In case you missed it, I provided some background in response to Jack Layton’s comments today to the Globe and Mail’s Economy Lab. Check it out here.
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My Economy Lab debut
By Andrew on March 31, 2011
Posted in Canadian Politics | 2 Responses
2 responses to “My Economy Lab debut”
You mentioned in the Globe and Mail article that most of the money that the federal government gives the energy industry is related to defraying exploration and development costs.
I’m curious to know what your thoughts are on the balance right now in Canada between publicly funded exploration (through geological surveys and such) and privately funded exploration. What would the optimal balance be?
Thanks for checking in. I’ll say right up front that this is not an area about which I know very much. I can venture a few thoughts on the optimal balance, but beyond that I am out of my depth. In any negotiation, the party with more information is at an advantage. Resource royalties, rents, taxation, etc. really comes down to a negotiation between government and industry, although mostly at the provincial level. In order to be able to effectively negotiate, I think the provinces need to know what the resource quality is and how much rent there is likely to be in the ground, so as to effectively get the owner’s fair share. There is also a long-term planning benefit to knowledge about our resource base. The companies are, by the nature of our resource tenure rules, generally solving much shorter-term optimization problems than our governments should be. While it seems clear in Canada that, for most resources, security of long term supply is not a pressing issue, it still is important for our governments to have un-biased data on which to base policy decisions.
That’s a somewhat soft answer to your question, but I think that’s a better approach than speaking in specifics when I know little about the subject.