The origin and real meaning of the “Alberta Advantage”


August 31, 1993 marked the first time the words “Alberta Advantage” were uttered on the floor of Alberta’s Legislative Assembly.

Unlike some others, my government will not try to buy prosperity through higher taxes. Instead, it will build on Alberta’s existing advantage of low taxes and its free enterprise spirit to develop the most competitive economy in North America. The government will strengthen the Alberta Advantage and sell it aggressively around the globe.” – Speech from the Throne, August 31, 1993.

Premier Ralph Klein

Ralph Klein

“Promoting the Alberta Advantage” was the theme of the Speech from the Throne read by Lieutenant Governor Gordon Towers following Ralph Klein’s victory in the 1993 provincial election, dubbed by Tories as the ‘miracle on the Prairies.’ The Progressive Conservatives had narrowly defeated an insurgent Liberal campaign led by former Edmonton mayor Laurence Decore. Both party leaders campaigned on deep funding cuts and deficit reduction.

The one element, probably the most important element, of the Alberta Advantage that was not mentioned in that year’s throne speech was that the reality of the provincial advantage was based almost entirely on the government receiving royalties from high-priced natural resources, mainly natural gas and oil.

Gordon Towers Alberta

Gordon Towers

For two decades, PC governments were able to subsidize their tax cuts with royalty revenues from natural gas, and then oil. This unfortunately led to government then using those undependable royalties to fund the province’s operations budget. What this meant was that large portions of royalty revenues that should have been saved for future generations, or for a rainy day – like now – were spent on day-to-day operations.

The PC government was once so flush with cash that it sent out $1.4 billion worth of Prosperity Bonuses – known as Ralph Bucks – to every Albertan. It was an embarrassment of riches and a hallmark of PC financial mismanagement.

The Alberta Advantage of low taxes and quality public services stopped being so easy when the international price of natural gas, and later of oil, dropped through the floor. When the PCs began running deficit budgets in the mid-2000s due in part to the drop in natural gas prices, they refused to restore the modest levels of personal income and corporate taxation that had existed before the ‘Alberta Advantage’ became their motto.

The most recent economic decline had many Albertans asking themselves “where did all the money go?” In an off the cuff moment, former premier Jim Prentice told Albertans to “look in the mirror.” But Mr. Prentice’s ‘Hail Mary’ budget of early 2015, which raised some taxes, was not enough to persuade Albertans that the Tories had learned a lesson.

Instead, having despaired of changing the Tories, they opted to change the government and elected the New Democratic Party led by Rachel Notley.

15 thoughts on “The origin and real meaning of the “Alberta Advantage”

  1. Sherry

    I agree the PC government became complacent with business as usual following the exit of Ralph Klein.

    Reply
    1. Alan

      I think that the PCs were pretty complacent by Klein’s first reelection.

      Klein’s held up as a hero but people forget how wasteful his government really was.

      Reply
  2. Roland Jodoin

    Put succinctly, Alberta provides services similar to those offered in other provinces but uses resource royalties instead of a sales tax to fund some of its core operations. Problem is, resource royalty revenues are highly unstable, whereas sales tax revenues are not. Bonus: sales tax revenues grow in sync with the population.

    Reply
    1. Alfredo Louro

      And don’t forget the corporate tax rate that dropped from 15.5% in 2001 to 10% in 2007 and stayed there, and the flat income tax rate of 10%. At the same time that the Conservatives were doing this, they were blowing up hospitals and cramming more and more kids into classrooms, and telling us they had no choice but to cut back public services. Teachers and nurses were especially targeted.

      What this article does not describe is how the Heritage Fund that Peter Lougheed set up was systematically raided by the Conservatives to plug the holes in their budgets. By the time the Saudis suddenly decided to flood the oil market with cheap oil, there was nothing left. So they brought in Jim Prentice, who told Albertans that it was time for more “austerity”, telling us to “look in the mirror” if we wanted to know whose fault this was. And they call themselves “prudent fiscal managers”.

      Reply
  3. AlbertaRusH

    Further, Alfredo, the 1%ers, dead-enders and wanna-be oligarchs Kenny is uniting would gleefully repeat 40 years of PCAA mistakes (with all the subtlety and compassion of the WRP). Their missionary zeal to redress the “accident” of conservative defeat and Kenny’s resurrection of Harper’s legacy as his ideal for Alberta puts us all at risk.

    Albertans have been naughty and must be made to repent and take their medicine. Jason Kenny is holding the wooden spoon…

    Reply
  4. merv

    “The PC government was once so flush with cash that it sent out $1.4 billion worth of Prosperity Bonuses – known as Ralph Bucks – to every Albertan. It was an embarrassment of riches and a hallmark of PC financial mismanagement.”

    Dear Dave, my family was dead broke when those cheques went out. We had nothing. That was one of the only things that any government ever did to help us. You call that an embarrassment? You think you are so high and mighty, that you, sir, know how to spend other peoples money better than they do?

    I have read your blog for some time, but I will now stop. I am insulted and taken aback by your suggestion. Sometimes people need money. Ralph was the only man who was ever generous. Why do you think the helpless and most needy voted for him election after election after election?

    Please respect the poor, sir. They are the backbone of this province.

    Reply
    1. Louise

      Hi Merv,

      While I can appreciate your comment, and understand that Ralph bucks helped your family (heck, they helped me pay tuition that year), I can’t help but disagree with you that Ralph did things for the poor. He infamously threw change at homeless people outside of the Hope Mission in Edmonton and shipped other homeless individuals out to BC on busses. By not funding infrastructure, schools, and hospitals, he arguably hurt the poor and families by drastically cutting services and increasing classroom sizes.

      Reply
    2. Blaise

      The $400 I got pretty much went straight to paying my now much higher electric bill after deregulation sent the bill skyrocketing. That 1.4 billion could have been better used to provide targeted assistance to those who needed it most. It was just another way to buy people off with their own money and ensure the PCs didn’t lose the next election. The not so subtle promise Klein was making was that cheques of that sort would be a regular occurrence now that the debt was paid off.

      Reply
  5. Moderate Matt

    Hi Merv. To add to Louise’s comment: You say that Klein’s $400 cheque “was one of the only things that any government ever did to help us.” Respectfully, have you ever been helped by a doctor or a nurse? I’ll bet you’ve also been helped by police, firefighters and soldiers. Your Grade 1 or 2 teacher surely helped you learn to read and write. City workers clean your streets and fix potholes; civil servants inspect the meat you buy at the store. Etc. You’ve been helped by government your entire life—even if people with agendas want you to believe otherwise. Klein, ironically, wanted not to help you. Sure, he gave you $400, once. But keep in mind it was your own money he was returning to you—some generosity…! Also, you might rethink the idea that the poor and needy voted for Klein. Voter turnout in the Klein era was among the lowest Canada has ever seen, sometimes in the 40 percent range. I guarantee you the rich weren’t the ones skipping the ballot box.

    Reply
  6. Ram Ses

    Indeed Klien was friend only to his corporate pals! He privatized so much and as a result everything average Albertans did cost much more! Deregulation of utilities has seen over a 300% increase, the added fees are typically 125% more than the actual consumption! Then there are the most recent transmission lines that we are paying for so corporations can make more profit selling our surplus power to neighbours! That’s rich they have to make no investment and then when they look like their profits will suffer they can leave? What is that if not corporate welfare! What about the incentives we are giving oil companies, deep well drillers etc? Again more corporate welfare! How does this help average Albertans? It doesn’t but Kenny and the WRP are up in arms because our current government is actually looking out for average Albertans interests!

    Reply
  7. CuJoYYC

    The first thing that really pissed me off about Ralph was that his political ascendency began with a surprise victory as Mayor of Calgary aided in large part by the downtrodden and disposed street people of Calgary who then suffered the most under his provincial government. Talk about turning your back on those that first helped you succeed.

    Klein’s government was a willing hostage to dogma far more than most governments in Canadian history. Spewing dogma in the service of maintaining political power is the worst of political sins. It’s for that reason that they didn’t build the South Health Campus in Calgary when it could have been built in a slower economy for about $500 million rather than building during a overheated economy for $1.5 BILLION. But you know, prudent fiscal managers and all that crap.

    Reply
  8. Wellduh

    I have been reading the comments to the writer’s remarks & views.The point is not the waste or misuse of any government but what was the “Alberta advantage” for you & I,first if i was moving to Alberta ,what would be my benefit to work ,live & raise a family? The lower property taxes ,no provincial sales tax ,
    cheaper fuel(home & auto),lots of jobs ,& in my view less restrictions(we in this day call them BY_LAWS).So , this is an advantage to be here is gone, in the 90’s till now 2017,it has been a moral,physical & financial rape to all that we know in Alberta.As of Jan1 ,we got the NDP’s carbon tax,oh my soul ,I pay more for supplied natural gas,power ,services ,i now pay for farting ,wake up people ,it don’t matter who is in ,its whether we as THE PEOPLE,are going to say enough ! So instead of whining about the “parties” sins ,its all back to us ,THE PEOPLE to make the government be accountable for the cost of operating so shabby. Who is willing to boycott the fees we are charged ,who will stand up & go to jail for unfair government ,remember you work for a company that is in league with all governments ,this is how you are controlled ,you must pay your taxes if you want to work ,eat & live in any place in the world .you stop any of it ,you don’t eat ,you lose your job & you’ll land out on the street .Not to say stop paying your dues ,but make it a public whipping to any elected MP that doesn’t do as we THE PEOPLE (as a majority) tell them what we will not put up with,like sur-charges for companies to buy freely into markets that they are the only ones that profit from.(or is there a kick back ,we don’t know about,hmmm?)

    Reply

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