CALGARY -Stephane Dion was a 25-year-old graduate student in Paris when the federal Liberals introduced the National Energy Program in 1980, sealing their fate in Western Canada for a generation. Watching the NEP unfold from across an ocean, Mr. Dion could not have fully appreciated the impact the NEP had on Alberta. When the federal Liberal leader visits Alberta this weekend to promote his own brand of federal oil taxation, he is certain to run into plenty of folks who lived through those very painful times, and are eager to stop anything like it from happening again.
Many stories remain of the heartbreak caused by the Trudeau government's plan: lost jobs, bankrupt businesses, foreclosed homes. Flipping pancakes at today's Stampede breakfast, Mr. Dion may even hear some. His plan may be different, its intentions less mischievous. But it isn't hard to stir Albertans' still-raw memories.
"The National Energy Program was really sinister," says Frank Atkins, a University of Calgary economist. "It just retroactively taxed the piss out of the oil industry, and in very sinister kinds of ways ... they were going to screw the oil companies and take their money and pour it into Ontario where the votes are."
Promoted as an effort to counter the shock of rising world oil prices ($1.80 a barrel in 1970, oil hit $30 by 1980), Mr. Trudeau argued the NEP would make Canada self-sufficient in energy by forcing Albertan producers to sell domestically at a deep discount to world prices and allowing the government-run Petro-Canada an advantage in buying energy assets. Self-sufficiency would protect Canada from the ravages of the inter-national market. Eastern Canadians would be able to buy oil at below-market rates. And Ottawa would have a window into an industry dominated by foreign giants.
Marc Lalonde, Mr. Trudeau's energy minister and the brains behind the NEP, later acknowledged the motive was what Albertans had suspected all along: to transfer wealth from Alberta to Central Canada.
"The major factor behind the NEP wasn't Canadianization or getting more from the industry or even self-sufficiency. The determinant factor was the fiscal imbalance between the provinces and the federal government," he says in David Kilgour's 1988 book, Uneasy Patriots. "Our proposal was to increase Ottawa's share appreciably, so that the share of the producing provinces would decline significantly and the industry's share would decline somewhat."
By that measure, it worked: By the time the Progressive Conservatives cancelled the NEP in 1986, Ottawa had si-phoned more than$100-billion in today's dollars from Alberta. Billions more in investment bolted a province that until then had revelled in an historic boom, causing immensely more damage: construction and energy projects were cancelled virtually overnight.
Alberta's unemployment rate shot from 4% to more than 10%; bankruptcies soared 150%. The housing meltdown was far worse than the current U. S. subprime crisis, with values collapsing 40% in Edmonton and Calgary. It would take office landlords a decade to work off the glut. Alberta's government went from record prosperity into deep debt.
"There was an enormous amount of pain everywhere," says Ted Byfield, founder and then publisher of the defunct Alberta Report, a magazine that loudly gave voice to the province's fury. "Alberta was very much a small-business province. Behind the big oil companies, there were thousands of little people.... All this was just brought to a crashing halt."
Former premier Ralph Klein, who was mayor of Calgary at the time, says: "Thousands of people lost their jobs, their homes, their businesses, their dignity. Some took their own lives."
The scheme never fulfilled its promises: Mr. Trudeau assumed oil prices would climb indefinitely; instead they plunged to $19 by 1988. By then, Alberta's industry was too weakened to adjust. Ottawa held onto its stake in Petro-Can until 2004, when prime minister Paul Martin sold off the last 19% for $3-billion.
The trauma set off a generation of political bitterness. Albertans felt Mr. Trudeau seemed untouched by their plight. He mocked Mr. Lougheed, saying the Alberta premier had been outsmarted by multinational oil firms. Keith Davey, the Liberals' campaign strategist, put it bluntly during the Liberals' 1980 federal election: "Screw the West, we'll take the rest."
The NEP became code for Western alienation; a famous Alberta bumper sticker urged: "Let the Eastern bastards freeze in the dark."
Certainly Mr. Dion has been more diplomatic than earlier Liberals, and claims better intentions. He says his "Green Shift" will leave the West better off in a decade, decreasing its reliance on the resource industry. But Albertans have seen Liberal oil tax plans before.
Whatever his justification for this one, or whatever name it may wear, Mr. Dion will likely find few Albertans eager to buy.
klibin@nationalpost.com
