Alberta
The Provincial Government’s 2018 report card on its “made-in-Alberta” energy strategy
From the Province of Alberta
Made-in-Alberta plan protects energy jobs
This year, the province fought to get top dollar for our energy resources by launching a made-in-Alberta strategy to build new pipelines and add value by upgrading more of our oil and gas here at home.
Premier Rachel Notley and her government fought to protect workers and the Canadian economy by taking action in the short, medium and long term.
“For decades, Albertans have been talking about getting more value for our oil here at home. It’s time to stop settling for less. We’re grabbing the bull by the horns with a made-in-Alberta strategy to create more jobs, open new markets for our oil and gas, and make more of the energy products the world needs.”
Major boost to energy upgrading
In the long term, the province doubled support for petrochemical upgrading to $2.1 billion, which will leverage private investment that’s expected to help create about 15,000 jobs.
Alberta also created a Liquefied Natural Gas (LNG) investment team to work directly with industry on reducing barriers for securing final investment decisions on export projects that will increase the value of Alberta’s natural gas resources.
In response to strong industry encouragement, Alberta is taking action to explore private-sector interest in building a new oil refinery in the province. Building new refining capacity would create good-paying, long-term jobs for Albertans while helping lower the oil price differential over the long term.
“Large industrial value-add energy investments help provide economic resilience and diversification, and create highly skilled, well-paying jobs for decades. Alberta has abundant feedstock, skilled labour and the ability to refine our resources to high-value products the world needs. There is significant international competition for these projects and for Alberta to compete, government and industry must work together. We commend the government’s focus on ensuring that the value of Alberta’s resources stays with Albertans.”
Fighting for pipelines and market access
The government also continued its fight for new pipelines. Premier Notley’s advocacy was instrumental in the federal government’s decision to purchase the Trans Mountain Pipeline. As well, the Premier continues to fight for needed changes on two federal bills:
- Bill C-69, which would create a new, far-reaching impact assessment process for resource development projects.
- Bill C-48, which would impose a moratorium on oil tankers off the north coast of B.C.
This year, the province also launched the nationwide Keep Canada Working campaign to explain to Canadians the benefits of new pipeline access. The latest push includes a real-time lost-revenue counter to show just how much Canadians are missing out on by keeping Alberta’s energy resources landlocked.
“Under Premier Rachel Notley’s leadership, more Canadians than ever before support this project because they know we shouldn’t be selling our products on the cheap. There’s too much at stake. We will keep the federal government’s feet to the fire so that this project isn’t delayed any further.”
Over the medium term, the government took action to build more capacity for moving oil by rail to clear the backlog and stabilize the market. Upwards of 7,000 new rail cars will come online in 2019 to move 120,000 barrels a day out of the province to markets where Alberta oil can earn the best value possible.
In the short term, Premier Notley protected the value of Alberta’s resources by mandating a temporary reduction in oil production. The decision, in response to a historically high oil price differential, has prevented thousands of job losses and helped restore the value of Alberta’s oil. The price gap is caused by the federal government’s decades-long inability to build pipelines.
Saving industry time and money
A more efficient regulatory process means new oil and gas projects can begin operating faster, creating jobs and maintaining competitiveness. The new process is fairer, faster and more accessible, saving industry hundreds of millions of dollars while making the process more transparent and accessible for Albertans. The new approach is expected to save industry $600 million by 2021, and is helping reduce the regulatory review time for an oil sands project from five years to just 15 months.
Strong energy future in the oil sands
Two major oil sands milestones were also celebrated in 2018. Premier Notley and Minister McCuaig-Boyd joined Suncor for the successful startup of the Fort Hills project, which put 7,900 people to work at the peak of construction and is employing 1,400 people full time now that the project is operational.
The government also highlighted a new $400-million investment in the Long Lake South West project by Nexen, a wholly owned subsidiary of CNOOC Ltd. With leading-edge technology, the project illustrates that a major oil sands producer can be both an energy and environmental leader while showing a long-term commitment to creating good jobs in Alberta’s energy sector.
“The Long Lake South West project demonstrates CNOOC Limited’s long-term commitment to the Alberta energy sector. Our oil sands development is an important component of our global portfolio, and through technological advancements we are pleased to be responsibly growing our production while reducing our overall emissions.”
New jobs, private investment in wind power
Private companies are partnering with First Nations to invest close to $1.2 billion in renewable energy projects in Alberta. This helps create new jobs and continues with record-setting low prices for Albertans. These results showcase Alberta as a proud leader in all forms of energy.
The five successful projects are made possible through the latest phase of the Alberta government’s Renewable Electricity Program. They include investments from homegrown Alberta companies, as well as from new investors from across Canada and around the world.
In total, the new developments will create about 1,000 jobs, attract new economic opportunities for Indigenous communities and bring an estimated $175 million in rural benefits over the life of the projects.
From the Fraser Institute
On Monday, the Smith government announced that beginning next year it will change the way it funds surgeries in Alberta. This is a big step towards unlocking the ability of Alberta’s health-care system to provide more, better and faster services for the same or possibly fewer dollars.
To understand the significance of this change, you must understand the consequences of the current (and outdated) approach.
Currently, the Alberta government pays a lump sum of money to hospitals each year. Consequently, hospitals perceive patients as a drain on their budgets. From the hospital’s perspective, there’s little financial incentive to serve more patients, operate more efficiently and provide superior quality services.
Consider what would happen if your local grocery store received a giant bag of money each year to feed people. The number of items would quickly decline to whatever was most convenient for the store to provide. (Have a favourite cereal? Too bad.) Store hours would become less convenient for customers, alongside a general decline in overall service. This type of grocery store, like an Alberta hospital, is actually financially better off (that is, it saves money) if you go elsewhere.
The Smith government plans to flip this entire system on its head, to the benefit of patients and taxpayers. Instead of handing out bags of money each year to providers, the new system—known as “activity-based funding”—will pay health-care providers for each patient they treat, based on the patient’s particular condition and important factors that may add complexity or cost to their care.
This turns patients from a drain on budgets into a source of additional revenue. The result, as has been demonstrated in other universal health-care systems worldwide, is more services delivered using existing health-care infrastructure, lower wait times, improved quality of care, improved access to medical technologies, and less waste.
In other words, Albertans will receive far better value from their health-care system, which is currently among the most expensive in the world. And relief can’t come soon enough—for example, last year in Alberta the median wait time for orthopedic surgeries including hip and knee replacements was 66.8 weeks.
The naysayers argue this approach will undermine the province’s universal system and hurt patients. But by allowing a spectrum of providers to compete for the delivery of quality care, Alberta will follow the lead of other more successful universal health-care systems in countries such as Australia, Germany, the Netherlands and Switzerland and create greater accountability for hospitals and other health-care providers. Taxpayers will get a much better picture of what they’re paying for and how much they pay.
Again, Alberta is not exploring an untested policy. Almost every other developed country with universal health care uses some form of “activity-based funding” for hospital and surgical care. And remember, we already spend more on health care than our counterparts in nearly all of these countries yet endure longer wait times and poorer access to services generally, in part because of how we pay for surgical care.
While the devil is always in the details, and while it’s still possible for the Alberta government to get this wrong, Monday’s announcement is a big step in the right direction. A funding model that puts patients first will get Albertans more of the high-quality health care they already pay for in a timelier fashion. And provide to other provinces an example of bold health-care reform.
Nadeem Esmail
Senior Fellow, Fraser Institute
From the Montreal Economic Institute
Alberta’s move to fund acute care services through activity-based funding follows best practices internationally, points out an MEI researcher following an announcement made by Premier Danielle Smith earlier today.
“For too long, the way hospitals were funded in Alberta incentivized treating fewer patients, contributing to our long wait times,” explains Krystle Wittevrongel, director of research at the MEI. “International experience has shown that, with the proper funding models in place, health systems become more efficient to the benefit of patients.”
Currently, Alberta’s hospitals are financed under a system called “global budgeting.” This involves allocating a pre-set amount of funding to pay for a specific number of services based on previous years’ budgets.
Under the government’s newly proposed funding system, hospitals receive a fixed payment for each treatment delivered.
An Economic Note published by the MEI last year showed that Quebec’s gradual adoption of activity-based funding led to higher productivity and lower costs in the province’s health system.
Notably, the province observed that the per-procedure cost of MRIs fell by four per cent as the number of procedures performed increased by 22 per cent.
In the radiology and oncology sector, it observed productivity increases of 26 per cent while procedure costs decreased by seven per cent.
“Being able to perform more surgeries, at lower costs, and within shorter timelines is exactly what Alberta’s patients need, and Premier Smith understands that,” continued Mrs. Wittevrongel. “Today’s announcement is a good first step, and we look forward to seeing a successful roll-out once appropriate funding levels per procedure are set.”
The governments expects to roll-out this new funding model for select procedures starting in 2026.
* * *
The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
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