws.

2015 Essay Contest Winners
Topic: National Security and the Role of Government: Safety vs. Privacy in a Technological Age.

From the Archives
Property Rights: The Foundation of Our Freedoms

by Peter Leeson
Why property rights are necessary for prosperity and trade.

Hot Topics
What’s New from the Institute: A look at student enrollment and why energy and environmental regulations are inefficient.

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Managing the Risks of Hydraulic Fracturing

Activist groups continue to oppose hydraulic fracturing, a new application of old technologies that is unlocking vast supplies of oil and natural gas in the United States and Canada. This opposition has resulted in the establishment of moratoria in several Canadian provinces, preventing the extraction of resources that could provide Canadians with significant benefits.

Research on the safety of hydraulic fracturing confirms that while there are indeed risks with it, they are for the most part readily manageable with available technologies and best practices.

Ground water contamination is one of the greatest concerns voiced by opponents of hydraulic fracturing. But as a recent US Environmental Protection Agency multi-year study found, hydraulic fracturing has not led to systemic impacts on drinking water. Research has also found that risks from well integrity failure are minimal when best practice procedures are implemented. Risks from exposure to the various air emissions generated by hydraulic fracturing are found to be minimal and manageable. Hydraulic fracturing and the natural gas it produces could also lead to fewer CO2 emissions if natural gas displaces coal in electricity generation.

While hydraulic fracturing can cause increased seismic activity, the tremors generated by the process are often very small—undetectable at the earth’s surface. When compared with other industries such as mining and conventional oil and gas extraction, the magnitudes and incidences of earthquakes caused by hydraulic fracturing are quite minimal.

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scale of taxes and increases

On October 1, 2015, the government of Alberta abandoned its single 10% personal income tax rate in favour of a 5-bracket personal income tax system with a top marginal tax rate of 15%.

Changing tax rates prompts people to alter their behaviour, which can lead to less additional revenue than governments might expect. This study estimates how much revenue the government will likely generate from its tax increases under a static model (with no behavioural response) and a dynamic model (that accounts for changes in behavior).

The tax increases would raise $1.242 billion assuming no behavioural changes and $1.058 billion assuming changes in 2016, a gap of 14.8% ($184 million). The dynamic model predicts that the additional revenue from the tax increases cumulatively between 2016 and 2020 will be 25.8% less than under a static model. The difference over the 2016-2025 period is predicted to be 34.9%. When taxpayers’ behavioural responses are accounted for, the government of Alberta is likely to receive $1.7 billion less than expected between 2016 and 2020. Between 2016 and 2025, the difference between the static and dynamic model will increase to $5.1 billion.

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