Some economic facts of life the NDP government needs to keep in mind if it wants Alberta to continue to prosper
In a famous explanation of why voters choose the governments they do, a 1990s-era adviser to Bill Clinton remarked, “It’s the economy, stupid.”
That’s not wholly accurate; voters toss parties out (and vote parties in) on matters other than unemployment rates and incomes. The recent Alberta election is only the most obvious example.
Nonetheless, economic facts matter, at least to anyone not independently wealthy and who needs a job and income.
Here I will purposely note the 1994-2013 period, because Alberta’s NDP campaigned on a platform to reverse many of the policies implemented in those two decades – restrained government spending (the first decade), lower business taxes, moderate royalties, and reduced and flatter provincial personal income taxes (the second decade).
The following then is a reasonable standard by which the new government can be measured in future years.
Economic growth: Between 1994 and 2013, Alberta’s economy grew faster than any province in 10 of those 20 years; Saskatchewan recorded six first place finishes, British Columbia was tops twice and Ontario once. (In one year, 2009, every province was in recession).
Over the 1994-2013 period, Alberta’s annual average GDP growth was 3.6 per cent – much higher than the national average of 2.7 per cent. Alberta thus also trumped Ontario and Quebec (2.7 per cent and 2.3 per cent respectively) and other western provinces such as British Columbia and Saskatchewan (2.6 per cent each) and Manitoba (2.5 per cent).
Private-sector investment: Between 1994 and 2013, Alberta topped the charts with private-sector investment (non-residential). Of the almost $2.9 trillion in private-sector investment in all 10 provinces.
Alberta attracted $893 billion, or 31 per cent. The next largest destination for private investment: Ontario, $743 billion or 26 per cent.
Those big numbers are why per worker, private-sector investment in Alberta topped every other province.
On an annual average between 1994 and 2013, Alberta per worker private investment was $37,285, followed by Saskatchewan ($29,024), and Newfoundland and Labrador ($23,303). Alberta tripled British Columbia ($12,116) and Manitoba ($12,080); Alberta easily beat Ontario ($9,132) and Quebec ($8,836).
All that private-sector investment in Alberta drove down unemployment. Between 1994 and 2013, Alberta had the lowest average annual unemployment rate in the country, at just 5.4 per cent. That was followed by Saskatchewan (5.5 per cent), Manitoba (5.6 per cent), British Columbia (7.4 per cent), Ontario (7.5 per cent) and Quebec (9.1 per cent) with Atlantic Canada much higher still.
Population growth: Unlike some provinces, Alberta’s unemployment rate was not the result of working-age people leaving the province. Rather, the opposite was true.
Between 1994 and 2014, those in the 15 to 64 cohort increased by 59 per cent in Alberta. Compare that to British Columbia and Ontario (28 per cent), Saskatchewan (19 per cent), Manitoba (18 per cent) and Quebec (12 per cent).
It’s vital to note that Alberta’s prosperity did not result from permanently high oil and gas prices. Over the last two decades, the province prospered through high and low commodity prices. From 1994 to 1999, oil prices were as low as $11.35 a barrel and as high as $26.10. In the 2000s, oil prices never reached where they are today (about $60) until 2005. Natural gas prices were similarly low for extended periods before a few sharp increases coupled with the recent steep drops.
Also, the mere presence of oil and gas doesn’t guarantee prosperity. New Brunswick, Nova Scotia and Quebec all have decent oil and gas reserves but choose to block most development. Internationally, Venezuela has plenty of oil and plenty of poverty. There’s a reason why Alberta has prospered: in part, mostly smart policy on royalty rates, taxes and regulation (and in part the “boring” necessities such as rule of law, property rights and other foundational elements for prosperity that are generally common Canada-wide).
If the new NDP government in Alberta wants to help Albertans prosper, the above-noted statistics and successes should remain in mind. All those positive numbers didn’t occur by accident.
By Mark Milke
Mark Milke is a Senior Fellow at the Fraser Institute.