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"A Strong Alberta
Makes for a Strong Canada"
Notes for an address
by the Honourable Stéphane Dion,
President of the Privy Council and
Minister of Intergovernmental Affairs
Keynote address at the
University of Alberta
Edmonton, Alberta
April 12, 2001
Check against delivery
My
knowledge of Alberta has been gleaned from my experience as a Minister, but
I also see your province through the eyes of a Quebecer, an academic and a
political scientist. What strikes me is the extraordinary contrast between
what I read about Alberta, in certain media and certain academic writings,
and my own hands-on experience with Albertans.
Are
Albertans alienated? Whenever I come to Alberta, I meet people who are
optimistic, aware that they're living in one of the most fortunate regions
of one of the most fortunate countries in the world. People who look at life
head-on, with its inevitable challenges and promises of a better future. I
see a pluralist society where people are asking, as they are in Quebec, how
best to combat inequalities and alleviate poverty, and how to ensure
sustainable development.
Sure,
people sometimes talk to me about the Senate, but I have to say that's
mainly in universities and press rooms. Most Albertans do not seem to me to
be particularly obsessed with constitutional issues, even though they would
like to see improvements in this area, as in others.
If my
perception is right, and if it is true that you Albertans are optimistic,
both in terms of your potential for development and your role within Canada,
then what I have to say may not come as any surprise. I think that you are
right to be optimistic, and I have three examples
that demonstrate this.
My
first one is drawn from my experience as Intergovernmental Affairs Minister.
I'll tell you about an event I experienced which I believe speaks volumes
about the role of your province within the federation.
Second, I will present a view that I have about an important chapter in your
history. More specifically, I think that the period in which you made
efforts to take control over your natural resources, which is commonly
viewed as a painful chapter, may actually be seen as a success story if we
compare it with the experience of other federations.
Finally, I want to emphasize the importance of what you have done with this
bounty of natural resources. It seems to me that many
Canadians living in the other provinces and territories do not know enough
about how much you have been able to do together
with both of your governments, provincial and federal, to diversify your
economy.
1. Alberta's influence in the federation: an
illustration
I'm
going to tell you about a recent episode in our federal-provincial life. As
the story is rather well known, I believe I can repeat it without being
indiscreet.
I'd
like to take you back to the evening of September 10, 2000, in Ottawa. The
Prime Minister was hosting a dinner for all of the premiers and the three
territorial leaders, in preparation for an important negotiation session
scheduled for the next day. The centrepiece of the negotiations was an
agreement on our health system renewal.
Throughout the previous summer, I had worked hard to help the Prime Minister
and my colleague Allan Rock, the Health Minister, conclude this agreement of
great importance to all Canadians. It wasn't easy. The federal government
indicated to the provinces that solving our health problems isn't just a
question of money: we also need a plan. But the provinces were bound and
determined to get additional money from the federal government. "No
money, no plan," they told us. No plan, no money, we responded. We
went back and forth like that throughout the summer.
And
then, as always in Canada, we were able to work things out. Numbers began to
circulate, as did ideas for a joint plan. However these negotiations are
always difficult and some provinces still had major problems with the
agreement. Ontario and Quebec, in particular, had concerns that it might
constitute an intrusion into provincial jurisdiction.
Which
brings us to the First Ministers' dinner on September 10. As is well known,
one of the first premiers to speak out was your Premier. Ralph Klein said in
his direct style, and I am paraphrasing, "I've seen the plan, I've
seen the amount, I'm ready to sign." It was a decisive moment. The
tone was set.
The
next morning, the premiers of Ontario and Quebec continued to say that the
text of the proposed agreement was a federal intrusion. At that point I met
with my Alberta counterpart at the time, Minister Shirley McClellan, who
expressed her view that this was not the case, as the Alberta government
would never have agreed to a federal intrusion in its areas of jurisdiction.
She spoke to Premier Klein, who was instrumental in convincing others that
there was no intrusion on provincial jurisdiction and, due to his
intervention, we were ultimately able to come to an agreement.
The
reason I'm telling this story is that it reveals a great deal about what
your province represents within the federation. It's been five years now
that I've been Canada's Intergovernmental Affairs Minister. I've lost count
of the number of negotiations where we said, back in Ottawa: Klein is the
key. When the Premier of Alberta decides to get onside a consensus, success
is not far behind.
And
we know what it takes to work with Alberta: an approach of cooperation, with
deep respect for both federal and provincial roles and responsibilities. To
be sure, we don't always manage to reach agreement. But I'd say that our
batting average is higher than is generally believed.
2. Alberta's control of its natural resources: a
success story
As in
all societies, Albertans have past grievances, and sometimes scars. But I
suggest that even these can yield grounds for optimism. For example, you
rightly criticize the fact that you had to wait until 1930 for the Prairie
provinces to have a level of control over their natural resources similar to
that of the other provinces. But another way of looking at it is that you
succeeded, through persistence and determination, to obtain that control
back in 1930, whereas for all Western states in the United States, except
for Alaska, more than half of the land is still federal property today.
The
same is true of the National Energy Program (NEP) of 1980, which was not one
of our most popular initiatives. Partly as a result of your reaction and the
pressure exerted by your provincial government, the Constitution Act,
1982 gave the provinces the right to raise revenues, through any form
of taxation, on natural resources. Another result of your influence is that
following the Western Accord signed in 1985, the Government of Canada agreed
to limit its use of its taxation power over natural resources by restricting
itself to levying a corporate income tax on
companies in the natural resources industry. Hence, today only provinces
raise royalties on natural resources.
And
here we are today. In his speech in Calgary last Friday, the Prime Minister
promised his "unswerving commitment to competitive markets and fair
regulation". He unequivocally ruled out an energy export tax. In
fact, he already said "No" to rumours of another National Energy
Policy when he first became Prime Minister in 1993.
Let's
step back a little and look at the broader picture: compared
with other federations, the Government of Canada considerably limits the use
of its own taxing powers in respect of natural resources, and the provincial
governments have access to more tax fields than the state or provincial
governments of other federations. Let's compare with two other federations
rich in natural resources like ourselves.
In
Australia, the states, like our provinces, levy royalties on natural
resource development in their territory, as well as excise and sales taxes.
However, as opposed to here, the federal government holds the exclusive
power to levy corporate taxes on natural resources throughout the Australian
territory and offshore. As well, it exclusively raises revenue
from exploration and development permits for offshore natural resources. And
it also levies federal excise and sales taxes, as well as the Petroleum
Resource Rent Tax, which is shared between the two orders of government.
In
the United States, the states can levy royalties on activities on lands
under their ownership, property taxes, corporate income tax, as well as
leasing rights on deposits of natural resources within their territory. But
the federal government has access to a number of revenue sources from
natural resources. First, it levies royalties on activities on all U.S.
territory and has leasing rights on federal lands (although it shares these
two revenue sources with the states in which the activities are conducted).
It also levies an exclusive tax on extraordinary income which enables it, in
combination with the corporate income tax, to capture a substantial portion
of income resulting from an extraordinary increase in the price of raw
materials. Finally, it has exclusive rights over offshore natural resource
development activities.
Based
on my review of these and other federations, I do not know of any other
sub-national entity that, like Alberta, combines such a wealth of natural
resources with such extensive control over them. I call this a success
story.
Your
natural resources potential is tremendous indeed. Alberta already produces
over 60 % of all of Canada's energy: oil, gas, coal and electricity
combined. And as the Prime Minister has been reminding President Bush
recently, Alberta also has a world-class resource in the oil sands, which is
only beginning to be tapped, that is equivalent to the reserves of Saudi
Arabia. If you add in your huge remaining gas reserves and vast coal
deposits, you see that the long-term prospects for Alberta's energy economy
are exceptional.
But
it is not enough simply to have petroleum reserves. You have to find a way
to take optimal advantage of them. The fact is that making the oil sands pay
off has required new technologies, sustained effort and imagination, through
a partnership of industry and the federal and Alberta governments. As the
Prime Minister said in his speech last week, the positive investment climate
required to make this happen came about, in part, due to the efforts of that
great Albertan and University of Alberta alumna, Anne McLellan.
As
an energy superpower, Alberta has developed a know-how that will be very
helpful now that we are entering a new energy economy in Canada, where more
regions will be developing their own energy resources. Northern
gas reserves are estimated to exceed even those of Alberta and will soon be
developed. The British Columbia gas industry has been growing quickly. The
Nova Scotia and Newfoundland offshore projects are both now producing and
they have the potential over time to transform the economies of Atlantic
Canada. Saskatchewan is rich in heavy oil.
These
developments elsewhere in Canada are highly promising for Alberta. The
companies and services based here will be playing key roles in the
transformation of our energy economy across Canada.
Our
Government has two key objectives in assisting Alberta and the whole country
to fulfil this exciting energy potential:
- to ensure that all energy
opportunities will be governed by competitive markets; and,
- to maintain high standards of
environmental protection and enforcement.
As
the Prime Minister said "A strong energy sector is not only a
pillar of the Alberta economy, it is absolutely fundamental to Canadian
prosperity."
In
order to assist in achieving these objectives, the Prime Minister has
established a Reference Group of Ministers on Energy Issues. The committee
is chaired by the Foreign Affairs Minister, John Manley, and includes Anne
McLellan. I also have the honour of sitting on that committee. It will be
another fascinating opportunity for me to work even more closely with
Albertans and with your provincial government.
3. A Diversified
Alberta - Ready for the Future
Among
Canadians outside Alberta, there is the sense that Albertans are 'rich' only
because of their petroleum, while in fact, what you have done to diversify
your economy is impressive. It is not only by luck that Albertans enjoy
average personal incomes that are 8.9% above the national average.
You
have used this exceptional control that you have over your natural resources
very effectively in diversifying your economy. An economy based on a few
natural resources is very cyclical and uncertain. Today's wealthy Alberta
was not in such great shape in the early 1990s, with the largest provincial
deficit in 1992-93 [4.6% of GDP] and unemployment reaching 9.6% in 1993.
But
today, you - like Canada as a whole - are better equipped to deal with any
economic slowdown. It's not surprising that some 64% of small business
owners expect Alberta's economy to perform better in 2001 than it did last
year, despite the economic slowdown in the United States. The extent to
which your economy has diversified is not, in my opinion, sufficiently
recognized elsewhere in the country.
Some
data tell the story. Among provinces, Alberta is first when it comes to
population aged 15 and over with a post-secondary diploma. Your high levels
of education are reflected in Canada's highest labour force participation
rate: fully 72.2 % of working age men and women in Alberta are in the
workforce, which is 6.1 percentage points higher than the Canadian average.
Your labour force productivity is the highest in Canada and it enjoyed
strong growth over the past five years.
And
what about your universities? Which one is the best in Alberta? I will let
you be the judge of that. What I can say is that the University of Alberta
leads the country with more 3M Fellowships for Teaching Excellence than
any other university in Canada, and is among the
top five Canadian universities for research funding from the federal
granting councils. Innovation and diversity are hallmarks of the university
and its student body, as illustrated by the Aboriginal MD (Medical Doctor)
program and the Faculté Saint-Jean, the only French-language
institution offering degree programs west of Winnipeg. Your President Rod
Fraser was recently in Ottawa with a team from the U of A, telling your
story to different ministers, including myself, and making sure we
understand your perspective on how the Government of Canada can contribute
to further strengthening universities across Canada.
But
they were preaching to the converted. About the only complaint the U of A
might have against the federal government is that we took Anne McLellan away
from you!
Now
let's talk about your cities. Alberta has two of Canada's six largest
cities, both of which have become culturally rich and diversified. The Financial
Post's 1999 listing of the Top 500 and Next 300 companies by revenue
showed that Calgary is second only to Toronto in Canada's corporate head
offices. Roger Gibbins, the President of the Canada West Foundation, is
leading a project for the foundation to look at what he calls the "New
West." A West which, without neglecting its agricultural sector, is
becoming increasingly urban. Here again, how many Canadians know that
Alberta is now only very slightly less urban than the Canadian average? I am
very happy that the Government of Canada is providing some financial support
for Roger's study and I shall follow its progress with great interest.
In
Alberta, I see a very diversified province, subject to many different
influences, made up of a population that comes from across Canada and around
the world. In the past five years alone, you have had Canada's fastest
growing population, with a net gain of 114,000 people coming from elsewhere
in the country. You have also received 65,000 immigrants from other
countries. How many of you have parents who were born in Alberta? How many
of you were born in Alberta yourselves? At holidays and birthdays, how many
Albertans call different parts of Canada and the world to talk with family
members? Just ask someone working at Telus for the answer!
Canada
is showing the world that diversity is a strength, not a weakness. Alberta
is an impressive illustration of that reality.
Conclusion
I've
given you a broad outline of my experience of your province and the immense
potential I see in it. Am I too optimistic? Don't criticize a Montreal
Canadiens fan for being so optimistic when your Oilers have made the Stanley
Cup playoffs! Don't criticize the optimism of a Liberal when the Calgary
Herald just wrote that my party "is beginning to understand
that a strong Alberta makes for a strong Canada"! (April 8, 2001)
That's the most positive press coverage we've had in a very long time!
I
have no doubt that Alberta's future in Canada will continue to be one of
national leadership. This is most obvious in the energy economy, but I am
sure the story will be much greater than that. It will be felt across the
economy, in the scientific and cultural communities, and in our political
life. The challenge for Albertans will be to reflect on how you will use
your advantage and leadership in this admirable country that we will
continue to share and to improve together.
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