Finance committee  Two issues have come up with us. One is about the definition of what does and doesn't qualify. It seems to be an endless and ever-changing one. Secondly, the audit provisions are to the point where companies simply quit applying, because for the amount of return.... Take Syncrude, for example.

Finance committee  Probably the biggest impact of that has been felt not just by the trusts but by the smaller companies that would build up and then sell their production to get to two or three or four thousand barrels a day. It was a way to sell their production into a unit that would.... What's happened is, there have been a number of provincial royalty changes, some economic changes, and then the disappearance of their exit strategy.

Finance committee  To start with, if you want to take $95, let's remember that we're now dealing with, let's say, parity—for a period of time, it was higher than that. You have straight operating costs, you have taxes provincially, you have taxes federally, and you have royalties provincially. I would love to say it's all profit, Mr.

Finance committee  Yes.

Finance committee  The fixed costs are fixed, but you're also looking for investment capital to go on and do the next-level investment.

Finance committee  I'm not convinced you would do the same thing at $67. We're seeing a remarkable retrenchment in the industry right now, Mr. Chairman. A lot of talk of the Alberta boom right now is from people who are looking in the rear view mirror. There is a tremendous slowdown that is occurring in the economy here, outside of the large urban centres.

Finance committee  Absolutely.

Finance committee  SR and ED is a hugely underused program, not just in the oil and gas industry but in the resource sectors broadly. I think a large part of that is the way it has been administered to date simply does not recognize the difference between benchtop and university-type R and D and the kind of thing Red River College was talking about.

Finance committee  There are two ways to look at it. One way is from an activity level. We've seen natural gas drilling drop from 23,000 wells to 15,000 wells. We will probably see somewhere between a 5% and 10% reduction in natural gas production this year—not exploration, production. Those are big numbers.

Finance committee  I think the bigger problem isn't just the accelerated capital cost allowance, Mr. Richardson. We've just seen wave after wave of dramatic changes federally, provincially, on top of very difficult economic circumstances, particularly relating to the dollar and global growth. The concern I think, and I'm sure you're hearing it from the business community as well, is that there is just a growing weariness in the capital markets about how many changes you can take, how many shots you can take, before people simply start saying, “We're going to look at doing business anywhere else”.

Finance committee  You have asked several questions; I will do my best to try and answer them. I am going to give you two or three examples. Why are we afraid? Why do we see a threat of discrimination? There are two very recent examples. First of all, budget 2000 treated our sector very differently from other sectors of the economy.

Finance committee  We have already started in Alberta. It is in the act: we will start this year. It will probably cost us up to $150 million, that we will pay to the Government of Alberta for a technology fund. That is how we will pay this carbon tax here in Alberta.

Finance committee  No, we are paying with our money. It is not a fund. We are paying directly.

Finance committee  There is no program at the federal level. There will not be a tax before 2010. Quebec and Alberta have a program. There is no problem. We will not pay voluntarily if other sectors of the economy do not pay. We have been ready since 2002, we are starting.

Finance committee  It depends on which barrel.