National Energy Program

A resilient and potent symbol of federal government – and particularly Liberal government – biases against Western Canada.

The “NEP” was introduced by the Pierre Trudeau government in its 1980 Budget, with the claim that it would provide “energy security” for Canadians. It created a made-in-Canada, “blended” oil price that resulted in lower domestic oil prices. It also instituted a double-taxation system that did not apply to other commodities, adding a new 8% tax on oil development, in addition to existing provincial royalties.

Alberta perceived the move as a money grab by Ottawa, and an effort to use their province’s wealth to subsidize the rest of the country. The NEP’s timing also coincided with a broader global economic slowdown, which was already depressing oil prices. The combination of new federal taxes and lower oil prices devastated investment in the Alberta oil sector and triggered a massive slowdown.

Politically, this was seen in Alberta as confirmation of the province’s second-class treatment in the Governing East. That the program was implemented by both a Prime Minister (Pierre Trudeau) and an Energy Minister (Marc Lalonde) from Quebec likely did not help matters.

Parts of the NEP were reversed, first by the Trudeau government itself; later the PC government of Brian Mulroney would eliminate it completely. Alberta’s economy rapidly recovered, but the political damage to the Liberal Party in Alberta – and Western Canada in general – would prove deep and lasting, effectively salting the ground for Liberal prospects in the province.

References to the NEP lived on as a flashpoint with the business community across Canada – and particularly on Bay Street – as an example Liberal economic incompetence and hostility to markets.

When the National Energy Program is invoked today, it is to raise the spectre of perceived anti-West bias, the recklessness of pitting one Canadian region against another, and all brands of cynically-conceived economic policy.

Image source: Flickr user Charles LeBlanc

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