Kevin O'Leary is chairman of O'Leary Financial Group.

From: Kevin O'Leary

To: Alberta Premier Rachel Notley

Story continues below advertisement

Hi Premier Notley, how's it going? Actually, you don't need to answer that – it's obviously a pretty grim situation we all find ourselves in today.

Energy is the No. 1 export in Canada by miles; nothing even comes close. Energy, energy services, and transportation represent as much as a third of our economy. You are the steward of a very important economic engine. If anything bad happens to Alberta, we're all screwed. And bad things are happening.

I recently promised Canadian taxpayers that I would call out incompetence, mediocrity and risk in government policy. That's why I'm writing. Since you took over as Premier, the price of oil has collapsed, the dollar has cratered and 73,000 Albertans lost their jobs last year.

I heard you say recently that none of this is your fault because you don't control the price of oil. That's true, but the fall in the dollar and a lot of the job losses have your name all over them.

First, the dollar. A weak dollar is bad for Canada. Our companies can't competitively become productive if they can't buy technologically-advanced services or new plant equipment. Now, they're working with a dollarette that's lost 35 per cent of its value .

No one wants to buy the Canadian dollar, and you're a good part of the reason.

Energy is a multitrillion-dollar global sector, and it's part of every country's economy. If you're a sovereign fund, you might invest 10 per cent to 20 per cent in energy companies globally, adjusted for GDP weighting. Canada would receive 2 per cent to 3 per cent of any global funds allocation – so in the case of a $100-billion fund, about $345-million. In order to make this investment, global portfolio managers would use their British pounds, Swiss francs or U.S. dollars to buy Canadian dollars and then use them to buy debt or equity positions in Canadian energy and energy service companies. Thousands of these funds were investors in Canadian energy – until you showed up to speak, uncoached, in New York a few months ago. You told them you were raising corporate taxes by 10 per cent, beginning a review of royalty rates and planning to introduce billions in new carbon taxes. All while the price of oil was collapsing. What were you thinking? That was the worst road show in Canadian industrial history. No wonder the dollar collapsed, and the market cap of Alberta-based Canadian energy companies followed suit. Global investors checked out by the billions. They sold their Canadian dollars and invested in other countries' energy sectors.

Story continues below advertisement

By the way, you still haven't announced what royalty rates are going to be on the output from new energy capital investments. No one is going to invest in new Alberta energy projects until they can calculate their returns. Why is this taking so long? Investors hate uncertainty.

Now, let's talk about the 73,000 lost jobs. A lot of the blame for this falls on your shoulders. Early in your mandate, when oil prices were declining, you should have leaped into action. Instead you spent your time travelling around, discussing new climate-change initiatives. Are you kidding? That's not your primary mandate. Your first concern should have been jobs. It doesn't mean you had to abandon environmental issues in the long term, but you have put your people first. You breached this trust and now you're paying for it.

It must frustrate you that a guy from Ontario is holding your feet to the fire this way. Unfortunately, Alberta is such a large part of the Canadian economy that when it catches a cold, the whole country gets sick. And right now, Alberta has influenza. I bet thousands of Albertans are writing you letters, but they don't have the national media publishing theirs. I'm writing on their behalf. And I'm just getting warmed up.

I'm interested in affecting economic and fiscal policy when I see it broken. And your policy plan is definitely broken – in fact, as far as I can tell, you don't have one. So I'm going to give you one.

1) Reverse the 10-per-cent increase in corporate taxes that you implemented at the beginning of your mandate.

2) On existing oil-and-gas production, slash royalty rates by 50 per cent for the next 24 months so companies have more cash for employee retention. These people are highly trained, valuable assets and no company wants to let them go. But your ill-timed tax increase and royalty uncertainty has caused companies to reduce risk by lowering costs. The short-term 50-per-cent reduction in royalty rates gives them more cash to sustain them during the downturn. Meet with each large-cap CEO and tell them that you'll be increasing royalty rates in the future to make back what you're giving up now. The point is, you want to keep those energy workers employed during the downturn.

Story continues below advertisement

3) On new oil-and-gas production capital expenditures, implement a 12-month capital cost allowance acceleration. In other words, if anybody is willing to invest in new Alberta production, they can write off the entire investment in the year it occurred.

4) On any new capital investment, there will be a 36-month royalty holiday on any new production of oil-and-gas flows. New capital investments create new jobs.

Of course, this will create deficits, but you are going to get those anyway. At least with this plan, you're not at war with the No. 1 industry and employer in your province. And all this will help the Canadian dollar – investors will have to buy it if they wish to invest.

Put it all in a presentation and hit the road. Your message to the world is simple: Alberta is back in business and has the most attractive terms and potential returns for any energy investor on Earth.

Every day billions of dollars are deployed in the energy sector around the world. Your job is to make sure that Alberta is the most attractive place to invest them in. On that count, you've failed miserably.

If you reject all of these ideas, then come up with better ones. Doing nothing is not an option unless you want to see another 73,000 Albertans lose their jobs.