By Patrick Malkin

In an era defined by economic volatility and political strife, Alberta stands out as a beacon of success, outpacing many areas of North America in growth and innovation. The province’s achievements can be attributed to a combination of prudent governance, resource management, and a commitment to diversification that positions it as a model for other regions.

At the heart of Alberta’s success is its robust economy, driven primarily by its abundant natural resources. The province is rich in oil, gas, and minerals, which have historically fueled its growth. However, what sets Alberta apart is its ability to adapt and evolve. Unlike many resource-dependent regions, Alberta has not rested on its laurels. Instead, it has invested in technology and innovation to enhance its energy sector’s efficiency and sustainability. Initiatives aimed at carbon emissions and promoting innovative energy are gaining traction, demonstrating that Alberta is not merely a fossil fuel powerhouse but a forward-thinking leader, and breadbasket for energy in North America.

Alberta is addressing growing global energy needs by leveraging AI adoption, fueling a robust expansion our energy sector and taking the lead in a new era of energy innovation which could produce worldwide benefits.

The Danielle Smith government has embraced fiscal responsibility and business-friendly policies that attract investment. By maintaining competitive tax rates and fostering a regulatory environment that encourages entrepreneurship, the province has become a magnet for both domestic and international businesses. This strategic approach leads to job creation and economic resilience, even in the face of global downturns. While other regions grapple with increased unemployment and stagnant growth, Alberta’s job market shows strength, reflecting the effectiveness of its policies.

Education and workforce development also play pivotal roles in Alberta’s success story. The province has invested heavily in education and skills training, ensuring that its workforce is equipped to meet the demands of a rapidly changing economy. With a focus on STEM (science, technology, engineering, and mathematics) fields, Alberta is cultivating a generation of innovators and problem solvers who will drive the next wave of economic growth. This commitment to human capital development is a crucial differentiator, setting Alberta apart from regions that have neglected investment in education.

Alberta’s diverse economy is another factor contributing to its success. While the energy sector remains vital, the province has successfully expanded into agriculture, technology, tourism, and manufacturing. This diversification mitigates the risks associated with reliance on a single industry and enhances overall economic stability. As the global economy shifts, Alberta’s varied economic landscape positions it to adapt more readily to change than regions heavily reliant on an individual sector.

Political stability and effective governance cannot be overlooked. Alberta’s leadership under Smith, has prioritized transparency and accountability, fostering public trust and engagement. By listening to the needs of its constituents and responding with effective policy solutions, the government has cultivated a sense of unity and purpose that resonates with Albertans. This contrasts sharply with the polarization seen in other parts of North America, where political gridlock can stifle progress.

Alberta’s success is not merely a product of its natural resources; it is the result of strategic planning, investment in human capital, and a commitment to innovation and diversification. As other regions struggle with economic challenges and levels of economic instability, Alberta serves as a shining example of what can be achieved through sound governance and forward-thinking policies. As we move further into the 21st century, the lessons learned from Alberta’s remarkable rise may hold the key to unlocking potential in other regions, reminding us that success is not merely about resources but about how we choose to leverage them for the greater good.

Patrick Malkin 

Deputy Chief of Staff for Operations

Province of Alberta

@MalkinPcos on X

From the Fraser Institute

By Tegan Hill

As Albertans look toward a new year, it’s worth reviewing the state of provincial finances. When delivering news last month of a projected $4.6 billion budget surplus for fiscal year 2024/25, the Smith government simultaneously warned Albertans that a budget deficit could be looming. Confused? A $4.6 billion budget surplus sounds like good news—but not when its on the back of historically high (and incredibly volatile) resource revenue.

In just the last 10 years, resource revenue, which includes oil and gas royalties, has ranged from a low of $3.4 billion in 2015/16 (inflation-adjusted) to a high of $26.1 billion in 2022/23. Inflation-adjusted resource revenue is projected to be relatively high in historical terms this fiscal year at $19.8 billion.

Resource revenue volatility is not in and of itself a problem. The problem is that provincial governments tend to increase spending when resource revenue is high, but do not similarly reduce spending when resource revenue declines.

Overall, in Alberta, a $1 increase in inflation-adjusted per-person resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year, but a decline in resource revenue is not similarly associated with a reduction in program spending. Over time, this pattern has contributed to historically high levels of government spending that exceed ongoing stable levels of government revenue.

And while the Smith government has shown some restraint, spending levels remain significantly higher than reliable ongoing levels of government revenue. Put simply, unpredictable resource revenue continues to help fund Alberta’s spending—and when resource revenues inevitably fall, Alberta is at high risk of plummeting into a deficit.

Indeed, Finance Minister Nate Horner continues to emphasize that we are “living in extremely volatile times” and warning that if oil prices fall below $70.00 per barrel a budget deficit is “very likely.” According to recent forecasts, the price of oil may hit $66.00 per barrel in 2025.

To avoid this fate, the Alberta government must do more to rein in spending. Fortunately, there’s plenty of options.

For example, the government spends billions in subsidies (a.k.a. corporate welfare) to select industries and businesses every year. A significant body of research shows these subsidies fail to generate widespread economic benefits. Eliminating this corporate welfare, which would generate significant savings in the budget, is a good place to start.

If the Smith government fails to rein in spending, and Alberta incurs a budget deficit, it will only mean more government debt on the backs of Albertans. And with Albertans already paying approximately $650 each in provincial government debt interest each year, that’s something Albertans simply can’t afford.

With a new year set to begin, the Smith government continues to warn of a budget deficit. But rather than simply prepare Albertans for more debt accumulation—financed by their tax dollars—the government should do more to avoid red ink. That means cutting wasteful government spending.