The Federal Budget and Energy Program, October 28th, 1980: A Review

Abstract

This paper reviews the recent MacEachen budget and the Lalonde energy program. It suggests that these policy initiatives not only restore the problematical economic course of excessive fiscal deficits and unrealistically low domestic oil prices, but in addition make an excessively large intrusion into the rights of ownership and control of provincial governments over their non-renewable energy resources. As a total package, they will not only turn out to be selfdefeating on such questions as security of future energy supplies and on rekindling growth in productive investment, labour productivity and employment, but they are inevitably antagonistic to the legitimate interests of large segments of the country. Although the federal government should obtain substantially increased revenues from oil and natural gas production, unilateral action and the unnecessarily slow increase in the wellhead price of conventional crude oil are simply unacceptable to Western Canadians. The low wellhead oil price will also perpetuate resource misallocation and associated rent-dissipation from both the production and consumption sides of the energy marketplace.