Empire Club of Canada speech
"Ontario’s financial and manufacturing industries in particular have been key partners in Alberta’s development – and have much at stake in these circumstances."
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Thank you for that very warm introduction.
And thanks to all of you for coming here today.
I am just back from New York, which was quite an exciting place to be this week.
There was an important United Nations session going on.
And several other conferences.
And a recent Papal visit.
And underlying it all, quite an entertaining U.S. national election.
I hope I am not creating a diplomatic incident by saying that if Donald Trump ultimately wins the U.S. Presidency, there is going to be quite a revolution, world-wide, in men’s hair styles.
There is an almost equally exciting campaign going on here north of the border.
And I’m watching all of this…
… feeling very grateful that our election in Alberta is over.
Not that politics hasn’t been interesting in Alberta.
I am the fourth Premier our province has had in two years.
There has been a lot of change at the top in our province.
A lot of drama.
A lot of uncertainty.
And then a change in the governing party – for the first time since 1971.
Since then, we’ve been working hard on our agenda, which we will begin to detail in a provincial budget our government will present to our Legislature the week of October 26th.
I’m here today to outline what we’re working on.
And then I’m going to conclude by offering you a few words on the importance of the Alberta-Ontario economic partnership.
Let me begin by saying that the challenges that the people and Government of Alberta face are not small.
A year ago today, energy prices were strong. A barrel of oil traded at $95.55 (U.S.). This morning it was trading at $44.38.
In 2014 the Albertan economy grew by 4.4%. In 2015 our GDP is projected to shrink by 0.6%.
The economy of Alberta added 48,400 jobs in 2014. By one estimate we have so far lost some 35,000 jobs in the energy sector alone this year.
Energy sector capital expenditures in our province stood at approximately $70 billion in 2014, and have declined to approximately $45 billion in 2015.
This very significant economic shock has implications across the country, including here in Ontario.
The federal government’s finances, and therefore its ability to support programs and transfers for all Canadians, have taken a significant hit.
And the broader private-sector economy across the country has lost a significant pillar of growth.
Ontario’s financial and manufacturing industries in particular have been key partners in Alberta’s development – and have much at stake in these circumstances.
I’ll have a few more words to say about that in a few minutes.
These realities are confronting the Government of Alberta with a tough fiscal challenge.
We ran a $1.1 billion surplus last year.
Our predecessors in office projected that our province would run more than a $5 billion deficit this year.
Since that estimate, pressure has continued on oil prices, and therefore on provincial finances. That deficit may end up being higher.
These are tough challenges to be sure.
Put up against this, we have some significant advantages to build on.
Alberta has world-class universities and colleges, and one of Canada’s youngest and best-educated workforces.
Our province still has, by far, the lowest overall provincial taxes in Canada, with no sales tax.
We have, by far, the lowest provincial debt in Canada – zero net debt, all in.
We have an innovative, flexible capital market.
And as much as our energy industry is under pressure, our world-leading energy companies know how to cope with the volatility that is inherent in the energy business these days.
Now, we don’t change our government all that often in Alberta.
As I alluded to earlier, the last time a new Albertan premier ventured out of the province to introduce a new government was in 1971.
But we are working hard to make the transition as smooth as possible, and to bring as much economic stability as we can, while we implement our plans.
Those plans centre on living up to our promise to grow prosperity and create good jobs and conditions that will be widely and fairly shared – renewed prosperity that will benefit every Albertan.
We know there is only one way to succeed.
And that’s by supporting an open, sustainable and increasingly diversified economy.
We can’t accomplish this by ourselves.
Job creators create jobs in the private sector, not government.
And so we will be honest, thoughtful partners to them.
Alberta will continue to be a healthy place for private investment under our government.
Our energy industry is a foundation of our economy, and will be for many years to come.
Looking for new opportunities in our energy economy, and pioneering advanced technologies — all this will continue to require investment on a large scale.
So under our leadership, Alberta’s abundant oil and gas reserves will remain open to investment.
We will maintain one of the most competitive tax systems in Canada.
Our government will boost exports by seeking out new relationships, strengthening old ones and enhancing Alberta’s environmental record.
And we will be consultative and prudent in how we take the province in a new and better direction.
We don’t control the international price of oil.
We therefore have to manage the hand we have been dealt, while working to diversify our economy and working to reduce our dependence on a single product and a single price.
We can also work on strong, progressive policies that move us forward and position us to build on these resources as prices recover.
For example, this July the Canadian Energy Strategy was endorsed and adopted by every provincial and territorial government in Canada, at the Council of the Federation meeting held in St. John’s, Newfoundland.
The Canadian Energy Strategy is a very important inter-governmental framework, that will help Canadian governments align on an environmentally-responsible, sustainable, and prudently managed development of Canada’s energy resources and energy potential.
There were some important competing views on these issues.
But ultimately, conducting inter-provincial business respectfully and politely turned out to be the best strategy.
In my view…
… and in the view of the Government of Alberta…
… it is clear that our only road to achieving those economic goals is by getting it right on the environment.
I discussed this issue with Premier Wynne yesterday.
And I believe Canadians are of one mind on this issue.
They expect their governments – all of their governments -- to act decisively and responsibly on climate change.
And so we are listening carefully to Albertans about this issue, because Albertans feel strongly – as do many business leaders in the energy industry – that it is long, long past due for us in the Government of Alberta to get it right on the environment.
Air pollution and poor air quality is a direct threat to the health of our children and our seniors.
Albertans know well that environmental issues – and specifically, the issue of climate change – is a key global problem that every community and every jurisdiction must help address – especially energy producing jurisdictions like ours.
If we don’t get it right on this issue, a solution is going to be imposed on us – sooner or later – by others. By the federal government, and by our markets, who will increasingly insist that energy products they buy be mined and processed responsibly. If we want an environmental policy that works for Alberta and keeps our capital in Alberta, then the time to act is now.
And finally, our province needs to act because doing so is increasingly going to be the price of admission to those energy markets.
It is my hope that by acting decisively on the issue of climate change, we will reframe the current national debate over pipelines and energy infrastructure. By making better decisions in Alberta about the environment, we will hopefully then be able to discuss key pipeline projects on their own economic and environmental merits.
Speaking of the energy business…
If you follow energy industry news, you probably know we are conducting a review of our province’s royalties.
This is an important review that is about modernizing and updating our royalty system, so that it fits our future energy industry instead of its past.
This review is about considering whether there are ways to better manage our royalties so that they better support processing, diversification and value-added development.
And this review is about ensuring that as prices recover, we collect and begin to save an appropriate share of our own resource wealth in the Alberta Heritage Savings Trust Fund, for the future of our children and our grandchildren.
The time is past due – long past due – for the Government of Alberta to return to a responsible, long-term approach to collecting and investing our royalty wealth – so that we stop being the farmer who pays for the groceries by selling the farm’s topsoil.
Here is the timeline:
We intend to announce our policy changes in this area by the end of this year – by the end of 2015.
Any changes will be implemented after one’s year notice. So investors and energy companies will have a year to prepare for any royalty reforms, which would come into effect in January 2017.
Now let’s speak about Alberta’s broader fiscal challenges.
We have seen drops in the price of oil many times before in this province.
And we’ll see price cycles many times in the future.
But that doesn’t make it any easier to deal with the kind of revenue shocks we are witnessing as I speak.
We’ll be setting out the details of how we intend to manage this situation in the provincial budget we will present to the Alberta legislature during the week of October 26th.
We are looking to achieve three things.
First, we are going to stabilize public services, and we are going to correct some mistakes that in our view the previous government made in managing public finances.
Second, we will present a plan to return to fiscal balance.
And finally, the Government of Alberta has an important role to play as a good partner to Alberta’s job creators, entrepreneurs, good ideas people, and visionaries.
Becoming Canada’s best place to start and grow a business – competing at the high end, with Alberta-owned businesses that provide our people with good, high-skill, mortgage-paying jobs -- is about much more.
We can operate a province with a modern, efficient infrastructure.
We can expand access to capital.
We can support innovation.
We can be determined about trade development, and single-minded in attracting inward investment throughout our economy.
And we can reform the way we structure government, so that we are easy to work with – one-stop shopping for government business services.
We are considering all of this carefully, and will have a lot more to say in and around our budget.
Let me conclude by saying a few words about the close economic partnership between Alberta and Ontario.
Over 1,100 Ontario companies provide the energy industry in Alberta with construction, manufacturing, transportation, warehousing, financial services and environmental consulting goods and services.
There has been a reduction in investment in the energy industry in the face of low prices. But by any reasonable estimate, Alberta will still require hundreds of billions of dollars in goods and services from Ontario over the next 25 years.
So we are partners in each other’s success.
And our provinces need to work together, to promote jobs and prosperity – and responsible environmental and climate change policy -- in Alberta… and Ontario… and across the country.
I discussed these issues with Premier Wynne during our meeting in Queens’ Park yesterday.
I invited Premier Wynne to visit Alberta, and to consider bringing a delegation of business leaders, to discuss how we can further deepen our close economic ties.
I’m very pleased she accepted my invitation and I’m looking forward to this work.
Friends, it has indeed been a time of rapid change in Alberta over the past two years. But we have now re-entered a period of political stability and strong majority government in our province.
This gives us an opportunity to deal with some important matters that require a steady hand and some careful thought.
We will stabilize our public services and run them well.
We will set out a plan to return to budget balance.
And we will work within our means to promote jobs, value-added production, diversification, and prosperity...
Prosperity that is both widely shared, and in balance with our duty to act on climate change.
Thank you for joining me here today.
I’m looking forward to seeing a lot of you doing business in Alberta!