How to Fix Alberta’s Economy Right Now

Canada’s economic slowdown has been felt most fiercely in Alberta not only because of tumbling oil prices, but also the political factor. The NDP government is a classic embodiment of “regime uncertainty” — investment has contracted because capitalists cannot predict what new anti-business measure is next.

Despite the fact that Alberta offers few votes to buy, even the federal government is contemplating launching its infrastructure ‘stimulus’ plan in Alberta and Saskatchewan (the latter having also been hard hit by depressed oil prices, although its government is arguably less antagonistic) with $1 billion in spending.


Federally funded infrastructure boondoggles will do little or nothing to help Alberta, but let’s put that aside for now. The real source of trouble is low oil prices, lack of pipelines, and provincial government policy.

Nothing can be done about oil prices. Demand has not grown as quickly as anticipated, but mostly the positive supply shock weighs heavily on the price.

Likewise, little can be done at this time about the pipeline issue. Myriad stakeholders are determined to have a de facto embargo on Alberta, and that is not going to change any time soon.

The NDP government, however, could quickly and easily take action to accelerate investment in the Alberta economy. This can be done unilaterally and it doesn’t even matter what oil prices are or whether any pipelines get built.

Cut taxes. A lot.


Notley’s NDPs government made a disastrous decision of imposing higher taxes immediately upon taking power. Higher income taxes, both individual and corporate. Taxes on gasoline. Sin taxes. The new carbon tax is also a sin tax, by the way, much like tobacco and liquor, at least in the eyes of the radical environmentalists. Fortunately, they at least eliminated some of the tax hikes in Prentice’s PCs’ budget, such as the healthcare tax.

Taxes do not occur in the abstract, but greatly influence present and future decisions. While companies that lose money won’t pay corporate income tax (thus implying little or no new net revenue), the higher tax rates will deter future investment. This is exactly the opposite of proper policy.

The government should immediately cut all taxes. Not only to the previous level, but much lower. At a minimum, they should get rid of personal and corporate income taxes completely. Investment and private consumption would dramatically increase and the positive impact would be immediate.


As many other taxes should be cut as possible. Gasoline taxes, resource production taxes (aka royalties), carbon taxes, insurance taxes, even popular sin taxes. But eliminating the personal and corporate income taxes should be the top priority.

Such a law could be fit onto a single page and could be written in an hour. The government could convene for an emergency session and pass the law at once. The whole process need not to take longer than a week.

This would have an immediate effect. New capital investment would flood into Alberta even if oil went to ten bucks a barrel. While the capitalists wouldn’t make any money right away, their investments will entail new projects and entrepreneurial efforts now. This means hiring more people, buying new equipment, and producing more goods in the present. Unemployment would fall rapidly, supply chains would kick into high gear, and myriad investments that have already been put on hold or cancelled entirely would resume while numerous new ventures would flourish.

Within a year, Alberta would again be the province of unparalleled economic growth and and unprecedented prosperity.

Furthermore, these policies would benefit all Canadians. Making Alberta extremely attractive to investment would strengthen our currency because investing in Canada requires Canadian dollars. The Canadian dollar is getting killed this year by various factors, but one of the reasons is due to Canada’s lowered attraction for investment. Alberta has a disproportionate effect on this because Alberta because it’s the province that has received the lion’s share of capital spending for the last 10 years. Increasing the demand for Canadian dollars would increase consumer buying power and therefore enrich all Canadians.


There are many beneficial actions the government could take to help Alberta, but these tax cuts could be implemented easily and quickly and their impact would be the most quickly felt.

And here is the most important part: it wouldn’t matter what the oil price is, whether pipelines get built, or what the federal government does. Not only would this restore vigor to Alberta’s strained oil and gas industry, but all other sectors of the economy as well.

Obviously this would be only the first step in making Alberta the incontestable economic powerhouse of Canada. The NDP government must also dramatically cut spending and regulations. Pipeline companies and private property owners must be allowed to reach agreements on their own about pipeline projects with zero input from phony stakeholders such as US-funded radical environmentalists.

But those are issues that would take time to resolve. But taxes can be cut instantly. And that is what must be done.





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