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Legislative Report
(9 March 2011)

Setting the Record Straight
on Potash Royalties

As with last fall’s hostile takeover bid for the Potash Corporation of Saskatchewan, our government is again saying no to protect the jobs for all those working in our growing potash industry. We have considered the risks associated with the full-scale review of potash royalties the NDP is calling for. Like equal hours legislation they tried to ram down the throats of working people before the last election, this too is a potential “job-killing monster.”

First, a full-scale potash royalty review would put current plans for billions of dollars in mine expansion and new mine construction, plus thousands of new jobs, at risk. You don’t have to look far to see why royalty reviews have serious implications. Case in point: the impact of a 2007 royalty and tax study done in Alberta by an independent panel. Their government proposed an up to 20 per cent increase in royalties for energy companies. The response? Investment dollars left Alberta along with thousands of jobs – just ask those were laid off.

Second, not only does a royalty review pose a serious threat to the stability of the investment climate in Saskatchewan, it also doesn’t make sense. Our potash royalties are already twice as high as any other jurisdiction in the world. As they say: if it ain’t broke, don’t fix it.

And finally, a word of caution for those who say Saskatchewan can charge whatever it wants for potash, given that we have roughly half of the global potash supply. This also means half is being produced in other parts of the world. If Saskatchewan fails to remain competitive, potash expansions will occur elsewhere.

Right now, we are competitive and that has resulted in the creation of thousands of jobs and billions of dollars being spent in our province. Potash companies will invest more than $12 billion in Saskatchewan over the next decade and increase provincial capacity by roughly 65 per cent. About 19,000 person-years of employment will be created through construction, followed by a permanent increase of 1,500 high-paying, industry jobs.

The Conference Board of Canada recently predicted that Saskatchewan will lead the country in economic growth both this year and next and that the potash industry will play a significant role. Why would we want to start a process that would put that growth at risk? Calls for a royalty review are just another example of the backward-looking attitude of Dwain Lingenfelter and the NDP.

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