Why is Alberta so grumpy? The truth is the West has been struggling badly
Charles St-Arnaud is chief economist at Alberta Central. The following is adapted from a recent report by the financial institution.
Western alienation has a long history in Alberta, from the lack of bank lending to the province in the 1930s, to the National Energy Program in 1980, to what is currently viewed as an overrestrictive regulatory framework that stymies the oil and gas industry.
With this as a background, the election of a fourth consecutive Liberal government has led to the most recent surge of discontent in Alberta and fanned the flames of separatism to the point where a referendum on the subject is becoming highly likely. The reaction and dismay in other parts of Canada to that rising discontent is a sign that the rest of Canada is oblivious to Alberta's situation.
The main reason behind the growing discontent? As U.S. Democratic strategist James Carville described the central issue of the 1992 presidential campaign: 'It's the economy, stupid.'
This is what makes the situation in Alberta more comparable to the campaign for Brexit than to the sovereignty movement in Quebec. And, despite the Alberta government's assertion that the province is doing great economically, it is not; in fact, it has been struggling for the past decade.
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Many look at Alberta with envy, as it is the wealthiest province, boasting a GDP-per-capita of approximately $72,600 in 2024, roughly 30 per cent higher than the national average. However, what is less well known is how Alberta has experienced a significant decline in its standard of living and household purchasing power as it adapts to the 2014 oil bust.
Following the 2014 crash, Alberta's economic activity declined by about 7 per cent, and it took eight years to fully recover. To put this into perspective, this represents a similar economic downturn to the one experienced by Spain, Portugal, and Italy during the global financial crisis.
As a result, Alberta's GDP per capita in 2024 was only marginally above its level in 2004. In other words, the province's living standard have not improved in two decades. This situation has significant implications for households in the province. While Albertans' real disposable income per person is still higher than the national average by about 5 per cent, it has declined by about 13 per cent since 2014. This represents a significant reduction in the average Albertan's purchasing power, with the province's performance trailing that of B.C., Ontario, and Quebec, which gained 9 per cent, 5 per cent, and 7.5 per cent, respectively, over the same period.
Some would argue that the decline in purchasing power is only a result of a drop in incomes over the past decade for workers in the oil patch, but this is not the case. However, looking at median wages, adjusted for inflation, purchasing power has fallen for workers in most industries since 2014, led by the education, health care, construction, and arts and entertainment sectors; oil and gas workers have seen an increase in their purchasing power over the period.
In addition, since the mid-2010s, younger and older cohorts of workers, especially men, are less likely to be employed now than they were 10 years ago; the employment rate for both groups has dropped by about 10 percentage points.
The general feeling that is fuelling discontent in the province is that no economic progress has been made over the past decade, and that Albertans are falling behind, whether individually through lower purchasing power and employment potential, or collectively, because of a lack of growth in GDP per capita and prolonged recovery.
This situation is similar to what has been observed south of the border, where manufacturing workers feel that the system has left them behind, fuelling the populist movement. A lack of understanding of the situation only fuels more resentment; remember presidential candidate Hillary Clinton's comments regarding the 'deplorables' during the 2016 U.S. elections.
These economic developments are mostly the direct impact of the oil bust of 2014 and a global reduction in investment by oil and gas companies over the past decade. However, the federal government is not without blame. Many regulations introduced in recent years, whether it's the 'emission cap' or the 'clean electricity grid,' have been badly designed and often affect Alberta disproportionately. The inherent flaws in these regulations raise questions about whether the federal government is intentionally trying to hurt Alberta.
With all this in mind, the rest of the country should, to quote fictional TV soccer coach Ted Lasso, 'be curious, not judgmental.' Most Albertans, having fallen behind over the past decade, do not want to separate, but they want their concerns to be known, acknowledged, and heard by the rest of the country. Some understanding and empathy could go a long way to bridge the gap.
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