A strong Canada needs a strong Alberta (speech)
Premier Kenney’s speech to the Canadian Club of Ottawa | Ottawa, December 9, 2019
Thank you Deputy Prime Minister (Chrystia Freeland) for being here. Albertans are very proud to have a Deputy Prime Minister born and raised in Peace River Country who understands Alberta. I truly appreciate your presence and look forward to working with you in a spirit of searching common ground to ensure prosperity and opportunity for Albertans and all Canadians.
Thank you to the Canadian Club for the chance to bring an urgent message on behalf of Albertans: There cannot be a strong Canada without a strong Alberta.
Alberta has been the great engine of prosperity, social mobility and shared wealth in modern Canada. But our ability to play that role in the future is at risk. That puts Canada’s prosperity at risk and weakens our country’s unity.
That’s why I am here today with Team Alberta – an unprecedented mission of eight ministers and eleven deputy ministers, to press for a fair deal for Alberta in the Canadian federation now.
On ne peut pas avoir un Canada fort sans un Alberta fort.
Alberta est un des plus grands moteurs de prosperité, mobilité sociale, et richesses partagées dans l’histoire du Canada moderne.
And that is…C’est la raison pour laquelle je suis ici avec l’équipe Alberta, pour démander une entente juste pour l’Alberta dans la fédération.
So to boil it right own, our idea of a fair deal is a federation that respects the original vision of our Constitution, and that allows us to develop our resources and get them to global markets at a fair price, so we can continue to share jobs, wealth and opportunity with the rest of Canada.
Let’s start with the numbers.
We have made a massive, oversized contribution to Canada’s prosperity.
Research by economists Robert Mansell, Mukesh Kanal, and Jack Mintz concludes that Alberta has made a net contribution of $630 billion to the rest of Canada since 1961.
In the last 11 years alone, the net transfer from Albertans to the rest of the country was $240 billion. That’s a personal contribution to Canada of $55,000 from each and every Albertan.
For perspective, that’s 600 per cent more than the net per capita contribution of British Columbians and Ontarians combined over the same time.
On an annual basis, Alberta taxpayers contribute about $23 billion more in federal taxes than they get back in services, or about $5,400 per person, per year.
We are proud of that. We are proud to have helped our fellow Canadians when times have been good in Alberta and bad elsewhere. We are proud to have helped to build schools, hospitals, roads, to fund pensions, health care and social programs from coast to coast.
But Alberta’s contribution to social progress and prosperity goes much deeper than just these fiscal transfers.
We punch above our weight in every economic category.
For example StatsCan data shows that in 2018, despite all the challenges to our energy sector, it was by far the biggest export industry in Canada, exporting nearly twice the value of our next largest export industry, autos and auto parts.
Alberta’s largest industry – oil and gas – is also Canada’s largest industry sub sector, larger than banking and financial services. Larger, two and a half times larger, than residential construction, and four times larger than telecommunications.
And while we have only 12 per cent of the national population, Alberta typically generates one third of the investment, and one quarter of the new jobs in Canada’s economy.
Canadians depend disproportionately on Alberta’s energy sector for their financial security, with retirement savings and pensions invested heavily in energy stocks that have been hit hard in recent years.
Our energy sector has been Canada’s greatest engine of social mobility, moving tens of thousands of people without formal post secondary education into great middle class careers.
This is demonstrated by the work of University of Ottawa economist Miles Corak.
He spent years analyzing intergenerational income mobility and plotting it on the map of Canada.
Corak’s work — and you can see the map here — Corak’s work finds Alberta is the best place in Canada to move from “rags to riches” – from the lowest income group to the highest. And believe you me, I know more than a few Alberta millionaires who’ve done just that.
Alberta’s dynamic economy enables people to overcome socioeconomic hurdles that are sometimes insurmountable in other parts of Canada, which is why so many have moved to Alberta over the years.
It’s also why we enjoy by far the highest levels of Indigenous employment and the highest incomes amongst Indigenous Canadians, and better economic outcomes for immigrants and refugees as well.
Alan Freeman, the long-time economics reporter who’s now a Senior Fellow at the University of Ottawa’s Graduate School of Public and International Affairs, wrote the following: “In the two decades between 1994 and 2014, Alberta’s GDP grew by an average of three and a half per cent a year. The province, with something over 11 per cent of Canada’s population, accounted for 25 per cent of the new jobs for the entire country in the 10 years to 2014. Resource companies, led by the oil sands producers, invested $126 billion in their facilities, accounting for almost half of all non-residential capital investment in Canada.”
He went on to say: “We all benefitted. Revenues from Alberta flowed into federal coffers, boosting overall growth, allowing Canada to avoid the worst of the Great Recession of 2008-9. Alberta provided a huge safety valve for surplus labour from other parts of the country. Tens of thousands of skilled and not-so-skilled workers from the Atlantic provinces, Quebec and Ontario flocked to Fort McMurray for the high wages, sending money home like immigrants providing remittances to their families abroad.”
If not for Alberta’s huge tax contributions, by the way, even during these tough recent years, Ottawa’s deficits would be far worse than they are.
Federal Finance Department data shows that, without Alberta’s net contributions in just the last five years — when we’ve been in basically a recession, the federal debt would be almost $100 billion higher than it currently is.
In other words, to sum it all up, Alberta has been the goose that laid the golden egg in the modern Canadian economy — and for our system of fiscal federalism. But our ability to continue playing that nation-building role is in real jeopardy today, as we live through our fifth year of economic stagnation and decline.
Our economy is still $3 billion smaller today than it was in 2014. Between 2014 and 2018, business bankruptcies rose by more than 50 per cent. And it looks like 2019 will be another record year for bankruptcies and foreclosures in Alberta.
Oil and gas investment is forecast to contract for the fifth consecutive year in 2019, down almost 60 per cent from 2014 levels. There has been, it is estimated, a $100 billion loss in market value of publicly listed oil and gas companies since 2014, making Canadian pensioners poorer. Of 129 independent Canadian listed oil and gas companies in 2014 — this is shocking — almost half of those have seen their market cap decline by 90 per cent, or have been sold, delisted or gone through an insolvency event.
This has been devastating for Canada’s financial industry, and there’s not a pension owner in this country who has not been affected by it. Family incomes still haven’t recovered. And our per capita GDP is down 13 per cent overall.
For years, we have been running the biggest provincial deficits in Canada and the fastest-growing debt. And for years, our unemployment rate has been above the national average, with Calgary and Edmonton having the second and fourth-highest unemployment rates for large Canadian cities.
The extent of this jobs crisis is obscured by tens of thousands of folks leaving the workforce, especially young men, and many folks leaving the province as well. It’s estimated that we have lost something like 80,000 high-paying energy-sector jobs.
To put that in perspective, just think about this for a moment. Recall all of the media attention quite rightfully focused on the tragic loss of 3,000 jobs at the GM plant in Oshawa. And Albertans felt a sense of solidarity for those people. That occupied the better part of a week of national attention, and rightfully so. But have we given anything like proportionate attention to the 80,000 energy workers who have lost their jobs in Alberta?
These are stark statistics. But beneath them are the human costs, which are the ultimate source of the fear and anger that are roiling the prairies. Everywhere I go I see the fear of people affected by this downturn.
Business owners hanging on by the skin of their teeth with nowhere left to cut. Local municipal councillors struggling to pay for public services as local tax revenues dry up. CEOs with exhausted lines of credit, who can’t raise equity, grimly contemplating a third or fourth round of layoffs. Police officers, social workers and health care providers overwhelmed by the explosion of homelessness, crime, depression, and addiction.
This could not be more serious. Some rural counties have experienced a 400 per cent increase in crime. More families are breaking up. Food banks and women’s shelters have never had more demand. Alberta increased its support for women’s shelters by 50 per cent last year and they are already indicating they do not have enough space.
The per capita – and this is very grave – the per capita suicide rate in Alberta is 50 per cent higher than here in Ontario. And according to a paper from the University of Calgary School of Public Policy, for every 1 per cent uptick in the unemployment rate, we have seen 16 more people take their lives.
So why is all of this happening?
Well, here in Central Canada, there seems to be a widespread misunderstanding among some of what has caused this prolonged downturn in Alberta and Saskatchewan, and more generally in Canada’s energy sector.
Every day I read columns and commentary suggesting that we are just the hapless victims of global commodity prices, or that we’re witnessing the end of the oil and gas as an industry. And apparently, according to some of this commentary, we Albertans are just too dense to grasp this, and so we’re just lashing out in frustration at Ottawa.
But enough about the editorial pages of the Toronto Star.
So let me take on each of these misconceptions.
First off: oil prices are not low. They’re average. It’s true that in 2014 there was a sudden drop from $100 to $50 oil. But prices have stabilized, with the current benchmark West Texas Intermediate price around $60, which is well within the range of historical norms as you can see on this chart.
In fact it’s higher than the average price since the modern Alberta oil boom began in 1947, and higher than the average price that we’ve experienced since 1980.
Now, because of the 2014 price correction, Canadian producers have cut costs by about one-third, becoming more efficient than ever. Most of our major oil sands producers will tell you that they can operate profitably now at $35 prices for West Texas.
At the same time, and at the same prices, we have seen a huge oil and gas boom south of the border and in many other parts of the world.
Global production of oil is up 10 million barrels a day over the past decade. Much of that is being supplied by the United States, which has more than doubled output to become the world’s largest oil producer and, for the first time in history, an exporter.
Much of that production down there was fuelled by tens of billions of dollars moving from Canada, specifically Alberta, to the Permian, Eagle Ford and Bakken basins in the U.S.
So while Alberta is in its fourth year of a jobs crisis, energy states like Texas, Oklahoma and North Dakota are at full employment, experiencing sustained economic booms.
So, friends, Albertans submit that the difference is not price. It is policy.
Policies that have made our industry less and less competitive, driving job creating investment out of this country. And policies that have killed and delayed pipelines mean that we are captive to the U.S. and sell one of our country’s most valuable assets to them at fire sale prices, subsidizing massive profits for U.S. refineries. It’s like taking our family jewels to the pawnshop.
According to Scotiabank, the price differential costs the Canadian economy about $16 billion a year. A year ago, it became so extreme that we were selling Canadian oil to the U.S. at $10 a barrel. And they were selling their oil to the world at $60 a barrel.
This forced the Government of Alberta to impose production caps on our crude as a last resort, which in turn has driven away investment as producers cannot sell additional production.
So yes, a decline in global prices did hit us five years ago. But Alberta has been through that before. And we’ve bounced back. We are resilient and we are innovative. But this time, something was different.
Government policies made a bad situation much worse. Policies from different levels of government. Like the cancellation of the approved Northern Gateway Pipeline. The surrender to a U.S. presidential veto on Keystone XL. The killing of Energy East by changing the regulatory requirements halfway through the process. By constant uncertainty and delays around the Trans Mountain expansion that caused Kinder Morgan to leave the country.
To an endless and uncertain approval process which contributed to the cancellation of projects like Petronas’s $40 billion West Coast LNG project, which would have been the largest direct foreign investment in Canadian history. Like carbon taxes and regulations that are not imposed by any other major energy producer on earth, which have had the effect of accelerating carbon leakage and capital flight.
And now, the deeply problematic Bills C-48 and C-69. One of them, 48, is a first, I believe, in Canadian history. A ban on the export of only one export product – bitumen – produced in only one province – Alberta. So while Saudi tankers can enter the Bay of Fundy every day, unimpeded, with their carbon tax-free, conflict oil, we are barred from sending Canadian energy out of certain Canadian ports, even if we have the support of First Nations, as we do in many cases in northern British Columbia.
That’s why the Senate transportation committee voted to defeat Bill C-48, a decision that was subsequently reversed.
And Bill C-69, the new Impact Assessment Act, is known in Alberta as the “no more pipelines law.” It creates enormous new uncertainty, potentially endless reviews, was opposed by almost every major industry group in the country, was opposed by nine of the 10 provincial governments, by many First Nations (most of those in Alberta), and by all five political parties in my province.
The majority of senators, including those appointed by the current Prime Minister, and a majority of the Liberal Senate caucus, voted to adopt virtually all of the amendments to Bill C-69, proposed by Alberta’s government under the NDP, and by the Canadian energy industry. But ultimately, these 180 amendments were reversed.
C-69 not only creates huge new uncertainty for the future of Canada’s resource industries at the worst possible time. It also constitutes, we believe, a blatant constitutional intrusion into our exclusive provincial jurisdiction to control the development of our resources.
That power was hard fought for, and won, by one of my great predecessors, Peter Lougheed, during the debates around the patriation of the Constitution in 1981. And Alberta’s signature on the Constitution is there only because we secured Section 92A as a condition precedent of our concurrence with the Constitution’s patriation in 1981, giving provinces exclusive authority to regulate the production of their natural resources.
Something that Bill C-69 flagrantly violates, which is why we are seeking a judicial reference to the Alberta Court of Appeal to challenge its constitutionality.
On top of those policies, we heard the leader of the national government speak during the last election campaign, when he said…Et pendant la campagne électorale récente, il a dis que, je cite, « on a besoin d’un gouvernement qui va lutter contre les pétrolières. »
He said, “We need a government that will fight the big oil companies.”
Now, I get that rhetoric happens in elections and I hope that we can – starting with my meeting with the prime minister tomorrow – move beyond this and find common ground. I hope he will demonstrate his intention to do so through actions.
But I just have to ask you this: can you imagine a national leader of any party, on live television, saying, “We need a government that will fight the big auto manufacturers?” Or, “We need a government that will fight the big aviation companies?”
It is unthinkable. And rightfully so. Can you imagine a government during a prolonged downturn in Quebec, with tensions running high, bringing legislation that imperils Quebec’s largest industry?
I sat around a federal cabinet table, I think that would be implausible. Again, rightfully so.
Et je dis, comme j’ai dit le soirée de notre victoire electorale en avril.
Les Albertans sont depuis toujours les alliés du Québec dans le défense des champs de compétences des provinces et j’espère que au noveau, nous serons les partenaires en prospérité.
Nous avons établis une bonne relation avec le gouvernement du Premier minister Legault et je suis très reconnaisant de son appuis pour la situation de l’Alberta au Conseil de la fédération la semaine dernière.
Friends, these are reasons why we have seen a disturbing rise in alienation on the Canadian prairies, and particularly in Alberta. You’ll have seen polls indicating support running as high as 32 per cent for leaving the Federation.
Let me be clear: I am and always will be an unconditional and proud Canadian patriot. Our government will always be a federalist government. The new party which I am privileged to lead, not by accident, wrote into its founding principles that we are devoted to a united Canada.
And I believe that, despite our flaws, Canada is the best country in the world. And my patriotism will never be conditional. Nor do I understand, quite frankly, how the solution to a campaign that’s trying to landlock Alberta is for Alberta voluntarily to landlock itself. Doesn’t make sense to me.
Having said that, what concerns me most in the polling is the indication that upwards of 80 per cent of my fellow Albertans say they “understand or sympathize with the separatist sentiment.” These are good people, the vast majority of whom I do not believe would ever opt to leave our country. They have not given up on Canada, but more and more, they believe that Canada has given up on them.
And so, I am here with my colleagues from cabinet to convey a message to the newly re-elected federal government and parliamentarians from across party lines: Let us take seriously these challenges in a province that has done so much to build this country to be an engine of social mobility, of progress, of prosperity. Let us not make the mistake of diminishing or deriding these voices of frustration, the experiences of so many proud Albertans.
My province’s population has doubled in the past three decades, in large part because of people from every corner of Canada joining us in what they saw as an opportunity society. The 80 per cent who I just cited, and some of the 32 per cent that I referred to — many of those people, hundreds of thousands of them, were born and raised in Ontario, in Quebec, in Atlantic Canada, in British Columbia.
They moved from the despair of poverty and unemployment or underemployment in the fishery of the East Coast, or the traditional manufacturing industries of Central Canada, or the forestry industry of British Columbia to enjoy opportunity in Alberta. They are Canadians, profoundly and deeply, and yet this is what they feel: a sense of having been marginalized in the federation.
And so I’m encouraged by the appointment of Deputy Prime Minister Freeland as Minister of Intergovernmental Affairs, and our initial productive conversations. And the fact that many members of her cabinet have reached out to my colleagues to open a dialogue about issues affecting Alberta’s future.
But I’m also here to say that we need to see not just dialogue. We need to see some meaningful action.
First of all, we launched a fair deal consultation with Albertans to look at whether or how Alberta should begin to use some of the powers exercised by Quebec and Ontario for example. We are not a marginal, regional province. Demographers project that we will, in the not-too-distant future, exceed British Columbia as the third most populous province. We had the second-largest economy in Canada until this downturn.
And so we will be studying a whole range of ways in which we can more effectively exercise our powers as a province to defend our vital economic interests within the federation.
But I am here today focused on five key urgent priorities for Alberta. Firstly, we are seeking a firm, fixed and fast deadline to complete the Trans Mountain expansion, to get Canadian oil moving to new markets, so we can bring investment and jobs back to Canada.
I’m specifically asking the government to commit to upholding and enforcing the rule of law to ensure that this happens, and to make it a priority to bring First Nations into the project as equity partners as quickly as possible.
And on this, we in Alberta are leading by example. We have just passed through the legislature the creation of the Alberta Indigenous Opportunities Corporation, backstopped by $1 billion of the faith and credit of the Alberta Crown, to facilitate Aboriginal financial participation in and co-ownership of major resource projects including, prospectively, pipelines.
Because we think it is an economic imperative. It will be a game changer in terms of completion of major projects, but we also recognize it is a moral imperative of our generation to help our Indigenous people benefit from the resources that lie below the ground that their ancestors first inhabited. And we hope the federal government will join us in that. And so we do hope to make forward progress on that.
The second thing I will be raising this week with my colleagues in Ottawa is asking for payments we should have received during the height of our downturn, under something called the Fiscal Stabilization Program — the way I explain it to folks is a sort of “equalization rebate” designed to soften a sudden decline in revenues, typically for “have” provinces.
Alberta suffered a $7 billion revenue drop in 2015, due mainly to the world energy price collapse. But because of a per capita ceiling put on that program many years ago we only received $250 million.
So we will be seeking this, with the unanimous support of every province and territory expressed in the communique of the Council of the Federation last week. I’m so grateful to my colleagues – all of them have urgent issues – but in that communique they decided to focus on three main issues, specifically market access for Canadian resources, working with the federal government to undo the problematic aspects of Bill C-69 and the Federal Impact Assessment Act, and then lifting the cap retroactively on the Fiscal Stabilization program.
And I can assure you that if the federal government decides to do that – to recognize the huge adversity facing my province – we will put those funds to good use helping to create good, blue-collar jobs in areas like reclaiming abandoned wells that will help to improve our environment at the same time.
Thirdly, we seek repeal of Bill C-48 and Bill C-69. Recognizing that the latter is unlikely, we will hope the government will work with us constructively to mitigate the uncertainty created by that bill.
I’ll give you one example. We’ve got a huge conversion from coal to natural gas-fired power going on in Alberta right now. But in order to make that happen, the electricity companies need to build pipelines to bring natural gas into their electricity plants. And unfortunately, if they’re a certain length, they fall under the federal aegis, under Bill C-69, and that’s taking years to get to an approval.
So here we have the private sector with the support of the provincial government, trying to do something that will materially reduce CO2 emissions. And we’re caught up in a bureaucratic morass. These are practical simple things that we can do together.
Another thing that we believe must be done is to get to a positive approval of the Teck Resources mine in northern Alberta that would create thousands of jobs, that has multiple deep partnerships with First Nations and Indigenous communities. I see Herb Lehr here from the Metis Settlements General Council, from the Métis people as well.
Do you know – I’m sure you’ve heard of Chief Allan Adam. Allan is the chief of the Fort Chipewyan First Nation. Allan has in the past toured Leo DiCaprio and James Cameron and Jane Fonda around the Alberta oil sands. Chief Adam has given his conditional support to the Teck Resources mine because he sees this as an opportunity to lift his people from poverty to prosperity. And if this project does not proceed, it would be a clear indication that there is no way forward for this country’s largest natural resource.
My fourth request of the government, which I know will be echoed by Finance Minister Travis Toews in his meeting with Minister Morneau, will be an expansion of tax instruments like flow-through shares to stimulate job-creating investment in resource-related activities.
Flow-through shares are a proven tool to accelerate job-creating investment, and we’re asking the federal government to expand them to include activities that will improve the environmental performance of our energy sector, such as carbon capture projects and decommissioning of spent oil and gas wells.
Again, I think that on these issues, we can find common ground with the federal government that is very much focused on middle class jobs, environmental protection, and prosperity for Indigenous people. We share these points in common in our agenda. Let’s find ways of acting on those shared priorities.
And my final urgent request to the Prime Minister tomorrow will be an equivalency recognition for Alberta’s methane reduction regulations.
I want to commend the Government of Canada for having announced an equivalency agreement for our levy on major industrial emitters, the Technology Innovation and Emissions Reduction plan. And we ask that a similar consideration be given to our very rigorous methane rules which, according to a study co-sponsored by the federal government, would reduce more emissions than the federal regulations at a significantly lower cost.
Let me conclude with a final appeal to those who persist in seeing our insistence on a fair deal as selfish or parochial: People who feel that way, I believe, completely misunderstand the Alberta spirit.
In our hearts, Albertans are patriotic and generous. So if a growing number of Albertans see themselves as not fully at home in their country – a country that they have so dutifully served and to which they have contributed disproportionately – then it is the responsibility of all Canadians, but especially the national government, to address that.
Let me leave you with the words of a man who spoke at last week’s first town hall meeting conducted by our Fair Deal Panel. I don’t know this man. He stood up and talked about having fought for Canada in Afghanistan, probably with the PPCLI (Princess Patricia’s Canadian Light Infantry).
After leaving the Forces, he found good-paying work in the oil patch. That job took him to Chad, in Africa, where he proudly reported that his Canadian company followed exemplary environmental, social and governance standards.
He said: “I built roads. I built power, I built a future for those people. I saw a country coming alive because they had industry and hope.”
Upon returning to Alberta, he lost his job, and has been out of work for the past two years.
Here’s how he feels today: “Just because we’re right, just because we have the right to demand to be treated fairly, does not mean that they will automatically treat us fairly. If you want to do something, you have to be able to stand up and say, ‘I deserve this and I’m gonna fight for this.’ ”
I couldn’t have said it any better.
It’s what I hear everywhere I go in my province. I hear that we’ve been working for Ottawa for too long; and it’s time for Ottawa to work for us. That Ottawa needs to stop making it harder for us to jump-start our economy. And so here I am – with a third of our cabinet, in Ottawa – to deliver that message on behalf of Albertans.
Albertans are practical people, we’re not unreasonable people. Nothing we’re asking for here is unreasonable. Everything we’re asking for is within the federal government’s power and none of it would hurt another province.
Indeed, we saw many of these items endorsed unanimously last week at the Council of the Federation. We are simply asking for a fair deal now within Canada.
One that respects the constitution and lets us do what we do best, what Albertans have always done: grow our economy, get people to work, and generate an outsized share of Canada’s wealth.
That’s what Albertans want; it’s what we need; and we hope that’s what we’ll get in a fair deal within the federation.
Thank you very much. Merci beaucoup.