The fragile power of Alberta's golden goose economy

Cast yourself back seven years to August 2007 when Canada's premiers gathered for their annual meeting in Moncton. Led by Ontario's Dalton McGuinty, the majority of premiers, representing 75 per cent of the Canadian population, were pushing for a cap and trade system to deal with the growing greenhouse gas emissions.

In the crosshairs, Alberta and its then-premier Ed Stelmach.

Stelmach left after one day, insisting Alberta needed more time to reduce emissions in any substantial way.

It was Newfoundland premier Danny Williams who stepped up to defend Alberta in his absence. "It's not easy being green," Williams said back then, adding "we don't want to slay the goose that lays the golden egg."

At the time, the Stephen Harper government had also pledged to regulate emissions in the oil and gas sector. The industry and the provincial government in Alberta are still waiting for those regulations, first promised in October 2006.

How many years need to go by, you might ask, before an unfulfilled promise is nothing more than misleading rhetoric?

Then again, perhaps the delay is prompted by a real fear. Regulations to curb oil sands emissions might curb their growth, but they could also curb the oversized contributions the oil sands are making to the entire Canadian economy.

Consider that seven years ago, one of the most passionate proponents of a Canadian cap and trade system at that Moncton meeting is now one of the chief salesmen for Alberta's oil sands, and the pipelines needed to transport its bitumen none other than Canada's ambassador to the U.S., Gary Doer, the former premier of Manitoba.

Consider also that, as the Bank of Montreal pointed out in March, that nine in 10 net new jobs in the past year were created in Alberta. In other words, 90 per cent of the new jobs in Canada were created in a province with 11 per cent of the population.

Canada's lopsided economic engine

Guess what industry is fuelling that growth.

Federal Finance Minister Joe Oliver certainly knows, which explains his recent doom and gloom scenario about not getting Alberta's bitumen to market.

"The choice is stark," he says. "Head down the path of economic decline, higher unemployment, limited funds for social programs like health care."

Valid point, but what does it say about the federal government's job creation record and its stewardship of the national economy?

Surely a national economy that is so reliant on one industry in one province isn't a healthy one. And it isn't just BMO pointing out the lopsided nature of Canada's growth.

As Craig Wright, the chief economist at the Royal Bank of Canada, observed earlier this month, "Alberta is head and shoulders above other provinces, having experienced an average growth rate of 4.3 per cent over the past four years."

That was more than double the average growth rate in the rest of the provinces over most of that period, and the economic dominance is expected to continue this year.

The delicate dance

If you go to the government of Alberta website, you'll find a report called Fiscal Spotlight.

The most recent numbers are from 2011, and what they show is that the federal government collects the most tax revenue on a per capita basis from Alberta and spends the least.

By the numbers, that works out to an average of $5,012 more per person paid to federal coffers than was paid back in transfers, for a net contribution of $18.9 billion to the national purse.

It seems obvious that money not only doesn't always buy happiness but it also doesn't buy harmony. The nature of today's debate about the oil sands and pipelines makes that very clear.

A recent online story about flooding concerns in southern Alberta attracted a disturbing number of people who suggested it was payback for being environmental laggards.

That's hardly fair. Albertans are as concerned about the environment as anyone else.

But environmental stewardship in lockstep with economic stewardship is a delicate dance.

If the Canadian economy was more balanced, if job creation was more widespread, if explosive growth wasn't concentrated in one sector and one province, the federal government could probably be less of an advocate for the oil industry and address the growing calls for a more substantive strategy to reduce GHGs.

As far back as 2007,about the same time as those cap and trade premiers were meeting in Moncton, the prime minister said climate change was "perhaps the biggest threat to confront the future of humanity today."

Yet in early June of this year, Harper insisted, "No country is going to undertake actions on climate change, no matter what they say ... that is going to deliberately destroy jobs and growth in their country."

How do we square that one?

Meanwhile, Alberta will continue to grow and make its substantial contributions to federal coffers. New numbers this week show the provincial population grew by three times the national average in 2013, a growth rate not seen since the 1980s.

Opponents of the oils sands and pipelines will continue to make their arguments for pulling back and putting the environment ahead of the economy a position many Canadians hold.

When Pierre Trudeau's Liberals helped rescue the oil sands in the mid-1970s, along with the governments of Ontario and Alberta, the three thought there was great potential for the national economy. I doubt they imagined the animosity that would become part of the package.