When the oil sands industry established the Oil Sands Community Alliance (OSCA) in 2014 the member companies were looking for a new approach to manage the economic and social impacts in the communities where we operate.
That new approach recognizes that our collective future is intertwined. An economically viable oil sands industry supports stronger and vibrant communities in the Athabasca Oil Sands Area (AOSA). In turn, communities with a high quality of life significantly helps attract and retain workers for our industry.
By any measure the tax contribution of the oil sands industry to the communities in the oil sands region has been significant. Combined property taxes of $797 million are identified for the 2016 budget for the Regional Municipality of Wood Buffalo. More than 94 percent, about $749 million is contributed by the non-residential rate payers comprised mostly by oil sands companies and service industries.
Our industry members appreciated the need for the community to make significant investments due to record breaking growth in past years. Our community grew from just under 67,275 residents in 2006 to an estimated 81,948 in 2015 – 26 percent in just under a decade. During the same time, the municipal budget grew from $108 million to $692 million – representing a tax increase of 540% percent.
The economic and population growth driving those increases are no longer forecasted to continue. In 2015 $34 billion in capital spending was invested in oil sands projects; however, since that time, many projects were either cancelled or deferred resulting in an estimated $17 billion in 2016. The consequences of the economic downturn are real and felt particularly acutely here in Fort McMurray.
While most of the decisions which contributed to this downturn are beyond anyone’s direct control, the oil sands industry is asking our local government to look at what can be done to align spending with a population that is no longer growing.
In December 2015, OSCA requested Council align spending with taxation by reducing 2016 taxation by 5% over 2015 for all ratepayers; remove “growth” from the “revenue neutral plus growth” fiscal management strategy; and, provide an opportunity for industry and Council to discuss mass assessment appeals.
The oil sands industry recognizes that this means making some tough choices. And we have had to make our own share of hard choices in recent months because the current price of oil is not sustainable. Industry players have deferred or reduced scope of capital projects as part of cash conservation efforts.
Let us be clear industry is not asking for hand out. Industry is not asking for residents to pay more taxes.
The per capita spending in the RMWB in 2014 was 1.5 times higher than the average rural municipality and 5 times higher than the average urban centre. However, industry is asking the RMWB to review spending and focus on core services needed to serve the current residents of the Wood Buffalo region.
OSCA believes that the combination of a weak national economy, record low prices for oil, cancelled oil sands projects and growing local unemployment, is exactly the right the time to re-evaluate the priorities in our community.
We believe that the current situation demands the oil sands industry have a dialogue with our stakeholders about how to best work together to build and strengthen our communities and our workforce.
And while we may not have the answers yet to each of these challenges, the simple fact is we want to be at the table. We also realize that there may be difficult conversation but, in the end, difficult conversations often lead to the best solutions.