Check against delivery
To Sandeep (Lalli) my friend, the president of the Calgary Chamber, look around, eat your heart out. They don't even get an audience a third of this size in Calgary. Edmonton represents…well-done Janet (Riopel). And by the way, how about them Oilers? Holy smokes! We hope that our economy goes as strong this year as the Oilers are so far in the season. Thank you so much.
We have a lot of elected officials here as well, and to you, to our First Nations leaders, and to all of you (thank you) for being here to talk about the future of our magnificent province.
So let me begin, in this discussion of the state of our province, with a note of optimism. I would say the state of Alberta is one of resilience. We are tough people, the folks who first created communities here.
Our Indigenous people overcame all of the odds in a tough environment to create communities. They were our first entrepreneurs, the people who made those canoes that plied the waterways of the Northwest - by the way, sealed by bitumen - who traded between one community and another - showed us the way forward for those who came in the eighteenth and nineteenth centuries, the pioneers, the first farmers and those who founded communities like Edmonton.
The resilience, the spirit of innovation, the drive and work ethic of those people, has never really left this province. Which has ever since been a magnet for risk-takers, hard workers and entrepreneurs, the big dreamers, and people with audacious levels of ambition. And so it's true that we have been through five very challenging years of economic decline and stagnation. It's true that many of our fellow Albertans continue to struggle. That too many are out of work, that most of seen their incomes decline, that we've seen near-record levels of business bankruptcies, and many have left our province, some of them young people who gave up waiting for work.
We know those things are true, and we also know, as I'll be discussing, that we’re facing significant challenges on the horizon. But I truly believe that the state of our province is one of resilience. We are and will get through these challenging times by pulling together. We've never been unwilling to take-on and overcome a challenge. We are people who overcome adversity.
In fact, just yesterday one of your sponsors, Syncrude, was celebrating their three billionth barrel of oil production since 1978. What a perfect metaphor for Alberta. A group of brilliant scientists and entrepreneurs, supported by sensible public policy, who saw in those enormous oil sands north of here, untold trillions of dollars in potential wealth to fuel our prosperity and our economy. But it required the technology to do it effectively, through intensive investments in research and development, much of it at our own University of Alberta.
Through strong government leadership and private sector ingenuity, they managed to do what was considered undo-able - to turn the world's third-largest energy reserves into the greatest engine of Canadian prosperity. Congratulations Syncrude and congratulations to all of the engineers, scientists and working women and men who made that possible.
With that in mind, let me address two significant challenges that our province faces today. First of all, challenges that are external to us, that are often too often beyond our control, and in particular a federal government that recently campaigned on an agenda that is, on so many levels, hostile to the vital economic interests of Alberta. And then I will address the real fiscal and economic challenges that we are facing and how we're doing everything we can to renew economic growth, job creation and investor confidence in this province to pave the path forward.
First of all, it was discouraging to hear in the recent election our Prime Minister (Justin Trudeau) target this province and its largest industry for criticism, to say that Canada needed a national government that would quote, "stand up to the big oil companies."
I find it curious coming from a national government that has generated hundreds of billions of dollars of revenue from Alberta's energy industry event, that it would then turn around and say that it needs to stand up to what has been the greatest source of federal revenue, middle-class jobs and investment in the modern Canadian economy. And that is, I think…Albertans shared that anxiety that was reflected in the largest democratic mandate ever given to a federal political party in the history of this province eight days ago.
As was the case for our neighbours in Saskatchewan and through much of Western Canada. Indeed through communities across the country rooted in our economic history of responsible resource development.
Our Prime Minister said at the Davos Economic Summit four years ago, that quote: "My predecessor wanted you to know Canada for its resources. But I want you to know Canada for its resourcefulness." Unquote.
I think what he misunderstood, what I've tried to convey to the Prime Minister, is that
there is no industry more resourceful;
there is no industry that invests more in science and technology and research and development;
there is no industry more focused on shrinking its environmental footprint, including its carbon emissions;
there is no industry that has engaged First Nations people more in economic opportunity;
there is no more resourceful industry than our resource industries, including our oil and gas industries in this country.
And unfortunately, the Prime Minister has given practical expression to that sentiment through a series of policies that have deeply damaged investor confidence. that have led to capital flight and the loss of tens of thousands of jobs and the decline of incomes that we have seen in this province and other parts of Canada - a six per cent decline in after-tax disposable income for Albertans since 2014
Bill C-69, the no more pipelines law; Bill C-48, the prejudicial attack on Alberta energy exports; the killing of Northern Gateway; the killing of Energy East; the surrender on Keystone XL; the bungling of Trans Mountain; the threat to impose a cap on oil sands development, and so many other injurious policies.
Now, it is one thing for us to identify our deep concerns about these, but it's another to have a game plan to fight back for our vital economic interests, which I believe are also Canada's vital economic interests. We are 12 per cent of Canada's population and yet in the last 10 years we have represented 25 per cent of new investment in the Canadian economy.
Every year, we as Albertans contribute $20-billion net to the rest of the federation through equalization and other transfers. Over $200-billion net in the last decade and over $600-billion fiscal contribution since 1960, by far and away the greatest of any province in Canada. Which means that we Albertans, through the blessing of our resources, but also ingenuity and work ethic, have been by far the greatest contributors to national prosperity.
There are schools and hospitals, roads and social programs from coast-to-coast that have benefited from what we have done, and underscoring that the tens of thousands of people who faced poverty, unemployment or under-employment in other parts of Canada, who moved here to enjoy the dignity of work and of opportunity.
This is a province that has lifted people up, that has been a great engine of social progress and social mobility, and we should never have a federal government that says it needs to stand up to that industry, in this province, that has been that great engine of social and economic progress. That is why our government has articulated a strategy to fight for our vital economic interest. Because we believe they are also Canada's. We cannot have a strong Canada without a strong Alberta.
Friends, I'm pleased to tell you that we are not isolated in this. We have friends and allies all through the federation. I'm happy to tell you that at both of the Western and Northern Premier's Conference that I hosted here in Edmonton last July, and at the Council of the Federation in Saskatoon later that month, that we have ultimately 12 of the 13 provincial and territorial premiers sign on to the concept of natural resource and energy corridors, including oil and gas pipelines.
Including, by the way, even my friend, the NDP Premier of British Columbia, who agreed to the principle of building national energy corridors, including oil and gas pipelines. We only had the Premier of Quebec - who did not like the word oil - but is welcoming the concept of liquefied natural gas exports that would ship Western Canadian gas out of the Gulf of St. Lawrence.
On Bill C-69, we had nine of 10 provinces agree with us that this bill would deeply injure investor confidence, not just in our energy, but in other resource and major projects across the country. On so many other issues, we have friends and allies across the federation. And a growing number of allies of course, amongst our Indigenous people, the vast majority of whom in Western Canada support responsible resource development.
And we will be deepening that support through the single largest investment of our government, the $1 billion Indigenous Opportunities Corporation that will facilitate Indigenous co-ownership of and financial participation in major resource projects. Because the only way we’re going to get a pipeline to (the) coast built is if we can demonstrate that our Indigenous people are full partners.
And it's not just an economic question. It is also a moral obligation of our time - of our generation - to ensure that our First Nations people benefit from the responsible development of the resources that lie below the grounds that their ancestors first inhabited. In the days to come I will be appointing a panel of eminent Albertans to consult broadly about our place in the federation - to identify ways in which we can more creatively assert ourselves and protect our core interests. We will be very imaginative and wide-ranging in all of the ideas that we can we will consider. A number which were already articulated in our spring platform in a fair deal for Alberta, including, and let me identify one: we Albertans have said overwhelmingly we know that the equalization program is unfair to this province. It allows other provinces to get constant increases in equalization transfers, the wealth from which is largely derived from Alberta workers, even if they choose not to develop their own resources.
In fact, it creates a perverse incentive for other provinces to lock in their resources and benefit from transfers provinces that do develop their resources. That is fundamentally unfair. And yet…so the federal government 35, 40 years ago developed something called the fiscal stabilization program, which was notionally to provide a shock absorber to provinces that see “have” provinces that go through a sudden, unexpected decline in their revenues. Now under that fiscal stabilization program given the huge decline in our economy in revenues in recent years, we should be receiving by rights over $1.3 billion a year from the program. But instead we’re getting $230 million from the fiscal stabilization program. Think of it as reverse equalization, or kind of (an) equalization rebate.
And that happened because the federal government put a cap on it. There's no cap for the provinces that refused to develop their resources, some of which provinces are now running significant budgetary surpluses and have effectively full employment and rising incomes. But this province that's in its fifth year of economic adversity and does develop those resources is capped on its fiscal stabilization program. So I can tell you that is part of our renewed list of demands for fairness in the federation. We will be insisting that that cap be lifted and that Alberta's huge role, the $600 billion that we contributed, it's time that we got some of that back through this rebate on equalization to recognize the adversity through which we are going.And we will be fighting for that and equalization reform.
And let me be absolutely clear, we must as a province have points of leverage to secure our vital economic interests. We must learn from our friends. We have to be as effective as our friends are in Quebec. And that is why I will be absolutely clear with the federal government that if we do not get reform of equalization, such as lifting the cap on the fiscal stabilization program, and if we do not get a coastal pipeline like Trans Mountain built, we will give Albertans an opportunity to trigger negotiations on a constitutional amendment to eliminate Section 36 of the Constitution Act, which is the principle of equalization. So stay tuned for much more on that.
Now one of the ways that we can also protect our interest is to be more resilient in the areas under our own control, and that is really the theme of the budget (that) was presented by our Finance Minister Travis Toews last Thursday. It is a plan for economic growth, for job creation, and for a resilient Alberta. Because not only are we facing serious challenges from Ottawa, but we all know that there is the very real possibility of a global economic downturn in the short- to mid-term.
The reverse yield curve, international trade disputes, shrinking demand in key emerging markets, all suggest that we may be facing a global recession. And let me be absolutely clear about this, if the federal government sells us down the river in order to make a political deal in Ottawa and doesn't build TMX, we will lose by 2023 an estimated $3 billion in provincial revenues. And if there is a midsize global recession over the next four years, we estimate we'll lose another $3 billion in revenues.
We are already running the largest per capita deficit in Canada. We've had the fastest-growing provincial debt of any province over the past four years. We have gone from $13 billion to $63 billion in net debt in the past four years. And without urgent action we are on track for a debt that will click well past $100 billion. Which would mean spending $4 billion a year in interest payments to bankers and bond holders - money that would not be invested in schools, hospitals and social programs. And then we would be borrowing money to pay interest on our debt, unsustainably. And how exposed will we be to policy shocks emanating from Ottawa, or of economic uncertainty emanating from a global economy if we don't take action now on an $8 billion deficit that, in the worst case scenario, could double. Then how will we deal with a crisis down the line?
That is why I submit it is completely irresponsible to suggest a policy of ignoring the fiscal crisis that this province finds itself in. That is why we kept our commitment to appoint an expert panel led by former NDP finance minister Dr. Janice MacKinnon and some of the most highly respected Albertans to advise us on the state of the province's finances and a path to balance.
What they concluded is what we all know as Albertans, which is that we have a serious spending problem. We spent 20 per cent more per capita than the average amongst large Canadian provinces. If we were simply spending at the same per person level as British Columbia, Ontario, and Quebec, which by the way we hardly think of as sort of miserly, libertarian governments, we would be spending $10.5 billion less than we are. We would have a $4 billion surplus instead of a $7 billion deficit. Spending at the average level, and you see as the McKinnon panel went deeper, they asked: are we getting 20 per cent more bang for the buck? And the answer is, manifestly, no.
On health care we spend 20 per cent more than those provinces, but we have on most key metrics worse outcomes. We have lower life expectancy, higher infant mortality and longer surgical wait times. Folks, imagine we didn't even have a deficit. I think even if we had a surplus today Albertans would be right to say, what the heck is going on? We demand and we expect better. We should be able to provide care with outcomes that are at least as good as other provinces, especially when we have the youngest population in the country and we're spending 20 per cent more.
So, even without the fiscal crisis that we face, I believe we, as a whole theme of this budget, is to reach out to the folks who deliver our public services, to our public servants, to our nurses, doctors, teachers and others, and challenge them to work with us to identify new and smart ways of delivering public services more efficiently, because surely in the get it done, entrepreneurial Alberta we can deliver programs at least as efficiently as they do in B.C. and Ontario. Do you agree?
You know, on education we want to maintain world-class universities and colleges. At the same time we need to recognize that we spend $10,000 more per post-secondary student than the average amongst other big provinces with lower enrollment rates and lower post-secondary completion rates. So, yes, we will continue to invest.
And, yes, we will continue to invest in capital spending. In fact, under this budget, notwithstanding which you might be hearing in some of the commentary, this budget will take us from having the highest level of relative infrastructure spending in Canada, to the highest level of relative infrastructure spending in Canada.
We will go from having the highest per capita provincial transfers to municipalities, before the budget, to having the highest per capita provincial transfers to municipalities after the budget. We're taking our total capital spend from $7 billion all the way down to $6 billion.
You know, folks, through better cash management and through prioritizing important projects, overall this budget reduces the provincial program spending by, get this, a whopping 2.8 per cent over four years.
Let me put that in context. Back in 1993 the Government of Alberta reduced spending by 20 per cent over two years. We have found three pennies on the dollar of savings. Do you think there's a family or small business in Alberta that hasn't had to find three cents on the dollar to save in the past five years? How could we possibly ask taxpayers to expect Albertans to have gone through the difficult choices that they have made if their government isn't prepared to do the same thing? Well, we are prepared to do the same thing and, and let me be absolutely clear, we have made some challenging decisions. And there will be controversy that emanates from some of these decisions. bBt we are absolutely determined to get our finances back on track so that we are resilient as a province and we can cope with whatever Ottawa or the rest of the world sends our way in the years to come.
And then, by the way, we get to save the money from interest payments and that then, in the future, can be reinvested.
But none of this will happen or work unless we get our economy rolling again. And that is why the heart of the fiscal plan is the economic growth strategy, beginning with job creation tax cut, which will give us, by 2021, the, by far, the lowest taxes on new business investment on businesses in in Canada. In fact, the next highest, Ontario, will be 45 per cent higher than us, and our combined federal provincial tax rate will be lower than it is in 44 of the 50 United States.
That's (a) message I'm looking forward to taking to Texas later this month to explain. Because they have been drawing Canadian and Alberta businesses down there, moving jobs, capital and equipment with them. I want them to know that
under our job creation tax cut;
under the red tape reduction strategy where we will reduce by one third the regulatory burden on Alberta's economy;
through our Royalty Guarantee Act that creates long-term certainty in the royalty structure;
through our amendments to (the) Municipal Government Act that allows municipalities to provide more generous incentives to attract new investment;
through our smart reforms to immigration policy that will bring brilliant, innovative, young people to help fuel our innovation and technology sector;
through these and other reforms we are determined to be the most attractive jurisdiction in North America for job creating investment.
Now Jen, and I know I am pushing my time here, but do you mind if I say something about Edmonton? Alright!
A city where I lived for several years before(my) time in public life, the city I love, a great Canadian, northern city, which in so many ways has been really at the heart of Alberta's resilience in recent years. Edmonton has not been spared the economic hardships that our province has faced, but compared to the mass job losses, investment flight and business closures in places like Calgary and Fort McMurray, Leduc, Drayton Valley and elsewhere, Edmonton's relatively diversified economy in the growth in government has meant that it has held up comparatively well - together with some $7 billion in new investment here in the downtown.
And since your skyline now boasts the tallest tower west of Toronto, I think Edmontonians are entitled to a bit of swagger. Your office vacancy rate is nearly 10 points lower than Calgary, but space is still way more affordable and attractive here than it is in tight commercial markets like Toronto and Vancouver. And I think that's a competitive advantage that I convey to business leaders in those places. Edmonton is one of the youngest and best educated urban populations in the country, and with the most affordable housing prices of Canada's six-figure cities, it is very attractive to young families from across the country and around the world.
Your metro population is now 1.3 million, and you've had one of the fastest-growing rates of GDP of all Canadian cities in recent years. On top of the city's historical strengths in oilfield services and as a warehousing logistics and transportation hub, there are exciting things happening in the financial services, and information and communications technology sectors.
Between 2008 and last year Alberta's financial services sector increased by 38 per cent, nearly 10 points more than it grew in the rest of Canada, and most of that happened here in Edmonton. The jewel of your tech ground, meanwhile is the U of A’s artificial intelligence Lab, ranked in the top three in the world, which our government will continue to support through this budget.
But the city is also winning global renown for the work being done in nanotechnology, micro- electro-mechanical systems, and machine learning. And regarding Edmonton's future as a tech hub, it's worth noting in the recent announcement by TELUS, that's it's going to spend $16 billion over five years to upgrade their IT and 5G infrastructure here in this province - a significant increase over what they were planning on spending, will have all sorts of creative applications across our economy and in the delivery of public services. This is a strong vote of confidence in the future of Alberta's economy and really amounts to strengthening the foundations on which future jobs and growth will be built, especially in the tech-rich capital region.
It's also worth mentioning that elsewhere in the Convention Center today, 600 delegates from across Canada and around the world are gathered at the Spark 2019 Conference discussing state-of-the-art technologies for reducing CO2 emissions and producing cleaner, greener energy for the world. It's obviously important that Edmonton and Alberta continue to be global centers of excellence for the development of these technologies. To that end, today our government is introducing legislation creating the Technology Innovation and Emissions Reduction System. TIER will incent major emitters to reduce greenhouse gases and generate revenue for further investment in low carbon energy R and D, and much of that will be invested in this city.
Budget 2019 was crafted to support all these inherent Edmonton strengths and more. I'll just mention a few examples of Edmonton projects that will be supported in our capital plan, and I want to thank Municipal Affairs Minister and Edmonton Southwest MLA, Kaycee Madu, for his leadership in this regard.
On LRT for example, while it's true we're extending the time frame for funding, the government's overall commitment has not changed. We are honoring a key recommendation of the McKinnon panel that, on capital spending, that it be broadened into line with the levels of other provinces. And we're doing that by moderating spending over time, but not stopping it.
We recently announced that we will be putting $95 million towards widening the ring road in the southwest to get that vital portion up to capacity, and we're proceeding with over $300 million for new schools in Edmonton over the next two years. Through the Municipal Sustainability Initiative and its successor program, the Local Government Fiscal Framework, we'll be providing the capital with$ 686 million over four years. Combined with the Gas Tax Fund, that's nearly a billion dollars for the city to invest in its infrastructure priorities.
In healthcare we’re proceeding with upgrades at the Misericordia and Stollery Children's Hospitals, and the proposed new Southside Hospital. It is being delayed by three years, but it is still very much in the capital plan, based on the needs assessment made by Alberta Health Services. But we're going ahead immediately with construction of the Norwood long-term care facility, providing more than $200 dollars over the next three years. And in health research and training there's money for upgrading the U of A's dentistry and pharmacy building, and for the new brain center as well as the clinical laboratory hub.
Capital funding is provided to support the capital's great cultural institutions, including the Winspear Centre, the Royal Alberta Museum, the TELUS World of Science, and the Jubilee Auditorium. And the budget delivers on our platform promise to move ahead on the proposed new Big Island Provincial Park in the southwest of Edmonton's magnificent North Saskatchewan River Valley, together with an $8 million capital commitment to help the Hope Mission build a new emergency shelter here in downtown Edmonton.
And on top of all that I can tell you that we are working with major global investors on what could be some transformational investments in this region, including the possibility of over $20 billion in new capital expenditures on petrochemical projects in the Industrial Heartland part of this region. Oh, Jen wants to applaud that. And I can tell you we are in discussions with a major global company that is giving very serious consideration to locating North America's first major bio-similar pharmaceutical manufacturing facility in this city that could become the hub for a major multibillion-dollar industry employing thousands of people in good paying jobs.
So friends, I want you to know that this is a government that wants to govern for all Albertans. We acknowledge that Edmonton's economy is more dependent on government spending than other parts of the province, but this is also why we've been very precise, careful and prudent in our fiscal planning. There will be some reductions in the overall size of the public service, because we simply cannot get to balance without that happening. But almost all of that will occur through attrition in the most thoughtful way possible. And once again I want to reiterate our hope to reach out to our public sector workers in unions to find a way forward to dig deep on that great Alberta spirit of enterprise and innovation.
Friends, government is about choosing, and our government has chosen to keep our commitment to focus on jobs and the economy while getting our finances in order. No doubt there will be vigorous debate over our budget in the legislature, in coffee shops and pubs, and around kitchen tables. And that's a good thing. It's what democracy is all about. But at the end of the day I hope and believe that Albertans will see that the budget speaks to our province's future with great optimism. As I always say, Alberta is a magnet for risk-takers and hard workers. It has been for generations.
Together we have built one of the most generous and prosperous places on the face of the earth. But, now it's true we are going through some tough times, so we need to pull together. We need to make some tough decisions, and we need to stand up for ourselves and get through this time. We need to stay focused on those Albertans who are still out of work and those who are barely making ends meet. We need to dig deep as a community - caring for the least fortunate while unleashing the spirit of enterprise that has made this place the envy of the world. I'm confident that we will emerge through this time of adversity stronger than ever - with a bright future as the heart of Canadian prosperity, as an Alberta that - for generations yet to come will be strong and free.
Thank you very much.