OPINION | Political games won't solve Alberta's problems

The problems facing our economy, our health system, our provincial budget, and more, do not have easy answers. Blaming others and ignoring policy details is easy, says economist Trevor Tombe.

Some aspects of the fair deal panel report will actually take Alberta backward

People make statements to the fair deal panel during a town hall in Edmonton in December 2019. Albertans are sharply divided between those willing to entertain real solutions and those blaming Ottawa. (Jason Franson/The Canadian Press)

EDITOR'S NOTE: CBC News and The Road Ahead commissioned this public opinion research in May as the lockdown in Alberta was eased. It follows similar research conducted in March, just as the social and economic shock of COVID-19 was becoming apparent.

As with all polls, this one is a snapshot in time. 

This opinion article is part of a series of articles to come out of this research. You can find links to the previous stories at the bottom of this one. More stories are to follow.

"Canada is broken"

"Canada doesn't know who we are anymore."

"Separate from a dysfunctional confederation that will never serve the West."

This was just some of the feedback Albertans gave the fair deal panel, whose final report was released last week.

Not everyone was so negative, of course.

"Be a team player. Work with Ottawa instead of constantly bashing them," said one. 

But the overwhelming majority of survey respondents were frustrated, and they blame Ottawa.

Fully 64 per cent of Albertans responding to the panel's public engagement efforts think Alberta is treated unfairly (54 per cent said "very unfairly"). And 63 per cent want Alberta to "take action to get a better deal in Canada," including 70 per cent who want a "different" equalization formula.

Anxiety, pain, anger and fear are understandable in a province battered by a half decade of economic and fiscal challenges. Total income collapsed 20 per cent during the 2015/16 recession, over 130,000 jobs were lost, and the provincial deficit ballooned to levels not seen since the 1980s.

These aren't abstract statistical concepts. The latest CBC News Road Ahead 2020 poll is clear: economic pain is deep and broadly shared. It also reveals Albertans are sharply divided between those willing to entertain real solutions and those blaming Ottawa. 

The fair deal panel spoke to the latter group, which does little to fix Alberta's problems.

Alberta's deep economic anxieties

The pandemic and the public health response disrupted the global economy to an extent not seen since the Second World War. The resulting collapse in energy prices makes Alberta's challenge all the more difficult.

One in three Albertans (37 per cent) are in a household where they or their spouse is working fewer hours; nearly one in two (47 per cent) are making less money; one in four (23 per cent) have someone temporarily laid off; one in 10 (11 per cent) have someone permanently laid off; and one in three (33 per cent) are concerned that someone could be laid off in the near future.

It's a "very" or "somewhat" stressful time for fully 70 per cent of Albertans.

Coming on the heels of Alberta's deep recession, household finances are deteriorating. Half of Albertans (49 per cent) say their situation is worse than one year ago and 58 per cent of households with incomes below $60,000 say so. Only one in 10 (12 per cent) say their situation has improved.

These responses align with Statistics Canada data. Economic conditions turned south in late 2018, and weakness continued throughout 2019 when Alberta's economy shrank by 0.6 per cent and employment fell by roughly 25,000 between summer 2019 and February 2020. 

Even before COVID-19, Alberta was facing the very real possibility of a second recession before it fully recovered from the last one.

Looking forward, one in three (32 per cent) think the next year will get even worse for their household's financial situation. 

It's little wonder many are increasingly prioritizing the economy over immediate public health concerns. Most now rank each concern equally, with 55 per cent weighing the implications of COVID-19 on the health-care system on par with the economy. But over one in three (37 per cent) are more concerned about the economic implications of COVID-19.

Restarting the economy is a priority, but so, too, is placing blame.

Canadian or Albertan?

Despite the overwhelming federal response to COVID-19 — demonstrating the value of a broad federation that pools risk with measures like income support to individuals and businesses, transfers to provincial governments, and more — an increasing number of Albertans are turning inward.

When asked if "Alberta would be better off if it separated from Canada," nearly one in three (30 per cent) agreed — a higher share than before the pandemic.

A majority of Albertans reject this idea. And, to the premier's credit, he rejects it, too. But many in his own party do not. A slight majority of UCP supporters (53 per cent) believe that Alberta would indeed be better off if it separated from Canada, compared with only four per cent of NDP supporters. This is a remarkable partisan divide.

Some might think separation provides leverage over Ottawa in negotiating a "fair deal." Indeed, threatening separation to gain leverage over Ottawa is an Alberta pastime older than the province itself. As far back as 1898, future prime minister and Calgary lawyer, R.B. Bennett, advocated provincehood for Alberta in part because it would then allow us to threaten secession. (Seriously.)

The trouble is: blaming Ottawa and moving inward does little good.

Fair deal for Alberta?

A provincial police force won't make building pipelines easier. A provincial pension plan won't increase employment. An Alberta firearms officer won't raise the price of oil. And a referendum on equalization won't shrink Alberta's deficit. 

They each might be good ideas. Or they might not be. But one thing is certain: they do little to solve Alberta's pressing problems.

Worse, some aspects of the report take Alberta backward by undermining public understanding of important issues.

Consider equalization. There is plenty of debate to be had over equalization's design and purpose, but if there's a problem with equalization, the panel didn't identify it. Instead, they helped stoke anger and frustration by spreading false information.

On page 17, for example, they claimed that between 2007 and 2018 Alberta made $240 billion in "contributions to equalization." Never mind that the entire national program paid out $190 billion over that time, Alberta (somehow) paid for 126 per cent of it.

Such egregious errors are unlikely deliberate — but they reveal how little those tasked with unpacking Alberta's position in Confederation seem to concern themselves with actual policy.

It must be said, however, that elsewhere in the report they correctly note, "Provincial governments do not contribute financially to this program."

So, in fact, "Alberta" contributes exactly zero dollars to equalization. As does every other province. We as individuals contribute to federal revenues through income taxes, GST, import duties, etc., and do so facing federal tax rates that are the same in Alberta as elsewhere.

Regardless, that the program is unfair to "Alberta" is, for many, self-evident. Equalization is an expletive, not a program. Getting a "different" formula is the goal, even if no specific reform is mentioned.

And when reforms are mentioned, they often don't withstand scrutiny.

In its 2019 platform, for example, the United Conservative Party identified two areas where equalization reform is necessary. First, exclude resource revenues from the formula. Second, implement a "hard cap" on transfers. Never mind that the first suggestion would, in most years, give more to Quebec — a frequent target by Albertans for receiving too much already. Never mind that the second suggestion was implemented in 2009, and remains a feature of the program today! 

This is unfortunate. The current formula was designed by a panel chaired by an Albertan (Al O'Brien) and implemented by a government led by an Albertan (Stephen Harper). The province can and should be proud of its legacy of helping improve Canada's fiscal transfers. 

Equalization is not perfect and reform proposals should be welcomed. There are many. But no reasonable reform would provide Alberta with even a single dime. In proposing a referendum, the fair deal panel helps perpetuate misplaced grievances and distracts from solving our real problems.

Good policy is hard work

Alberta's challenges are serious. They require thoughtful leadership and good public policy. This is hard work, and a panel composed mostly of politicians or former politicians may be less than ideal. The polling suggests many Albertans recognize this.

A majority of Albertans — nearly two in three (65 per cent) — now disagree that "it is better to trust the down-to-earth thinking of ordinary people than experts," and one in three disagree strongly.

The problems facing our economy, our health system, our provincial budget, and more, do not have easy answers. Blaming others and ignoring policy details is easy. Confronting our challenges head on, with thoughtful ideas and transparent debate, is hard. 

A referendum on equalization does nothing for Alberta's economy. It does nothing for Alberta jobs. It does nothing for Alberta's budget. It does nothing to change the equalization formula. It just distracts from the hard choices that this province needs to make.

We have real problems before us. Political games won't solve them.

The latest CBC News-Road Ahead survey was conducted between May 25 and June 1, 2020, by Edmonton-based Trend Research under the direction of Janet Brown Opinion Research. The survey sampled 900 respondents, randomly selected from Trend Research's online panel of more than 30,000 Albertans. The sample is representative of regional, age and gender proportions in Alberta. A comparable margin of error for a study with a probabilistic sample of this size would be plus or minus 3.3 percentage points, 19 times out of 20. For subsets, the margin of error is larger.

This column is an opinion. For more information about our commentary section, please read this editor's blog and our FAQ.


Trevor Tombe is a professor of economics at the University of Calgary and a research fellow at the School of Public Policy.