Government policy does make a difference.

What a reversal. After decades of Alberta holding the upper hand in formulating public policies that attract investment, the shoe is now on the other foot. It turns out the right shoe fits nicely on the left foot.

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There is no clearer evidence of the impact public policy can have on the attitudes of those who populate corporate boardrooms than Saskatchewan's last oil and gas rights sale. We took in $197 million. That's roughly what we came to think was a year's take. And they did it in one day.

The government usually holds a half dozen of these sales each year, offering up petroleum exploration and development rights to the highest bidder. The difference this time was not something we did--in fact, it's something didn't do. The new government said it would not adjust royalty rates, unlike Alberta which began tinkering with rates after a public commission last year. The commission's report suggested royalties in that province were too low and their new premier appeared sympathetic to that assertion.

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The result was straight forward. While the Alberta premier fiddled, corporate Calgary was packing its exploration bags to head east. It would be an understatement to say the industry was not happy with the Alberta government's new attitude. Entire exploration budgets were pulled by some players. Others significantly reduced their capex plans for the Wild Rose province in protest. But the money was still going to be spent--except it would happen in northern B.C. and Saskatchewan.

The very first opportunity the industry had to spend its money in Saskatchewan produced record revenues for our provincial government. Not a bad day's work for the provincial finance department--they took in the equivalent of two per cent of the year's budgeted revenue in a single auction and didn't have to do a thing to get it.

But that is only the beginning. Then there is the actual exploration and development expenditure itself which will generate rental revenues for land owners and create jobs which, in turn, mean fresh income taxes for government. If the industry is successful in its pursuit, there will be royalties added to the windfall. In short, Alberta's stumble means Saskatchewan winning the 649's biggest prize over and over and over.

What makes this turn of events so newsworthy is the fact that it is a complete reversal. For years we were the ones who dispatched investors. Things like labour legislation dampened our investment prospects despite what we--or more accurately the majority of the electorate who continually returned socialist governments--wanted to believe.

They didn't want to accept that lower taxes mean more money for government. Yet, when they did actually lower tax rates, the treasury in fact took in larger receipts. They also didn't believe government policy could undermine investment activity. Well, folks, take a look at Alberta. In week one, it cost $200 million that went to Saskatchewan.

The point here is capital is mobile. It flows to the most attractive investment opportunity, a determination that involves everything from acquisition costs to labour rates and tax levels. Right now, for the oil patch at least, Saskatchewan is the best place to be in Canada after all costs are measured against potential returns.

Despite this new upbeat situation we can't delude ourselves into complacency or believing the job is done. After all, this surge is not the result of something we did. It was Alberta's misstep. Nonetheless, our neighbours have opened the door for us with their misconception that higher royalty rates will net their government additional money. Basically, this is an opportunity for us to solidify our first-place standing.

The government needs to finalize proposed labour legislation changes and, while it missed a golden opportunity to improve our tax system by harmonizing the sales taxes which would have given it the room to reduce income taxes, matching or bettering Alberta, the Saskatchewan premier's strategy of crafting a course for economic growth is within reach. Alberta has given his plan a boost with a couple hundred million unbudgeted dollars to kick start the process.

Paul Martin is heard daily on 980 CJME and 650 CKOM as well as on the radio stations of the Golden West Broadcasting network in Saskatchewan.