On Monday, June 15, 2015, Alberta’s newest Lieutenant Governor, Her Honour Lois Mitchell, C.M., delivered the Speech from the Throne, kicking off the First Session of the 29th Legislature of Alberta.
The Speech was consistent with Premier Notley’s previous announcements: that the new government will move slowly, planning its course of action in the summer and taking more measured steps in the fall. Aside from three new bills to be introduced this session, the government will largely defer implementing its mandate - including a royalty review, refinery development and climate change policy - until the fall session, upon the introduction of its full budget.
What to Expect This June
The first act of the NDP Government is Bill 1, An Act to Renew Democracy in Alberta, which will, if passed, ban corporate and union donations to political parties in Alberta. This is a first step in the process to increase transparency in politics. While not addressed from the Throne, Premier Notley and Official Opposition Leader Brian Jean also jointly proposed a special legislative committee to review Alberta’s elections, whistleblower and conflict of interest legislation.
Second, the new government will introduce Bill 2, An Act to Restore Fairness in Public Revenue, which is intended to garner a greater contribution from “those who have benefited most from the boom times in Alberta”. If passed, Bill 2 will increase corporate taxes on large companies from 10% to 12%, while leaving small business tax unchanged at a rate of 3%. Further, Bill 2 will implement progressive income tax applicable to Albertans earning more than $125,000 per year.
While Bill 2 may pass in June, the Tax Collection Agreement between Parliament and the Government of Alberta prevents the implementation of increases in individual income tax until January 1, 2016. Under the Tax Collection Agreement, the Province is required to provide notice to Parliament on or before April 15 of the particular year in order to have the modification administered as of July 1. Otherwise, provided notice is given by October 15, 2015, the modification will not be administered until January 1, 2016.
The full impact of the corporate tax increase on the oil and gas community remains to be seen. Reduction to capital expenditures in Alberta is one potential result. Increased operating cost is another. Costs associated with new taxes may ultimately be realized indirectly if incremental taxes to service companies are passed to E&P companies through increased operating costs.
Finally, the new government will introduce its interim supply bill, Bill 3, which will be revisited in the fall. Bill 3 will allow the government access to funds to maintain stability in essential public services in the interim, while it prepares and implements its Budget.
While the Speech did not indicate any change to Alberta’s current climate change policy, such changes are not necessarily required to be made through the Legislative Assembly. The current policy structure is comprised of a number of regulations, all set to expire June 30, 2015. The government can extend these expiry dates, or make other changes to the regulations, through an Order in Council.
What to Expect in the Fall
As Premier Notley announced in May, 2015 the new government will continue to prepare its new budget and legislative agenda for introduction in the fall. The Speech offered some guidance as to what is next to come. Consistent with the NDP election platform, the government indicates that it will forge stronger partnerships with other provinces and the federal government to further develop a Canadian Energy Strategy. It will also evaluate the development of energy resources, presumably through its plan to review the royalty structure. Finally, Premier Notley will seek to nurture relationships with Alberta’s indigenous peoples.