FLANAGAN: The Return of the Alberta Agenda
By Tom Flanagan (Originally published in the C2C Journal on November 22, 2019, published here with permission of the author)
In early 2001, six Albertans led by Stephen Harper published an open letter to then-Premier Ralph Klein advocating adoption of an “Alberta Agenda.” The letter was a reaction to the 2000 federal election campaign, in which Liberal Prime Minister Jean Chrétien had deliberately targeted Alberta as a bogeyman. This was partly because of Alberta’s growing economic and political prominence, but it was not least because Canadian Alliance Leader Stockwell Day, who had become a serious electoral threat to the Liberals, was an Albertan. Chrétien’s cynical ploy succeeded.
In expectation of years of further hostility from Ottawa, the Alberta Agenda proposed a number of policy innovations that were within the constitutional power of Alberta and that, if enacted, would reduce Ottawa’s power over the province. Equally important, adopting the Agenda’s items would signal that the province wasn’t simply going to accept federal abuse and that it had options other than remaining a compliant province. Publication of the Alberta Agenda triggered a lot of public discussion, but no serious political action. Influential Alberta political leaders such as Ralph Klein and Preston Manning were cool to it. A committee of the Alberta legislature dismissed it after perfunctory study that included serious errors of interpretation. The Agenda’s informal name, the “Firewall Letter”, also proved unfortunate by raising in some minds the imagery of burning buildings and scorched earth.
When the Canadian Alliance held a leadership race later in 2001, Harper decided to run for the position and the co-authors mostly supported his candidacy. Harper won, then rolled the Progressive Conservative remnants into the new Conservative Party of Canada, and a few years later became prime minister. The Alberta Agenda seemed to lose much of its relevance; no one could accuse Prime Minister Harper of being hostile to his home province. It did, however, continue to have some support in the provincial Progressive Conservative and Wildrose parties, though never to the extent of becoming government policy.
Now, however, the environmentalist onslaught on Alberta’s oil industry, coupled with the return to power of the Liberals under Justin Trudeau, has revived the Alberta Agenda. In a dramatic move, Premier Jason Kenney incorporated most of its points into a more extensive “Fair Deal” for Alberta, which he unveiled to instant national attention at a conference on November 9. The Fair Deal proposal is to be studied by a nine-member panel chaired by Manning, which is to report by January 20. Kenney’s political methodology seems reminiscent of his approach to his first budget, appointing the MacKinnon Panel to study the budgetary situation. I hope it indeed is so, for Kenney then implemented most of the budgetary recommendations. The nascent “Wexit” movement also favours the Alberta Agenda items, evidently seeing them as foundation blocks for independence. In a recent open letter to Kenney, Wexit Canada leader Peter Downing called upon the premier to implement an “enhanced” version of the Agenda.
As one of the original co-authors, I’m pleased at the renewed attention to the Alberta Agenda, but the passage of time does require a second look. Along with Stephen Harper, the other co-authors were Ted Morton, professor of political science at the University of Calgary, a former Alberta Senator-elect and a former senior provincial cabinet minister; Rainer Knopf, professor of political science at the University of Calgary; Andy Crooks, a Calgary lawyer who is active in politics and philanthropy; and Ken Boessenkool, who has held senior federal and provincial political positions. The ideas in this article are my own, and I have not consulted with the other co-authors regarding what follows.
Certain things have changed dramatically since the Alberta Agenda was composed almost 20 years ago. Economically, Alberta was on a roll in 2001, the Klein government had erased the deficit, and oil prices were high. Now, in contrast, the economy is hurting, the province has gone deeply into debt, and the new government is once more fighting to get out of the cycle of deficit spending. What is even more frightening, the environmental movement has declared war on the oil and natural gas industry, with the goal of capping exports of our oil production (or “landlocking” Alberta), ending new investment in the oil sands and, within decades, ending all hydrocarbon production in favour of so-called “green energy.”
The change in circumstances has driven a change in priorities. Whereas 18 years ago Alberta was growing rapidly and the only questions seemed to be just how far we might go and how we might get there, today the province and its population are fighting for their very livelihoods and security. In turn this implies that a new Alberta Agenda may need to be somewhat different from the original. The original Alberta Agenda consisted of five main policy proposals. Let’s look at these in the light of today’s circumstances, both as policy and as politics. The following headings are the opening sentences from the letter’s five agenda items.
Withdraw from the Canada Pension Plan to create an Alberta Pension Plan offering the same benefits at lower cost while giving Alberta control over the investment fund.
There is little question about the legality of this. Alberta has the right to create its own pension plan under section 94A of the Constitution Act, 1867, and Quebec did so in 1966. Because Alberta has a younger population with greater participation in the labour market and higher average wages and salaries than in the rest of Canada, an Alberta Pension Plan could offer the same benefits with lower premiums than the Canada Pension Plan (while premiums for the CPP without Alberta would have to go up). The potential savings are believed to be in the order of several billion dollars per year. Premiums for the current CPP keep on rising, and every 1 percentage-point drop that an APP could deliver would leave more than $500 per year in the pocket of every employee paying under maximum pensionable earnings.
Alberta could also claim a share of the CPP Investment Board’s fund, currently about $410 billion, though the size of that share would have to be negotiated. An APP would likely be administered by the Alberta Investment Management Company, which manages about $110 billion in provincial pension assets (and would need to add capacity to administer an APP). It’s important to realize that, despite its pool of invested funds, the CPP isn’t a genuine pension plan, but rather a pay-as-you-go transfer from current working contributors to current retirees. Its financial viability therefore depends almost entirely on maintaining a population base in which plenty of people are working and not too many people are drawing benefits. Canada as a whole is aging; Alberta could go either way, depending on its economic fortunes in the coming decades.
A credible threat to withdraw from the CPP would shake Canada politically and might lead to concessions in other areas to keep Alberta inside the tent. It is truly the ace-in-the-hole of the Alberta Agenda.
One issue needs to be carefully studied, however. Insurance and pension plans are generally considered more secure as larger numbers of members are included. An APP outside the CPP would move from a population base of 36 million to about 4.5 million. That, combined with a deteriorating economy caused by the environmentalists’ war against oil, could lead to financial problems for Alberta down the road. On the other hand, since the CPP includes multiple provinces with weaker economies and millions of people with lower incomes and higher rates of unemployment, the degree of risk reduction delivered by such diversification is uncertain. And Alberta alone isn’t all that small. Thousands of pension plans worldwide have fewer members with weaker foundations. And even in its currently reduced straits, Alberta’s economy would place it among the world’s top 50 countries.
There are further arguments for distancing ourselves from the CPP. Since 2000 its Investment Board has mushroomed from a lean team of five people costing $3.7 million per year (or about $750,000 per employee) to a bloated organization of 1,500 spending an astonishing $3.2 billion per year (over $2 million per employee) merely to maintain themselves and the fund, as this C2C Journal article illustrated. It’s hard to imagine Alberta being unable to operate its APP with greater proportionate efficiency.
In addition, as the same article indicates, there are worrying signs the Investment Board is being pressured or is choosing to make politically motivated investment decisions, such as uneconomic green energy schemes. That not only flies in the face of Albertans’ priorities but bodes ill for future investment returns. What’s next, the CPP selling off its oil and natural gas holdings, as many international funds are doing, due to “environmental ethics”? Bringing pension management under provincial control would at least align the APP’s with the province’s priorities.
Nonetheless, because there are credible arguments on both sides of this issue, an APP would require study by a team of accountants, actuaries, economists, and lawyers to make sure it would be financially sound. This will be a pocketbook issue for all Albertans for generations to come, so it is important to get the details right.
Collect our own revenue from personal income tax, as we already do for corporate income tax.
Here, too, the constitutionality is not in doubt; Quebec already does this. It would be another political signal of Alberta’s intention to be self-determining. The policy implications, however, are more mixed. Alberta might receive its provincial income tax revenue more quickly, but it would have to enlarge its existing tax bureaucracy to collect it. From a policy point of view, the most serious problem is not that Ottawa collects the revenue for us but that the overly graduated federal rates and the morass of credits and deductions often stymie investment in Alberta.
Still, at the very least, collecting our own income tax would mean a few more well-paying jobs in Alberta and additional technical expertise on the financial side. It would send additional, relatively low-key, political signals that the status quo is unacceptable and that province is assembling the capabilities to take a different path if pushed hard enough.
Start preparing now to let the contract with the RCMP run out in 2012 and create an Alberta Provincial Police Force.
This can’t be accomplished as originally written because in 2011 Alberta and Canada renewed the RCMP policing agreement for another 20 years. It allows for cancellation with two years’ notice, however. The arguments for a provincial police force are at least as compelling as they were in 2001. Canada is the world’s only federal democratic country in which the federal government looks after local policing. Maybe the Australians, Americans, Swiss, Germans, etc., are on to something.
It is difficult to see how bringing policing one government level closer to the affected population would not result in improved services. An important example is rural policing. The RCMP’s performance has been far from ideal, as testified not only by long response times to calls by victimized property owners but by the years it took to develop a targeted strategy. The provincial government must deal with this issue regardless of the RCMP contract, and effective reform would probably be easier if Alberta had its own provincial police force. Dealing with certain politically charged law enforcement issues in a way reflecting the views of most Albertans should also become easier were the force provincially controlled.
The main argument in favour of the current arrangement is financial; Ottawa pays 30 percent of the cost of the contract. But that does not necessarily mean the cost of a provincial police force would be that much higher. The RCMP carries a costly load of political correctness in its hiring and operations, with preferences for Francophones, women, racial minorities, and Indigenous people. A more businesslike Alberta police force should be able to operate more efficiently. There should also be efficiency gains from integrating the existing Alberta Sheriffs Branch into a larger Alberta Provincial Police (and perhaps a catchier name for the force would emerge as well).
The arguments for a provincial police force are at least as compelling as they were in 2001. Canada is the world’s only federal democratic country in which the federal government looks after local policing. Maybe the Australians, Americans, Swiss, Germans, etc., are on to something.
This is not in itself a radical step, and the argument that Alberta is too small to have its own police force is specious. Ontario and Quebec have had theirs since Confederation, when both provinces were much smaller than Alberta is today. Even Ontario did not reach Alberta’s current population until about 1950, and Alberta today has a larger population not only than multiple U.S. states with their own forces, as well as every Canton of Switzerland, but also about 100 other countries. In any case, a majority of Alberta residents are already protected by the police forces of Edmonton, Calgary, and other communities. Lastly, creating an Alberta Provincial Police would be a strong political signal that Alberta is no longer willing to accept second-class status.
Resume provincial responsibility for health-care policy. If Ottawa objects to provincial policy, fight in the courts. If we lose, we can afford the financial penalties that Ottawa may try to impose under the Canada Health Act.
This remains a desirable policy if we are ever to overcome the creeping catastrophe of long waiting times for essential medical services and the other critical shortcomings and inefficiencies in our health care system. Unfortunately, at a time when our provincial finances are so deeply in the red, Alberta cannot afford the loss in federal health transfers, which could more than offset savings generated through other Alberta Agenda elements. Moreover, exiting the strictures of the Canada Health Act would impose no loss on the rest of Canada; indeed, it would provide a financial windfall.
Lastly, even a man of Kenney’s immense energy and intelligence can only fight on so many fronts at once, and an extended battle over the Canada Health Act could preoccupy a provincial government. Consequently, I believe the opportunity for serious health care reform that Alberta had in the early part of this century has passed for the time being.
Use Section 88 of the Supreme Court’s decision in the Quebec Secession Reference [of 1998] to force Senate reform back onto the national agenda. [The Alberta Agenda authors’] reading of that decision is that the federal government and other provinces must seriously consider a proposal for constitutional reform endorsed by “a clear majority on a clear question” in a provincial referendum.
Senate reform is no longer a major issue because the Trudeau government has made substantial changes to Senate appointments, whose implications are still working themselves out. Alberta will continue to hold senatorial elections, but more sweeping reform of the Senate is not on the table for now.
The provincial referendum strategy remains viable for other constitutional issues, however. Premier Kenney has often mentioned the possibility of holding a referendum on the Equalization program. Critics have argued that this would be futile because Equalization is a federal policy funded wholly by federal tax revenues, and that other federal programs cause a bigger loss to Alberta than Equalization.
These criticisms have some merit in terms of policy, but they miss the political point. A successful referendum could serve as a lever for forcing open a debate on Equalization as well as other policies that disadvantage Alberta. Quebec has gained enormous negotiating victories through use of its referendum strategy. What is there to lose if Alberta does something similar? Nothing else has so far moved the needle; the opposite, in fact, as the Trudeau government responded to Alberta’s even-tempered concerns over Equalization by sending even more money to Quebec. At a minimum, a referendum on Equalization communicates to the rest of Canada how unhappy Albertans are over the threat to the prosperity of their province, and implies that if we don’t get something, we may consider next steps.
The Alberta Agenda’s Enduring Value
There are legitimate fiscal and policy questions about the five items of the original Alberta Agenda. The health care proposal is impractical at the present time. The other four, however, remain relevant – one or two of them more than ever – and I believe implementing them would be beneficial to Albertans. Further, they have a political value that transcends the details of policy. Business as usual is not an option when you are under existential threat from outside political forces. Call it “Alberta Agenda II.” Their enactment would send a powerful message to the rest of Canada that Alberta is not prepared to roll over and play dead as outsiders seek to destroy its principal industry.
The original Agenda can form part of the foundation for a strategy crafted to suit Alberta’s perilous current circumstances. This time around, greater focus needs to be placed on the economy, particularly on saving what is not only Alberta’s principal industry but the driver of so much of the province’s overall success. Premier Kenney was on the right track to incorporate the Alberta Agenda into his newly announced Fair Deal for Alberta. It will be not an end in itself but the beginning of a long process of “Re-Confederation,” of getting fair treatment for Alberta within Canada.
Tom Flanagan is professor emeritus of political science at the University of Calgary and a former campaign manager for conservative political parties (Originally published in the C2C Journal on November 22, 2019, published here with permission of the author).