Wednesday, September 06, 2006

The Alberta advantage

Edward mentioned yesterday the consequences that different rates of population change in different regions within a country can have on internal politics. Within Spain, as he noted, the fact that two of the regions experiencing the quickest population growth are the Spanish capital of Madrid and the nationalist and potentially separatist region of Catalonia is going to have interesting consequences for the future of Spanish federalism. Certainly, in Canada similar concerns over different rates of population change--especially changing fertility and immigration rates and the speed of language acquisition and loss--played a critical role in driving the growth of Québécois nationalism.

Québec now shares in the standard Canadian pattern of relatively low TFRs and high rates of international migration, if to a lesser extent than Ontario or British Columbia, and while the relative weight of Québec within the Canadian federation is decreasing, it isn't doing so quickly enough to precipitate a crisis. The new destabilizing population change in Canada relates to the dynamic growth of the province of Alberta. Statistics Canada strong economic growth observed in 2004 that the economy of the province of Alberta was growing much more quickly than the economies of the other nine provinces.

Looking across the [1990-2003] period, Alberta increased its GDP per capita from 117% of the national level to 140%.

For the other nine provinces, those with the highest levels of GDP per capita in 1990 (Ontario and British Columbia) tended to experience weak GDP per capita growth. In contrast, provinces with relatively low levels of GDP per capita in 1990 (Saskatchewan and the Atlantic provinces) tended to experience strong growth. The result is a group of provinces whose levels of GDP per capita have become more tightly packed over time.

Between 1990 and 2003, only per capita GDP in Alberta and Ontario exceeded the national level. Over this period, Alberta accelerated away from the national level while Ontario drifted back towards it.

In 1990, Alberta and Ontario's GDP per capita were, respectively, 117% and 112% of the national level. By 2003, Alberta's GDP per capita was 140% of the national level, while Ontario's had dropped to just 105%.

Alberta's wealth in hydrocarbon fuels lies at the root of this economic surge, providing the provincial government with the funds that allowed it to pay off all of its debt even as it reduced taxes to the lowest level in Canada. This particular policy mixture produced the so-called "Alberta Advantage" that has so successfully stimulated the Albertan economy. It also produced significant migration from the rest of Canada--between 1996 and 2001, Alberta enjoyed a strongly positive balance of migration with the rest of Canada, attracting 119 400 people--roughly 5% of the Albertan population at the time. Since 2004, record highs in oil prices have only accelerated Alberta's economic and population growth. Despite this accelerated population growth, Alberta is still experiencing severe labour shortages.

In Fort McMurray, the two Tim Hortons franchises operated by Louay Maghrby are paying up to $15 an hour and covering full medical and dental for experienced staff. The com­pany that owns the franchises bought a condo to attract staff spooked by Fort Mac’s hyperinflated real estate market. Three managers stay there now at a subsidized $500-per- month rent. Maghrby’s still short about 20 people, and one of the coffee shops runs reduced hours. “Five years ago, if someone had told me we’d be covering medical and dental, I’d have laughed out loud,” he says.

The Tim Hortons and McDonald’s chains offer student scholarships; the McDonald’s scholarship program is exclusive to Alberta. Wages are exploding. The average weekly wage for chefs and cooks in Alberta rose 20% between 2000 and 2005, compared with just 14% for the whole country. Weekly wages for cashiers in Alberta rose an average of 18% over the same period, less than 10% in the rest of the country.

Alberta is also enjoying a relatively high TFR by Canadian standards at least in part because of the in-migration of mothers--only 51 births in every 100 in Alberta were to women born in Alberta. Alberta's demographic weight is bound to increase, possibly creating a third pole in Canadian federal politics outside of the Ontario-Québec pair that dominated Canada from the beginning of its history.

What's the political significance of this? Apart from the yawning gap starting to open up in between standards of living in Alberta and the rest of Canada, Alberta is well-known as a stronghold of American-style fiscal and social conservatism. Alberta's growth has already started to influence Canadian politics, for in the recent federal elections the Conservative Party of Canada swept Alberta, taking all of its 28 seats in the federal parliament and so ensuring the current Conservative minority government. When combined with Canada's controversial system of equalization payments, which transfers funds from richer provinces to poorer ones in order to ensure the comparability of public services across the country, and continuing Albertan resentments over the Trudeau-era National Energy Program that cut deeply into Albertan oil profits in the early 1980s, this promises to create significant problems. What might happen to a federation when its richest and most dynamic member is also ideologically distinctive and strongly suspcious of federal intervention into its domestic economy? Alberta had its own secessionist movement for a time; it might yet have one again.

UPDATE: My hometown paper, The Guardian of Charlottetown in Atlantic Canada, is today carrying a supplement promoting out-migration to western Canada.

A glossy recruiting magazine carried in Wednesday’s edition of The Guardian offers 52 pages of evidence about the eagerness of western Canadian employers to attract workers from the east.

MoveWest, a publication originating with the CanWest MediaWorks website, appeared in daily newspapers across the region, carrying 83 ads from operations hoping to recruit workers for the labour-hungry economies of British Columbia, Alberta and Saskatchewan.

[. . .]

Alberta Human Resources and Employment Minister Mike Cardinal is quoted in the magazine as predicting his province will need 86,000 new workers over the next decade. Meanwhile, P.E.I. struggles to bring its unemployment rate below 10 per cent.

One economist interviewed by The Guardian suggests that "skilled workers and tradespeople" will be particularly likely to respond.


Admin said...

Very interesting post Randy, and very much to the point. I'll thow over a link from Afoe at some point.

Will Baird said...

It is very interesting.

I question a little bit whether or not Alberta becoming another pole in the Canadian political system will rip it apart though. After all, the rise of California and Texas hardly destroyed the American system.

Aren't those seperatist movements emphatetically minority POVs though?

Randy McDonald said...

Thanks, Edward!

Albertan separatism is a minority movement now, but in the early 1980s, after the Trudeau government had--with the support of most of the rest of Canada--imposed an energy regime on Alberta that basically acted as a massive wealth confiscation, Albertan separatism became popular rhetoric. If Canada gets polarized sufficiently, with a particularly dynamic and wealthy Alberta opposed to a rest-of-Canada that wants a piece of the action, something could break.

Anonymous said...

Represenation in the House of Commons is not proportional to population due to various constitutionally entrenched lower limits to the number of seats given to Eastern provinces (based on seat distribution after dissolution of 33rd parlaiment and a factor reflecting number of upper house senators for each provinces). This means that some Alberta ridings have more than 120,000 people while some PEI ridings have less than 80,000.

This will further increase the aliention with Canada.

Anonymous said...

nice site

Anonymous said...

"Represenation in the House of Commons is not proportional to population due to various constitutionally entrenched lower limits to the number of seats given to Eastern provinces."

If you do the math on this, it is Ontario that loses the most seats under constitutional requirements. If I recall correctly, Alberta has 1 fewer seat than it would under a strictly proportional system, while Manitoba or Saskatchewan has 1 more than they would, and the other has exactly as many as it should.

The abberations to a truly proportional seat distribution are few, and hardly the basis for even a speck Western/Albertan alienation.

Anonymous said...

I didn't recall correctly. British Columbia and Alberta have 4 and 3 seats fewer than they would under a strictly proportional system, but Saskatchewan and Manitoba have 4 and 3 seats more than they would, so the western provinces, taken as a whole, have as many seats as they should.