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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.