Alberta—Canada’s Engine of Growth

September 25, 2007

Alberta—Canada’s Engine of Growth

THE HONOURABLE ED STELMACH

Premier, Province of Alberta



Chairman: Catherine S. Swift

President, The Empire Club of Canada



Head Table Guests:



Stephen Hewitt: Manager, Corporate Communications, Corporate and Public Affairs, TD Bank Financial Group, and Director, The Empire Club of Canada

Paula Sanderson: Grade 11 Student, North Toronto Collegiate Institute

Reverend Michael Clarke: OC, Associate Priest, Christ Church, Brampton

Robert B. Bell: Managing Partner (Toronto), Borden Ladner Gervais LLP

Jim Jaques: Senior Vice-President, National Sales and General Manager of Western Canada Bell Canada

Brian Shaw: Chairman and CEO, CIBC World Markets

Lisa A. Baiton: Vice-President, Government Relations, Environics Communications Inc., and Second Vice-President, The Empire Club of Canada

Helen Reeves: Senior Vice-President, Corporate Communications, MTS Allstream Inc.

Mike Crawley: President and CEO, AIM Power Generation Honorary Colonel Stanley Milner, South Alberta Lighthorse Regiment.



Introduction by Catherine Swift:



Alberta has certainly seen some roller coaster rides in its economy over the last few decades, with its dramatic history of boom-and-bust cycles. I recall the infamous bumper sticker of the mid-1980s bust, which said something along the lines of “God, please give us $40 a barrel oil again and I promise I won’t waste it all this time.” Who would have dreamt that we would see $80-plus barrel oil 20-odd years later? And given the stresses that come with the rapid growth that Alberta has experienced over the last few years with almost an excess of good fortune, sometimes you have to be careful of what you wish for. Our speaker today, Alberta’s new premier, is presiding over a province that has probably never in its history had as much influence on the national agenda as it does today.



With an Alberta-based prime minister, being the wealthiest and only debt-free province, continuing to attract workers from across the country and being the holder of the resource that has contributed to a spectacular increase in the value of our dollar, Alberta’s influence can be seen in all parts of our economy and public policy. With great wealth and influence comes great responsibility. Whether it is the level of public spending, civil service salaries and benefits, or as we have recently experienced here in Toronto, responding to mayors’ requests for more taxing powers, Alberta’s decisions can affect us all. There’s an old story about politics having a different character depending on what part of the country you are in.



In Atlantic Canada, politics is almost a way of life, in Québec, it’s kind of like a religion, in Ontario, it’s very businesslike, in Alberta and the Prairies it’s very grassroots, and in B.C., it’s entertainment! Our speaker today certainly fulfills the grassroots part of the equation as he has run the family farm since the 1970s and continues to live there. The Honourable Ed Stelmach has a long record of public and community service, having been a school trustee, chair of the Vegreville Health Unit board and member of the Archer Memorial Hospital and Lamont Auxiliary Hospital and Nursing Home boards. In 1993, inspired by Ralph Klein, Mr. Stelmach entered provincial politics and was elected MLA in the Vegreville-Viking constituency.



He has held four cabinet posts, including Minister of Agriculture, Minister of Infrastructure, Minister of Transportation and Minister of International and Intergovernmental Relations. He stepped down from his ministerial duties in March 2006 to run for the Progressive Conservative Party leadership. He is the first Alberta premier of Ukrainian ancestry, and the first baby boomer to run the province. Please join me in welcoming Premier Stelmach.



ED STELMACH:



Thank you very much. I was particularly happy the Empire Club extended this invitation, because it gives me the opportunity to talk about something that’s very dear to my heart. Something I believe all Canadians need to hear about. And that’s Alberta’s contribution to this great country of ours. Much has been said and written about my province’s current growth spurt. And it’s certainly impressive—outpacing the most recent predictions. At the beginning of Alberta’s second century, we find ourselves facing unprecedented global demand for our resources. The world is beating a path to our door.



Above all, Alberta provides energy security to Canadians and is recognized as a safe and stable supplier of energy to North America. As a result, today’s Albertans have the ability to build a future where prosperity goes hand in hand with opportunity, a world-class quality of life and deep respect for the environment we’ve inherited. Now, there are those who seem to believe prosperity is a finite thing with only so much to go around. If Alberta’s doing well, it must be at the expense of somebody else. In fact, over recent years Canada has been doing remarkably well, and Alberta has played a central role in that, because Alberta’s boom is Canada’s boom. Or as federal Finance Minister Jim Flaherty put it recently: “Alberta’s prosperity is ‘good news for Albertans and good news for all Canadians.’”



The taxes that flow from Alberta fund health care and other programs across Canada. Alberta’s economy drives demand for goods and services, creating jobs from British Columbia to Newfoundland. And Alberta-based research—medical, environmental, and more recently nanotechnology—is helping to expand and diversify the national economy and enhance the quality of life of all Canadians. And as I pointed out to my fellow premiers at our recent meeting in Moncton, while others talk about what they’re going to do for the environment, Albertans are taking action. We’re leaders in developing green technologies and practices to ensure long-term environmental sustainability. That always surprises people, but more on that later.



First I want to talk about the specifics of Alberta’s huge contribution to the well-being of this great country. With 10 per cent of Canada’s population, Alberta contributes about 20 per cent of federal tax revenues. In 2004, the last year for which we have complete numbers, Albertans contributed a net $8.8 billion to the Government of Canada. That’s by far the highest per-capita contribution of any Canadians. So it’s clear that Alberta pulls its weight in Canada and we do share our wealth. When it comes to supporting Canadian prosperity, the facts show Alberta punches far above its weight. And our contribution is set for a significant increase. The energy sector has already committed over $40 billion to developing and upgrading Alberta’s oilsands. And over the coming years that’s expected to grow to $110 billion or more. There are almost 1,000 construction projects proposed or recently completed in my province—worth a staggering $182 billion! That huge investment will have a profound impact on Alberta and also on Canada. As the Canadian Energy Research Institute has reported, a lot of those dollars will be spent in the rest of Canada on equipment, supplies, and specialized labour. In fact about half of the goods and services for Alberta’s energy sector are already sourced in other parts of Canada. And between 1999 and 2005 the value of goods imported into Alberta from the rest of Canada increased by 36 per cent, to more than $41 billion annually. Big numbers.



But let me give you some examples of what this means to businesses and working people in other provinces. A Tilbury, Ontario, company sells environmentally friendly utility poles for use in Alberta, and has increased its staff by 127 people to meet increased demand. Charlottetown Metal Products is involved with a Red Deer company in supplying steel tanks for our emerging biofuel industry. And since 2005, Nova Scotia’s Mulgrave Metal Works has done about half their business with Alberta. The list goes on. But you get the picture. The economic impact of Alberta’s growth is being felt nationwide. And it’s not just the economy that benefits from that growth. The investments Alberta is making in medical research have led to advancements in treating heart disease, cancer, Alzheimer’s, childhood blindness, and diabetes. These are innovations that improve the quality of life of all Canadians, and provide hope to people around the world. If it sounds like I’m proud of my province—I am. Deeply proud. Proud of our dynamic economy, but also of our accomplishments in research, entertainment, and the arts.



I’m determined that Alberta’s story—a growing part of Canada’s story—should be fully understood. Part of that story—a very important part—is the progress we are making towards preserving our environment for future generations. Because even in the midst of a boom—particularly in the midst of a boom—we must never lose sight of the fact that quality of life is more than dollars and cents. Albertans place a high value on clear air, clean water, and pristine open spaces. They are our heritage—and they are not for sale at any price! We are committed to safeguarding Alberta’s environment. And to achieve that goal Alberta is forging a sound and practical environmental vision—working with industry to find creative, innovative solutions. We’re focused on results rather than rhetoric. Many of you may not know that we’ve introduced Canada’s first legislated targets for greenhouse gas emissions by large industrial emitters. We’re creating a comprehensive provincial water strategy, and producing a Land-Use Framework that will help balance the competing demands on Alberta’s landscape. So while others argue about climate change, Albertans are acting.



The Alberta Research Council is pioneering a gas recovery process that allows carbon dioxide to be stored in undeveloped coal deposits. Two of Alberta’s major power companies have developed Canada’s most advanced coal-fired generator using less coal to produce more power, with lower emissions. Shell Canada is using new technology that reduces greenhouses gases by 40,000 tonnes a year. Suncor Energy Inc. is recycling 90 per cent of the water it uses in the oilsands extraction process. And you might be surprised to learn that Canada’s oil-and-gas province is also Canada’s number-one producer of wind power. I’m particularly proud that 90 per cent of the power used in Alberta’s government buildings comes from wind power and from biomass generated from material such as wood waste.



Clearly, Alberta isn’t dragging its feet on environmental issues. Alberta’s leading the way. So I have little patience with those who occasionally suggest Albertans don’t care about the environment. We take seriously our responsibility to ourselves, to Canada, and to future generations. And that includes Alberta’s energy sector. Our energy companies recognize that environmental concerns are real, and government and industry must work together to encourage practical measures to reduce our impact on the natural world. But it would be foolish to underestimate the challenge that involves. Most forecasts suggest that by 2030 the world will be consuming 50 per cent more energy than today, primarily due to the growth in developing economies. Canadians can, and should, reduce our individual energy demands, but globally those demands will inevitably grow, and we need to harness technology and innovation to lessen the impact.



Short-sighted policies that either undermine Alberta’s growth or punish Alberta for having resources the world wants would do great harm. Not just to our provincial economy but to the prosperity and well-being of Canadians. Albertans are happy to see their fellow Canadians benefit from the development of our resources, but we want no part of schemes that would have Albertans pay for somebody else’s license to pollute. It’s important that—as a province and as a nation—we strike the right balance between developing our energy resources and protecting the environment. Because those resources will underwrite Canada’s prosperity for decades to come. At a production level of four million barrels a day, Alberta’s oilsands can generate wealth for over a century. We also have a 1,000-year supply of coal, which as a result of technology and innovation may become tomorrow’s fuel—as a source of hydrogen and synthetic natural gas. So Alberta’s growth will continue—perhaps not at the present blistering pace, but over a very significant period of time.



Of course, that growth underscores all public policy in my province and presents my government with considerable challenges. But we have a solid plan to meet those challenges. We will continue to provide Albertans with the fiscal management that’s been the hallmark of Progressive Conservative governments and which has produced the only debt-free jurisdiction on the continent! We will get a fair economic rent on the development of our resources. In fact we have recently received the recommendations of the Royalty Review Panel that I established as one of my first acts as premier and we’ll be making a decision on those recommendations within weeks. I’ve promised Albertans a royalty regime that is fair to the companies who are investing billions of dollars to develop Alberta’s resources. We will provide the stability and predictability business needs. But these are not government’s resources. They are not industry’s resources. They are the inheritance of all Albertans—the key to my province’s future—and I must be guided by that. I understand this is a decision that will impact Alberta for years to come—and we will make a decision that is fair, realistic, and that recognizes the need for long-term competitiveness.



For Alberta, this is a unique moment in our history. We have the opportunity to diversify and broaden our economy through adding value to our exports, and commercializing our technological developments, with the ultimate goal of making our economy more resilient to the boom-and-bust cycle. That’s going to take hard work, innovation, and determination, but that’s what today’s Alberta is all about. I’m confident we can build an economy that will lead Canada through the 21st century and beyond. Because, make no mistake, Alberta’s positive contribution to national prosperity, and its role in building a strong, united Canada, is critical to the future of our country. I welcome that challenge. As a province with enormous economic impact on the whole country, Alberta should have influence on the national agenda. As the engine of Canada’s economy, Alberta offers a bold and confident perspective on the future.



For example, we’re championing the cause of free trade within Canada, because internal trade barriers reduce our competitiveness and pick the pockets of ordinary Canadians. They’re a hold-over from the 19th century, and have no place in the 21st. Governments need to stop talking about internal free trade, and start implementing it. And in Alberta we’re doing just that. As I’m sure many of you know, Alberta has entered into a landmark agreement with British Columbia—the Trade Investment and Labour Mobility Agreement, TILMA—to remove barriers between our two provinces. The agreement creates the second-largest economic market in Canada. It will build on the prosperity in both provinces by giving businesses and workers seamless access to a larger range of opportunities.



Frankly, TILMA should be a template for free trade within Canada. All it takes is political will. Like most provinces, we have agreed to a passport system of securities regulation. And I want to make my position on that very clear. Oil and gas development and exploration is a dynamic and high-risk business. In Alberta literally hundreds of companies—many of them highly specialized—have created a highly efficient oil and gas market. As a result, Calgary is emerging as a financial centre for capital allocation. Alberta’s securities regulator oversees this growing market in an efficient and responsive way. So it is not in Alberta’s interest to relinquish our constitutional jurisdiction over local securities regulation. We have a solution. The passport system is a model provinces can quickly implement to create a national system so let’s accept the passport and move on to other matters.



For Canada these are exciting times, challenging times. For the first time in a generation our dollar is at par with the American dollar, and oil hovers at around $80 a barrel. Our ability to compete—to keep the markets we have and develop new ones—will be tested. But I have to tell you that I’m full of confidence for the future of my country and my province. We’ve faced great challenges before and overcome them, because as a nation we have strength, resilience, and the will to succeed. As a new premier, I’m confident we have the right policies—the right plan—to make great things happen in today’s Alberta. For Alberta and for Canada, I believe the future looks bright. Alberta’s energy—from our people and from our resources—has the potential to fuel the way to a bright and prosperous future for all Canadians. Thank you for giving me the opportunity today to tell our story.



The appreciation of the meeting was expressed by Lisa A. Baiton, Vice-President, Government Relations, Environics Communications Inc., and Second Vice-President, The Empire Club of Canada.