Awakening To Alberta’s Lost Advantage
March 3rd, 2009
One year ago, we Albertans set a new record. Ominously, it had nothing to do with our province’s economic growth, which we had come to take for granted. This benchmark was about who we are as citizens, and how we see ourselves within our communities, our culture and our economy.
Last March 3rd, only 40.6% of eligible voters cast ballots in the Alberta general election, Canada’s lowest-ever turnout for a provincial vote. Ed Stelmach’s Progressive Conservatives won an increased majority, but the victory was warped by indifference: only 23% of the electorate had voted PC.
This was embarrassing, to be sure, but few Albertans expected grave economic consequences. Many followed the lead of Premier Stelmach and his cabinet, shrugging off the gloomy statistics as evidence that Albertans are resigned to one-party dominance.
But this year, the headlines aren’t as easy to shrug off. It turns out more than just some vague notion of civic duty was on the line last year. Our families’ jobs, our solvency - our entire economy was at stake.
Now we learn that four U.S. states are headed for budget surpluses this year. Alberta is not.
Saskatchewan’s government looks set to balance its books. Alberta will not. The Stelmach government expects to be $1.4 billion in the red, the first shortfall in 15 years.
Breaking his campaign promise, Ed Stelmach is rewriting Alberta’s no-deficit statute to allow overruns for at least two years.
Albertans wonder: how did we go from leaders to also-rans in only a few months?
Premier Stelmach and his cabinet blame worldwide recession. In doing so, they conceal this fact: Alberta’s oil patch, the source of one-third of provincial revenues, had been in steep decline well before chaos struck the markets in September, 2008.
In August, Saskatchewan and B.C. were already leading Alberta in oil and gas land sales, in part due to the Stelmach government’s determination to enforce higher royalties. By the end of the year, B.C’s earnings of $2.66 billion put Alberta’s $937 million in the shade. Saskatchewan enjoyed land sales of $1.2 billion, despite its oil patch being one-fifth the size of Alberta’s.
Throughout 2008, an estimated $2 billion in oil and gas investments left Alberta for other jurisdictions, pointing to even larger royalty losses in future years. This is no accident: Alberta’s neighbours have worked hard to attract risk capital and the entrepreneurs who depend on it.
By contrast, Premier Stelmach and his ministers turned a blind eye to evidence placed before them, well before last year’s election, that hiking royalties during a time of rising costs and low natural gas prices would poison the well of real provincial earnings.
A number of executives invited us to examine their books and do the math. Clearly, they were right: the new royalty scheme would chase smart money away from most of Alberta’s junior oil and gas firms. Higher royalties would kick in just as investors would be hoping to recoup.
The premier promised to meet the juniors’ representatives prior to the election. But he dodged them instead, opting for a vague assurance that his government would correct the “unintended consequences” of the royalty review after the election.
That correction never came. By summer, 100 fewer drilling rigs were operating in Alberta than had been the case 14 months earlier. Upwards of 10,000 jobs vanished with them.
Not so long ago, Premier Stelmach enjoyed grading his government’s performance. He hasn’t ventured to do so recently. Having rewarded themselves with 30% pay hikes within weeks of their election win, the premier and his cabinet stuck to a royalties plan that weakened Alberta’s key revenue-earning sector on the eve of the worst recession since the Dirty Thirties.
The province’s Heritage Fund has suffered its greatest loss since its creation 33 years ago. And just last week, the government committed our “Alberta Advantage” motto to history, revealing that it will spend $25 million taxpayer dollars to come up with a moniker more fitting for the times.
That ploy, to somehow “rebrand” Alberta, points to the Stelmach Conservatives’ deeper failing. The party would rather conceal the province’s ailing political culture, it’s democracy deficit, than respond to it.
The PC’s policy blunders - crumbling health care, a flaccid response to urban crime, failing to take assertive action on the oil sands – are all symptoms of a party that has grown old and detached, one whose leadership is militantly averse to innovation, and surrounded by impenetrable rings of appointees, cronies and contract seekers.
Sure, we’re Albertans. We’ll get our edge back – once we deal with the disadvantage of a government that lets patronage trump free enterprise, and stubbornness get in the way of common sense.