The Great White Divide.
The Canadian province of Alberta held elections on April 16 and the implications of their results are anything but usual.
Alberta is an interesting place. Strong economic growth, a robust energy sector, and center-right political leanings - trends broadly disconnected from the reputation and reality of the rest of the country.
Within that disconnect lies the problem.
Alberta has long been the Canadian province suffering from the largest gap between what it pays to Ottawa compared to what it gets back in terms of federal spending.
And the rest of Canada doesn’t even use much of Alberta’s crude, opting instead for lighter imports, stymying the energy industry that forms the backbone of the Albertan economy with everything from carbon taxes to blocking transport routes for the landlocked province’s crude to reach refineries along the Gulf of Mexico.
If you think restricting a region’s economic growth while depending on its tax payments is not a promising long-term strategy, you’re not alone. While more people are aware of Quebec’s independent streak, plenty within the Albertan political mainstream have had enough. And thanks to Quebec’s long-standing desire to separate from Canada, any future Albertan separatist referendum would be perfectly legal.
The Albert’s United Conservatives now hold 62 seats in the 87-seat parliament, and, with victory cemented; many Albertans now look forward to a shift in the provinces’ fortunes.
The United Conservatives are running on public dissatisfaction against carbon taxes, a lack of pipelines, and an unequal system of taxation by a federal government. With Canada’s population aging into mass retirement, transfers from Alberta to the center can only increase in the future.
The problem is, that Canada’s provinces lack the legal standing to challenge the central government on such topics. Prime Minister Trudeau needs Alberta’s tax dollars to hold Canada together, and what Alberta is asking for is quite literally an end of Canada.
This Alberta Question has two possible outcomes.
The first is an Albertan collapse. Economically, the province’s strength is resource extraction. The Albertans inability to bring their crude to market leaves them staring down an economic depression while also facing ever higher financial demands from Ottawa.
Outcome Two requires a sharp break with convention, as it is nothing less than Albertan secession.
Alberta isn’t dependent on the federal government’s financial handouts like other provinces. It has an energy sector, public infrastructure, educational system and workforce that has drawn plenty of international investment interest on its own. Negotiating export pipelines directly with the United States would be infinitely easier than with Canadian governments, especially since the U.S. Gulf Coast is home to the only concentration of refineries in the world that can process Albertan heavy crudes.
Add to this the fact that Canadian provinces work better north south than east west. Its an unusual design of a country: Quebec and Ontario have more in common with the US East Cost than with Vancouver for example. Saskatchewan and Manitoba naturally gravitate towards the Dakotas, and British Columbia has more connections with US West Coast that with the rest of Canada. What is also resurfacing are the regional differences within Canada.
The structure of the central banks was originally intended to manage the domestic capital flows, but it doesn’t function like this anymore.
One-size-fits-all interest rate policy of central banks pits provinces against each other, because it ignores the fact that domestic economies are not the same from one province to the next. The commodity – producing provinces are booming when the financial provinces are at their lows.
Farmers, oil producers and miners in central Canada are forced to pay higher interest rates when their economies are declining because of speculative booms in Toronto and Vancouver.
Add to this the rising tide of environmentalists that has seriously impacted Alberta’s economy to the point that people no longer seek engineering degrees in energy or exploration. In Canada, the left is urging lawsuits against oil companies to force them to pay for the damage to the climate. Maybe they all should just quit, lay off workers, stop paying taxes and we go back to the campfires to survive the winter in the North.
In Alberta, none of the major parties campaigned on separation, either in 2015 or 2019, but that doesn’t mean that the topic isn’t about to show up in provincial political discussions.
For Canadians everywhere, that alone should be terrifying.
Leave a Reply.
Tom Kubiak is the author of The Traveler