Western Standard - Alberta sends up to $45 billion east every year, but where does it go？

00:00:00.000 Today, we are looking at the economic transfers

00:00:02.620 from Alberta to the east.

00:00:04.860 The provincial government has stated the amount

00:00:07.400 to be 23 billion per year.

00:00:09.820 We will show the number to be as high as 45 billion per year.

00:00:14.120 For a family of five in Alberta trying to make ends meet,

00:00:17.080 that's $45,000 per year,

00:00:19.940 enough to pay for a home in 10 years.

00:00:22.680 BC and Saskatchewan are also net contributors,

00:00:25.300 but in amounts that are less egregious.

00:00:28.200 These transfers were either locked in or ramped up after Trudeau's 1982 constitution.

00:00:34.520 Welcome to a nation of people.

00:00:54.020 Hi, I'm Natalie St. Hilaire.

00:00:56.320 With me is Randy Royer.

00:00:58.680 We are going to put the economic transfers from Alberta in perspective for you today.

00:01:03.800 What are they? How should we look at them? What is done in other countries and what can we do about them?

00:01:12.440 All right, Randy, let's talk about transfers.

00:01:17.160 Well, the first thing is to set up a framework to analyze this. And because we don't have free

00:01:23.800 trade between provinces we actually have 10 different economies in canada it's highly unusual

00:01:29.400 but that's what we have so the way to put these transfers in context is to think of an analogy and

00:01:35.960 what i like to talk about is is that there's 10 different bathtubs and uh and the the water level

00:01:42.280 is the the level of the economy and then at the bottom there's a drain and that's the provincial

00:01:47.480 government and it takes water out circles it around and puts it back in into the tub keeps

00:01:53.940 the economy the same but it's just you know the government has different priorities in the private

00:01:59.360 sector in this case there's an extra drain in the bottom and that's the federal government

00:02:04.200 and it drains off water out of Alberta out of Alberta's economy draws down the economy and

00:02:11.280 transfers that water over into other tubs, if you will.

00:02:15.040 And those tubs are Manitoba's, everything east of Manitoba.

00:02:19.440 And so that's the first step is to understand how the economy works.

00:02:23.500 And that's because we don't have free trade and we have 10 different economies.

00:02:28.780 So when you say that we don't have free trade, what do you mean by that?

00:02:32.860 Well, there's a lot of trade barriers between provinces.

00:02:35.480 And we certainly have seen that.

00:02:38.080 with, you know, and they're just deeply integrated into all of our economy. It stops flow of goods.

00:02:46.280 It's all kinds of things. I mean, liquor stores are a good example. You can't take liquor across

00:02:50.820 provincial lines. So what you're saying is that even though we can't take goods across provincial

00:02:55.840 lines from time to time, there's interprovincial trade bearers, we still flow money into other

00:03:01.000 provinces. Exactly right. Just as a result of making money. Well, and the important thing about

00:03:06.300 the way that the Canadian economy is structured as opposed to the United States where it's a

00:03:11.120 single economy and there's they vehemently attack any state that tries to set up barriers to trade

00:03:17.640 in the United States. We don't do that in Canada. The federal government applauds provinces and

00:03:22.000 helps provinces set up trade barriers between provinces. The net result of that is we all

00:03:27.860 all provinces except for British Columbia trade more with the United States than we do with each

00:03:32.580 other. I mean, it's a crazy system, and we're going to talk about that in the next episode,

00:03:36.340 but it means that the transfers out of the province are meaningful, and so that's why

00:03:45.420 we're talking about these transfers. Meaningful to what tune?

00:03:48.740 Because it draws down the water level in our economy, thinking of the bathtubs,

00:03:54.600 and the amount that is drawn out of Alberta. The provincial government says about $23 billion a

00:04:01.320 I propose that it's more like $45 billion a year.

00:04:04.680 That seems like a lot of money, I think.

00:04:07.160 Would that be measured in GDP?

00:04:09.960 No, just straight dollars.

00:04:11.360 And the Alberta GDP, it's over 10%,

00:04:16.360 almost, I think, 15% of the GDP per year.

00:04:21.680 And so it's a substantial amount of money.

00:04:23.480 I mean, if you think of the bathtub,

00:04:24.920 it's a significant drawdown that we have to replenish every year.

00:04:28.280 So instead of keeping that money in Alberta,

00:04:30.560 It's drawn off and given to other provinces.

00:04:33.260 Okay, so what is the $45 billion going to?

00:04:36.380 Well, where it's going to is, as I said, it's drawn out by different means,

00:04:42.520 but it's going to the provinces in eastern Canada.

00:04:46.100 And the problem of it is it's all been politicized.

00:04:49.240 And so I think the issue is what are the ways that it's done?

00:04:54.600 And the first one is, I'll name this off,

00:04:58.440 that. Equalization is about $13 billion. Unemployment insurance transfers about $5 billion.

00:05:05.240 CPP is about $3 to $4 billion. And the way that the government, the federal government taxes and

00:05:12.180 spends transfers another $14 to $15 billion per year. Per year. That seems like a lot of money

00:05:19.540 for Alberta to be, I don't want to say wasting or giving away, but supporting other provinces with.

00:05:28.440 $45 billion seems significant. Do other countries do this?

00:05:33.080 It's an international anomaly.

00:05:36.980 Spain, for example, has the somewhat autonomous regions.

00:05:42.360 Catalonia is one of those.

00:05:43.920 And they actually have a separatist movement there.

00:05:46.340 But only $6 billion euros per year are transferred out of Catalonia.

00:05:52.480 Catalonia.

00:05:53.640 And so that kind of gives you a measure.

00:05:56.400 It's one of the few places that has that kind of transfers.

00:06:00.160 Australia is another example, but there the industrialized states transfer to the more rural states.

00:06:09.020 So that's kind of more and makes more sense.

00:06:13.980 In Canada, it's the rural resource-based provinces that support Ontario and Quebec.

00:06:21.440 So the industrialized state provinces in Canada are actually subsidized.

00:06:25.860 So it's a reverse of what Australia does.

00:06:28.740 In Germany, which also has federal states,

00:06:32.220 it has some transfers to states that support ports.

00:06:38.240 And so they have an extra responsibility for infrastructure,

00:06:43.480 and all the states go through those ports.

00:06:45.320 So there is a transfer between the outlying areas and the port states.

00:06:53.700 It sounds like, though, that would be to support, like, that I need a port if I'm, so I'm paying into something that directly supports me.

00:07:01.780 It's a little bit different.

00:07:02.540 Well, it's very different.

00:07:03.800 And there are, the German government argues that there are actual costs for the state, that particular state.

00:07:10.400 So that's what the United States, there's no concept of this at all.

00:07:13.840 It's a single economy, and there's no concept of transfers between various states.

00:07:19.740 Yeah, I'm not surprised to hear that.

00:07:22.240 I know that I have a couple of American friends that get very upset any time they learn how much we pay in taxes here in Canada.

00:07:29.280 I'm not surprised to hear that.

00:07:31.660 Part of it is the taxes, and we'll explain this,

00:07:34.020 but there's a whole bunch of different ways that the federal government has found to transfer wealth from the West to the East, effectively.

00:07:43.580 And we'll go through that now.

00:07:45.300 Well, that doesn't sound fair.

00:07:48.200 So how did this happen?

00:07:52.240 Where did it start?

00:07:53.500 Well, you know, it's sort of death by a thousand cuts.

00:07:56.320 It's a series of small decisions.

00:07:58.860 And then, of course, the 82 Constitution entrenched those decisions, made them unchangeable.

00:08:06.600 But it was a process over years.

00:08:10.760 But it's a political mindset, is that, you know, there was wealth in the West.

00:08:16.440 They needed support in the East.

00:08:18.500 That's where the votes are.

00:08:19.800 But it was a series of things.

00:08:21.520 Actually, can we start with the unemployment insurance?

00:08:23.780 Because that's a really good example.

00:08:25.700 So unemployment insurance, a little bit of a history on it was that in 1940,

00:08:30.320 the Supreme Court made the decision that it was a provincial jurisdiction.

00:08:34.680 And so the provinces got to control it.

00:08:37.220 And then in the 1960s, the provinces got together and said,

00:08:43.000 well, why don't we have a national program?

00:08:45.000 So the federal government got involved.

00:08:46.440 And then in the 70s, in the late 70s, the federal government started this program where they created different districts

00:08:55.180 and then measured what the employment was there and the probability of getting jobs and stuff like that.

00:09:01.360 And so they started breaking up the country.

00:09:04.300 And then, of course, in 1982, what happened was the provinces actually surrendered unemployment insurance to the federal government.

00:09:12.740 I can't remember the clause, but it's one of the things that the provinces actually gave it up.

00:09:18.220 And then immediately after that, then it became politicized.

00:09:22.040 And so there's 52 different regions.

00:09:25.020 They measure probability of getting employment.

00:09:28.820 And what happens is you have all the wealthy districts that have less access and they pay more.

00:09:37.840 And it just happens that Alberta is in that category.

00:09:41.440 All of the districts in Alberta are in that category.

00:09:44.640 And then you have the other categories where, you know, maybe employment isn't as strong.

00:09:50.580 It's going to be harder to get a job.

00:09:51.900 That's the rationale behind it.

00:09:53.540 But those all happen to be in Quebec and the Maritimes.

00:09:56.320 And actually, I think Atlantic Canada, so including Newfoundland.

00:10:01.080 Okay, so if I'm unemployed anywhere in Canada, I can get employment insurance.

00:10:07.080 Yes.

00:10:07.820 But the people paying for it are in the districts and the regions where there's less unemployment?

00:10:14.200 So what happens is that everybody pays a percentage of their paycheck.

00:10:18.940 So because the paychecks are bigger in Western Canada, they pay more.

00:10:23.480 But in Eastern Canada, they have access, like you don't have to have as many days to work seasonally.

00:10:29.920 You get seasonal coverage, whereas we don't have the same rules in Alberta.

00:10:36.820 So the impact of it is that it's easier to get unemployment insurance in eastern Canada than it is in western Canada.

00:10:44.580 Just simple.

00:10:45.780 Wow.

00:10:46.060 And then the other interesting step was that there turned out to be a surplus.

00:10:50.460 So the surplus is about $5 billion a year.

00:10:53.500 And the government just sweeps that and puts it into general, the federal government sweeps that and put it into general revenue.

00:10:59.520 So what was originally unemployment insurance ended up being an employment tax.

00:11:05.960 And so that amount that is transferred out of Alberta annually is about $5 billion a year.

00:11:13.060 A significant amount.

00:11:13.900 That is significant.

00:11:15.500 And it's never good when a government finds a new revenue source.

00:11:18.980 Well, they're looking all over the place.

00:11:20.800 So it's not just the revenue source.

00:11:23.320 It's also they were looking for a political way to transfer wealth from the west to the east.

00:11:29.400 And that's what they did.

00:11:32.100 Now, the next question is, what can we do about it?

00:11:35.100 And what's important here is that in 82, the Alberta provincial government surrendered unemployment insurance to the federal government.

00:11:45.020 If we actually have a vote on the Constitution and vote against it, then we can take unemployment insurance back.

00:11:53.660 So it's a really quick way to bring $5 billion of transferred money, bring it back into Alberta and keep it here.

00:12:00.480 So just by voting against the Constitution, we could stop the employment insurance thing?

00:12:05.920 Yep. Yep.

00:12:06.940 Okay. What about equalization? That's the big one that I hear so much talk about.

00:12:13.160 Well, equalization started as a kind of a convention in the 50s.

00:12:19.480 Alberta actually received sort of tens of millions of dollars around that time.

00:12:23.340 And then it got entrenched as part of our national constitution in 82.

00:12:29.780 And at that time, it was about $3.9 billion that were transferred.

00:12:34.900 And of course, after that time, it ramped up in quantum and it got politicized.

00:12:43.040 And so we actually have a chart here that we'll put on the screen.

00:12:49.060 But by 2024, that number has ramped up to $24 billion.

00:12:55.820 It's going to be a big political issue.

00:12:57.500 And what ended up happening was instead of having an agreement with all the provinces, the federal government ended up doing bilateral agreements.

00:13:05.260 So Quebec has an agreement that will never go below $10 billion.

00:13:08.660 And in the case of Alberta and Saskatchewan, there was a norm that every five years there would be a renegotiation.

00:13:17.400 And what the Trudeau government did was it sent a letter to some obscure bureaucrat and said, this is the official letter that indicates that we have done the negotiations on the equalization program.

00:13:30.560 And, of course, we had the referendum and the federal government disregarded that.

00:13:35.920 So that's kind of the story.

00:13:37.720 And this equalization out of Alberta, which is we pay federal taxes and don't get it back, that number is about $13 billion is what's estimated.

00:13:48.260 again significant and doesn't seem like it just doesn't it's what you're saying is that every

00:13:55.660 province has a different agreement with the federal government which for me just in hearing

00:14:00.580 that is like a recipe for discord and division because at some point things are going to feel

00:14:07.580 deeply inequitable well it's the same thing that we've seen in other issues that there's a there's

00:14:14.000 kind of a marketing scheme about it and the marketing scheme is that this shows that canadians

00:14:18.640 care for each other except for in 2014 when alberta was on its nose we didn't they didn't stop

00:14:25.840 equalization they didn't stop drawing the money from alberta and there was i think there was one

00:14:30.640 little adjustment i think they gave us 200 million dollars in and extra unemployment insurance but

00:14:37.120 But other than that, they did nothing.

00:14:38.480 So to suggest that this is our way of, you know, the rich helping the poor or taking care of each other, it's kind of a one-way street.

00:14:48.300 And so it's pretty much, from Alberta's perspective, it's a disingenuous argument that this is about us sharing.

00:14:55.160 This is about the East taking.

00:14:57.700 And they're doing it because they have the power to do so.

00:15:00.320 so yeah and it sounds a little bit like just fundamentally to me like a little bit of

00:15:05.940 socialism sort of like that wealth redistribution packaged up as like we're good because we're nice

00:15:11.880 people and we're sharing well i'm not sure if it's it's socialization but it's political

00:15:16.640 because that's where the votes are and uh and they need to buy the votes i mean we tie that

00:15:21.540 back into the nanny state uh we'll take care of you but we don't have enough money so we've got

00:15:26.020 take it from the west and so it's you know i'm not sure if that's social it's it's heavy government

00:15:30.740 involvement for sure yeah well it's wealth redistribution oh absolutely and that just

00:15:35.620 you know yeah well just begins to socialism wealth redistribution from those that have votes that

00:15:41.460 don't count to people that have votes that do count pretty simple yeah yeah i mean crazy that

00:15:47.860 it's gone on this long so does anyone out like what are the other provinces what's their

00:15:53.700 involvement like what are like bc manitoba with what's the situation they're like so bc and

00:15:59.940 saskatchewan are the perennial uh contributors so they also contribute uh not to the quantum

00:16:06.740 that alberta does um manitoba is one of the receiving basically everybody east of manitoba

00:16:12.820 manitoba and east are receiving so manitoba gets about 3.5 billion dollars per year

00:16:18.420 And it shows on the chart that, but Quebec, of course, is the largest single recipient.

00:16:23.880 So say we wanted to backtrack this or change it, and what would be the course correction for it without, you know, taking $45 billion away from a country that's become dependent on that money?

00:16:37.900 How would we course correct?

00:16:39.200 So this is the tricky part because it's not so much the people that have become dependent on it as the provinces themselves.

00:16:48.420 And so the money is given to the provinces to maintain their provincial budget.

00:16:54.800 So, for example, PEI, you know, they've got a provincial government for 180,000 people.

00:17:01.280 It makes no economic sense because it doesn't have the economies of scale.

00:17:05.520 So what we, these transfers, what they actually do is sustain uneconomically smart decisions.

00:17:16.520 And it also creates a dependency.

00:17:19.920 And, you know, I've heard stories about, well, New Brunswick has a ton of gas, Quebec has a ton of gas,

00:17:26.400 but they don't drill for it because then suddenly they'll lose their equalization payments.

00:17:30.980 You know, so we have, we are incentivizing underperformance.

00:17:35.600 And so Alberta's...

00:17:37.240 Which is what socialism does.

00:17:38.540 Yeah, okay, you got me on socialism.

00:17:40.720 I surrender on the socialism issue.

00:17:42.860 but we always package it up to make it look not socialist and look like we're nice people that's

00:17:48.920 why we do it but being a nice person you know is it appropriate to put people on on social welfare

00:17:58.020 and and incentivize them not to make the most of their circumstances you know why do we incentivize

00:18:05.620 the uh atlantic canada to not consolidate their provincial operations so that they can become

00:18:12.620 they can get the economies of scale. Why would we incentivize Ontario and New Brunswick to not

00:18:18.680 develop their natural resources? So I think there is another way of looking at this equalization.

00:18:26.260 There's two options that we have. One is to collect the taxes at the provincial level and

00:18:32.420 then pay the federal government for the services the federal government provides. That's sort of

00:18:37.440 an extreme case. The other thing that we could do is take the excess tax revenues from each

00:18:44.500 province. So the problem here is that Alberta, British Columbia, and Saskatchewan have excess

00:18:50.800 tax income above everybody else. So one option is to take that capital and put it into a sovereign

00:18:58.480 fund. And so we, as a nation, start developing a sovereign fund and then actually run it like

00:19:04.860 the IMF where if any province says I've got a specific you know shock to the system or we're

00:19:12.720 trying to develop an opportunity or we're trying to consolidate and be more efficient in our

00:19:17.940 provincial you know provincial operations they could actually borrow money from that fund

00:19:23.580 with a payments repayment schedule and so Canada could actually start being fiscally responsible

00:19:30.540 and drive everyone to being economically efficient

00:19:34.440 and supportive.

00:19:36.160 So no handouts.

00:19:37.960 Get rid of the handouts,

00:19:39.280 but have a method to help people.

00:19:42.000 Of course.

00:19:42.700 Hand up versus a handout.

00:19:43.900 I think that's what they say.

00:19:44.980 Yeah.

00:19:45.420 Well, I'm not opposed to hands up.

00:19:48.520 It's just the kind of disincentivizing results

00:19:54.600 of the handouts that I think you're describing so well.

00:20:00.100 So what about the transfers relate to how the federal government taxes and spends?

00:20:07.720 So how does that all kind of tie in together?

00:20:09.880 So this is one that is not often talked about, that for every province across the country, with the exception of Alberta, the federal government, again, think of the bathtubs.

00:20:21.920 The federal government drains out about $5,500 per person, drains it out, and then puts it back into that bathtub.

00:20:28.480 So it drains out $5,500 per person in taxes and then puts it back in through federal spending.

00:20:34.720 In the case of Alberta, it drains out because we're wealthier and our income is higher and

00:20:40.280 what have you. It drains out $7,500 per person and then only puts back in $4,000 per person.

00:20:47.980 So that again means the water level is dropping because they're siphoning off that $3,500 per

00:20:55.780 person and putting it into somebody else's tub and so that's i mean it's a tough one um but that's

00:21:02.560 another drain out of alberta that reduces our economic productivity and and it and so it doesn't

00:21:09.820 go back into our pro into our tub and is siphoned off to somebody else's tub well um again that just

00:21:17.800 seems like on its face, pretty unfair and discouraging. Well, it is unfair in the context

00:21:26.900 of us having different tubs. So if we had just a single economy and we could sell our products and

00:21:34.860 deliver our products across whatever territory and send it internationally, it wouldn't be unfair

00:21:40.380 because the United States, for example, they have military installations in sort of less

00:21:46.560 economically viable places and i could see in canada for example we're ramping up our military

00:21:52.660 it would be fine to spend that money in the maritimes or or whatever uh you know to prop

00:21:58.640 up those economies but when we have this situation where we don't have free trade and we're all

00:22:03.960 trying to take care of our own bathtub uh it's just another irritant if you will so if we can

00:22:09.860 get rid of this bathtub concept and then just have one big bathtub where we're all in together

00:22:15.140 it would make perfect sense to spend the money in in you know up and coming places like the

00:22:21.180 maritimes yeah no i get that it is really really frustrating in alberta to feel like we're a little

00:22:26.140 landlocked uh and i know that those barriers exist between multiple provinces in all sorts

00:22:31.700 of different ways but particularly in alberta we feel steinied i think with that that's right

00:22:36.840 that's the different bathtub problem and so you know if we were to say get rid of these impediments

00:22:42.780 to free trade get rid of the impediments to economic prosperity well then that's a different

00:22:48.300 story and this to me this issue about the federal government spending money in different places

00:22:53.580 that melts away if we can get rid of these impediments that's that's my view they could go

00:22:58.780 a long way okay what about the canadian pension plan i know uh early on in danielle smith's

00:23:05.340 premiership she was you know testing the waters on the canadian pension plan and

00:23:09.980 What was going on there?

00:23:11.240 What are your thoughts on that one?

00:23:12.520 Well, I think you need to look at first the genesis of this whole issue.

00:23:16.220 And it came out of Jason Kenney's era.

00:23:18.920 And his reason for doing this was that he wanted to have a pot of gold here in Alberta

00:23:26.160 that we could make decisions that are good for Alberta's economy.

00:23:30.100 And the Casta Depot in Quebec was sort of the gold standard.

00:23:35.580 So Quebec money stays in Quebec.

00:23:37.780 They make decisions about where the money goes in Quebec and they use it to support the economy of Quebec.

00:23:43.500 So talking about the APP was the idea that we would have our own pension fund here

00:23:50.160 and then we could use the money to generate opportunities and investments here in Alberta.

00:23:56.360 So that was the genesis of it.

00:23:58.100 The problem with it is that people don't understand.

00:24:02.020 If it's a hard thing to understand and they look at CPP, their own personal CPP,

00:24:06.120 and they think of it as a bank account a piggy bank piggy bank you know so i put money in and

00:24:11.400 then when i get old enough i take that same money out and that's not the way it works the way it

00:24:16.360 works is you put money in when you start uh but the younger people putting money in they they

00:24:23.080 actually the ones that fund your your your uh retirement retirement payments and so the problem

00:24:30.600 is is that alberta has more young people per capita more young contributors than any other

00:24:36.600 province and so we end up because of our young people we end up contributing more per capita

00:24:45.160 than other places because we have more young people and and and less old people and

00:24:51.880 And it's an incredibly difficult thing, but the problem is that it's complex, and bringing it home to Alberta, there's an issue about how much should it be.

00:25:07.480 The federal government is saying $130 million, $130 billion.

00:25:11.860 Provincial government says it should be over $300 billion.

00:25:15.380 It's a pretty big gap.

00:25:16.400 um but the issue the issue is that number one if you if you just bring the the investment back to

00:25:26.160 alberta it sort of narrows your coverage uh and it doesn't look at things like for example people

00:25:34.120 that have their career in alberta and then they move to the west coast to retire so it doesn't

00:25:38.920 include that um but the the quantum is about about four million four three to four billion dollars

00:25:46.520 per year now and uh the total amount since inception in 1980 i think is about 54 billion

00:25:55.320 dollars is that alberta has contributed above and beyond what it received so that delta it's all

00:26:01.000 quantifiable but strategically does it make sense for us to actually you know um just to narrow our

00:26:12.040 risk risk parameters so it's it risk management is like a snowshoe you know the larger your

00:26:19.480 footprint in the snow the less you're gonna less risk you have of going through the snow

00:26:25.400 so if we just have our investment in alberta we're kind of investing in

00:26:29.160 oil and gas and all that stuff so there's there's that issue but the other thing is is that just

00:26:35.480 bringing it to alberta doesn't fulfill what the original ambition was and so one approach would be

00:26:42.840 is to if we can take care of all these other issues the approach might be to say well let's

00:26:49.720 have alberta manage some funds so have a resident here in alberta and by the way there's there's

00:26:57.320 some issues with cpp and one of them is that they've really ramped up their administration

00:27:01.640 unsurprisingly i think the unemployment insurance they have like 35 is administration right and so

00:27:09.960 the nature of canada is you just ramp up the administration well cpp has done that too

00:27:14.680 they've got nine different offices worldwide and you know that their their their returns are a

00:27:21.800 little bit lower than some of their peers and some of that is because the administrations have

00:27:27.160 got costs have gone up so much so one way to fulfill jason kenny's original intention was to

00:27:35.880 say well let's have alberta be the seat of some of the administration 150 billion 200 billion if

00:27:43.000 that's managed out of alberta alberta would soon become a financial center and you know make it

00:27:49.480 institutional investors make probably make it third party managed and suddenly alberta would

00:27:56.360 develop another industry and i think that's a very positive thing now what i'm getting from

00:28:01.840 what you're saying is there's actually just so many different ways to to skin the cat as it were 0.99

00:28:06.920 to to look at solutions and ways out of this dyneed place i feel like a lot of melbertans 0.98

00:28:14.720 sense that we're in sort of getting hit from a lot of different angles financially

00:28:20.500 you know which causes frustration and a sense of you know well it's a bad deal well absolutely and

00:28:29.520 it was just piece by piece that this has been built up and the only way to get out of it in

00:28:33.800 my view is to knock it all over and it was all supported now by the 82 constitution knock it

00:28:40.180 all over and say let's fix each one of those problems okay so what other ideas do you have

00:28:48.260 Any other thoughts on, you know, what alternative pathways could be?

00:28:52.740 Well, if you look at it, and if the objective was to set up, to improve Alberta as a financial center,

00:29:00.200 there's two, it's, you know, bringing in the, you know, $150 to $200 billion.

00:29:06.120 There's also a hundred and some billion dollars in the Alberta AIMCO fund.

00:29:13.220 And there's, you know, there are other pension funds.

00:29:15.760 They can be well managed in Alberta.

00:29:17.500 That's not a problem. And I think that one of the ways to do it is have those entities

00:29:22.860 invest in financial innovation that has happened in Alberta before. And there's two of them that

00:29:30.800 are, I think, are the most successful. One was trusts. Trusts were basically truncated by Harper

00:29:37.140 on a, I think it was a Halloween gift to everybody. Yeah, that was another sore spot

00:29:41.080 for Albertans. And that, Harper was a conservative. He was in a Trudeau.

00:29:44.920 Well, I actually ran it. I ran a trust. I ran a trust and I was there at the time. And the issue, the legitimate tax issue was that the trust didn't follow the ACBs, the adjusted cost basis. Well, just make the trust do that because the tax guy was missing out on capital gains. So you can do that.

00:30:07.920 And then set up the vehicle to have trusts in Alberta.

00:30:13.360 And then the other one is QSSP, this Quebec Stock Savings Plan.

00:30:17.320 Very successful.

00:30:18.380 It was actually the PQ that started it, and it looked good.

00:30:21.440 Okay, so if we were running something like the QSSP in Alberta, what would it invest in?

00:30:26.500 What would it look like?

00:30:27.640 So what I'm thinking of is that we would create these companies that would be listed on the Alberta Stock Exchange.

00:30:33.880 they would be approved trusts so that they can be a flow-through mechanism.

00:30:38.540 And one of the things in my experience, because I ran a hotel REIT, it was a trust,

00:30:44.840 and our cost of capital was actually lower than the United States because it was tax-efficient.

00:30:50.420 And so we could do that same thing.

00:30:52.200 And what ended up happening is we drew in capital from all over the world.

00:30:55.640 So you set up these trusts, and perhaps you give the public this QSSP,

00:31:02.480 which Quebec Stock Savings Plan, they got a 30% discount on, a 30% credit on their provincial taxes to invest in that.

00:31:13.180 So you can create a public market investing in these things, listed on the Alberta Stock Market, TSX,

00:31:22.080 and then set out, I proposed, five different areas where these companies would focus in on.

00:31:28.740 the pension funds would invest them and being institutional investors get the public invested

00:31:34.140 and get people from overseas investing in them which they had in the trust and I'm thinking the

00:31:39.000 five areas would be housing because we need new capital and housing and banks for a bunch of

00:31:44.920 reasons are very old school things that improve our productivity so we've talked about that issue

00:31:54.340 the teeter-totter what the east should have done is it should have invested in increasing productivity

00:32:00.580 well these funds can do that the next one is uh in infrastructure we have huge demand particularly

00:32:06.900 british columbia has huge demand for infrastructure great investment for institutional investors

00:32:13.860 i also propose indigenous projects and then medical and innovation projects so those are

00:32:19.460 the five things that i'm thinking of that could be the parameters under which and if we did that

00:32:24.340 And of course, it would impact all of Canada because the investments would go coast to coast, but there would be a slight hometown advantage, just a slight, like there is in Toronto right now.

00:32:34.860 You mean like Alberta could have a little hometown advantage?

00:32:39.760 Well, there always is because it's easier to lend to somebody that just comes from down the street.

00:32:45.880 It's just kind of funny because they talk about the Alberta advantage, but what you've listed out today are really a lot of disadvantages.

00:32:54.340 right now they are yeah right now they are so that's sort of what i'm commenting on it's just

00:32:58.240 like well that would be i mean interesting for being even though if there's an alberta advantage

00:33:03.900 we're completely being um i would say like structurally disadvantaged so what what this

00:33:10.760 kind of structure does is it unleashes that self-initiative that we have in alberta you know

00:33:16.380 that we've talked about in other episodes it actually translate translates our desire for

00:33:21.960 entrepreneurship to get things done to help other people to make money it translates that into

00:33:28.240 solving problems that we have nationally and uh and the reason it's better off in you know it'll

00:33:35.680 probably be calgary sorry edmonton but it'll probably be calgary because that's where our

00:33:39.720 financial center is right now but you know calgary is is is more innovative on the financial things

00:33:46.160 than toronto so toronto can be the stayed stable stable place and they get a hometown advantage by

00:33:51.560 way on their lending and their financial instruments but alberta can be the innovative

00:33:56.120 place and can actually address these problems so it can be a national asset and that's you know and

00:34:01.640 and so that's that's a very positive thing for the whole country yeah well i think when any one

00:34:06.920 part of the country does well it benefits the entire country it's just when you're doing the

00:34:12.840 best and there's a lot not doing well and and then there's you know you're there's these disadvantages

00:34:18.200 you've been discussing today so okay it's been a lot it's a lot of financial information can you

00:34:23.240 give me a quick summary of what it is that you're saying just like highlights and what we should do

00:34:28.200 just so i have something to walk away with and kind of wrap my mind around so we've got to get

00:34:32.680 past the concept that you have to stymie the west in order to promote the east that has been our

00:34:40.040 nemesis since 1982 and uh we have to change our thinking to we need to support any part of the

00:34:49.080 country that will be prosperous and add to the prosperity of the nation and so that the first

00:34:54.120 step in that is that we've got to break the egg by voting against trudeau's constitution of 1982

00:35:01.720 and then we break that egg and propose different a new way of looking at things okay what would

00:35:07.400 What would the financial results be of getting out of an ITA2 constitution?

00:35:13.560 Well, the financial results are going to be that you cut loose the entrepreneurship in Canada 0.92

00:35:21.680 and have the West infect the rest of Canada and show them what can be done 0.72

00:35:27.780 and put the capital in there for innovation and investment for productivity.

00:35:34.320 put that out there and show them that by working together, we can turn the country around

00:35:39.580 significance. But it has to start with breaking the mold that we're in right now.

00:35:44.140 Well, it definitely sounds like that. Okay. Well, thank you, Randy, for another enlightening,

00:35:50.520 although somewhat terrifying conversation. We send the socials a word.

00:35:56.740 Thank you.

00:35:58.080 economics are the report card of a nation's political structure canada has had largely

00:36:05.520 failing grades to compensate for these failings it has leaned heavily on internationally

00:36:11.520 unprecedented transfers from alberta in the west these are a display of a failure of political

00:36:17.600 decisions these emanate from the political structure chosen for the nation canada's

00:36:24.400 underlying political structure is the very foundation of its perpetual failure in political

00:36:30.180 decisions and economic performance. The next episode we will explore that structure, how we

00:36:36.740 got it, and how the 1982 Constitution is a straitjacket that keeps us locked into this cycle

00:36:43.080 of underperformance. But we can indeed fight back. Join us next time to see how on A Nation of People.

00:36:54.400 Should I stay or should I go now?

Western Standard - September 05, 2026

Alberta sends up to $45 billion east every year, but where does it go？

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