Al­berta is the en­gine that drives Cana­dian growth

The Guardian (Charlottetown) - - OPINION - BY BEN EISEN AND STEVE LAFLEUR Ben Eisen and Steve Lafleur are an­a­lysts with the Fraser In­sti­tute’s Al­berta Pros­per­ity Ini­tia­tive and co-au­thors of “A Friend in Need: Rec­og­niz­ing Al­berta’s Out­sized Con­tri­bu­tion to Con­fed­er­a­tion.”

Dur­ing his Canada Day speech, Prime Min­is­ter Justin Trudeau ac­ci­den­tally caused a stir by for­get­ting to men­tion Al­berta when list­ing all of Canada’s prov­inces and ter­ri­to­ries.

It was surely an over­sight rather than in­ten­tional and the prime min­is­ter im­me­di­ately apol­o­gized.

Nev­er­the­less, his slip pro­vokes an in­ter­est­ing thought ex­per­i­ment: What would Canada’s econ­omy and pub­lic fi­nances look like with­out Al­berta?

It’s not a pretty pic­ture. Up un­til the re­cent down­turn in en­ergy prices and sub­se­quent re­ces­sion in the prov­ince, Al­berta con­trib­uted dis­pro­por­tion­ately to eco­nomic growth in Canada. Be­tween 2004 and 2014, in­fla­tion-ad­justed an­nual eco­nomic growth in Al­berta av­er­aged 3.4 per cent — more than twice the rate of growth in the rest of the coun­try (1.6 per cent) dur­ing the same pe­riod. With­out Al­berta’s strong per­for­mance, Canada’s eco­nomic growth rate would have been much weaker.

Al­berta’s pro­vin­cial econ­omy cre­ated more jobs than any other ju­ris­dic­tion in Canada be­tween 2004 and 2014, even though On­tario and Que­bec have vastly larger pop­u­la­tions.

The job-cre­ation ma­chine in Al­berta ben­e­fited peo­ple from all parts of the coun­try. Many of those peo­ple moved to Al­berta to seize eco­nomic op­por­tu­ni­ties and make a bet­ter life. Ap­prox­i­mately 270,000 more peo­ple moved to Al­berta from the rest of the coun­try than moved from Al­berta to some­where else in Canada over this 10-year pe­riod.

As im­por­tant as any of these fac­tors, how­ever, is Al­berta’s out­sized con­tri­bu­tion to the health of Canada’s pub­lic fi­nances.

Thanks to high in­comes, a youth­ful pop­u­la­tion and the fact the prov­ince doesn’t re­ceive equal­iza­tion pay­ments, Al­ber­tans send much more money to the fed­eral gov­ern­ment in taxes and other forms of rev­enue than they re­ceive in trans­fer pay­ments and ser­vices.

Even dur­ing the re­cent re­ces­sion, this gap re­mained large. In 2015, Al­ber­tans sent, on av­er­age, ap­prox­i­mately $5,000 more to Ot­tawa then they re­ceived in fed­eral trans­fers and ser­vices. Over the years, this large pos­i­tive net con­tri­bu­tion has re­sulted in stag­ger­ing sums. Be­tween 2007 and 2015, Al­ber­tans sent $221.4 bil­lion more to Ot­tawa than the prov­ince re­ceived.

So it’s dif­fi­cult to over­state how im­por­tant Al­berta’s con­tri­bu­tion has been to fed­eral fi­nances in re­cent years.

If Al­berta’s net con­tri­bu­tion per per­son was aligned with the Cana­dian av­er­age, the fed­eral gov­ern­ment would never have come close to bal­anc­ing its bud­get at any point since the 2008-09 re­ces­sion.

And the deficit to­day would be more than $20 bil­lion larger than it is.

Given the im­por­tance of a strong Al­berta for a strong Canada, Cana­di­ans from coast to coast should be con­cerned that the Al­berta gov­ern­ment is un­der­min­ing many of the poli­cies that helped make Al­berta an eco­nomic pow­er­house. Debt-free pub­lic fi­nances and strongly com­pet­i­tive taxes helped fuel eco­nomic growth in Al­berta for years. Un­for­tu­nately, pro­vin­cial pol­icy choices are quickly un­der­min­ing those ad­van­tages.

Clearly, it’s in the best in­ter­est of all Cana­di­ans for Al­berta to get back on its eco­nomic feet. Al­though en­ergy prices cer­tainly mat­ter, Al­berta can help its own cause by restor­ing a fis­cally sound, pro-growth pol­icy frame­work.

Given the im­por­tance of a strong Al­berta to the eco­nomic health of our coun­try, that’s a goal all Cana­di­ans should sup­port.

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