Every party or summer barbeque seems to have one: someone with the loudest jokes, the fabulous new promotion at work, the limitless pictures of adorable grandchildren. It may even be the person who has had too much to drink, knocks over a vase, or says something inappropriate. There is always someone at every party who, for reasons good or bad, seems to steal the show.
Lately, in Canada, that role is being played by Alberta. Awash in oil and natural gas royalties, it has managed to pay off its $23-billion debt and become the first province in recent history to be debt-free. But it hasn't only been the government's financial status that has been stealing the show. It just seems to be everything about it lately: surging employment, a swelling population, soaring housing prices, sky-rocketing investment. Everything about the economy has made Alberta the new It Girl on the block.
Some guests at the party swoon over Alberta's economic swagger and fiscal bravado. "If only we could be more like Alberta. . ." some of the provinces quietly whisper, looking for ways to lower taxes and cut spending to mimic Alberta's miraculous performance. Other party guests, however, are less than charmed. They shoot icy glances at her from across the room, silently conveying their displeasure with Alberta's pluckiness. "We wished she'd go home already. . ." some say.
Often this scorn reflects a view of Alberta as a spoiled heiress who has done little to earn her wealth. Her fortune flows from
the natural-resource
endowment lying
under the ground.
It is not surprising that
some of the party
chatter turns from the
weather and the Blue
Jays to ways in which
Alberta's good fortune
might be tapped by
other provinces.
Would you like a new
equalization formula with
that burger? Maybe a carbon
tax to top up that drink?
Love it or hate it, Alberta has got it going. By almost any economic yardstick -- the unemployment rate, retail sales, capital formation, and even inflation -- Alberta ranks head and shoulders above most other provinces. The June 2005 edition of the Canadian Economic Observer -- Statistics Canada's monthly pulse of the national economy --gushes over Alberta's leading role in national economic growth so far this year: "Since December, the Prairies have contributed more than either Ontario or Quebec to the national growth of labour income and retail sales, a rare occurrence."
But not everyone is cheering. Alberta's low-tax, high-growth, debt-free status is making life rather uncomfortable for some provinces. Take neighbouring Saskatchewan, for example. Despite having its own oil resources and achieving "have" status recently, the province is mired in debt. Its tax rates are much higher than Alberta's, and its most precious resource -- young, university-educated people -- continues to flow westward for better opportunities in Calgary and Edmonton.
It is not hard to imagine how things will worsen. The fiscal and economic balance between the resource-rich West and the manufacturing-dependent Windsor-Quebec City corridor has been tipping in favour of the West. With prices for oil, gas and other natural resources forecast to remain strong into the foreseeable future, the East-West fiscal imbalance is posed to increase considerably.
Certainly international trends point in this direction. Commodity markets remain strong while North American manufacturers struggle with intensifying global competition.
To be sure, Toronto will remain uncontested as the financial capital of the country. And Ontario, with a population and economy four times the size of Alberta's, is not going to lose its No. 1 ranking any time soon. But money flows to where the opportunities are, and you do not have to be the largest to be the most influential. The westward drift in economic power and influence has started to make some people in central Canada sit up and take notice.
What remains to be seen, however, is whether the westward economic drift will result in a similar westward drift in political influence. This is far from inevitable for, although we are quick in casual conversations to equate economic and political power, the two are not one in the same. Just look at Quebec: Its share of the national population and economy has been falling steadily for decades, yet the decline has done relatively little to weaken Quebec's political power.
So, what are the prospects for Alberta on the national political stage? Will the rich kid with jingle in her jeans succeed in translating economic clout into political influence?
One thing is clear: Success will not come by way of institutional reform or a transformation of the national party system. In both cases, Albertans have been beating their head against a stump for decades with little result. To use an Alberta expression, these dogs won't hunt.
Respect and political influence will depend much more on what happens in Alberta itself than on what happens in Ottawa. It will depend on how the opportunities created by wealth are used within the region. Alberta has the opportunity to lead by example, to be the primary driver of policy experimentation and innovation in Canada. With wealth comes the luxury of being able to take risks.
National influence -- if it comes at all -- will come through the power of ideas. The opportunity is there for Albertans to seize, but the price is a firm commitment to the transformative potential of energy wealth. National influence will be found in the creative application of entrepreneurial zeal to public policy reform.
Will Alberta shake her spoiled, party girl image? Will she gain the admiration and earn the respect she desires? Perhaps. Alberta's wealth will still be seen by some as undeserved, but others may come to see it as an opportunity to build economic prosperity and an enhanced quality of life for all Canadians. Our fingers are crossed.
Roger Gibbins is president, and Todd Hirsch is chief economist, of the Canada West Foundation.
Todd Hirsch