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Ted Morton: Canada's Constitution is out of step with economic reality

National Post logo National Post 2020-09-20 Special to National Post
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Alberta wants a fair deal from Canada, but can’t seem to get one. Should it build a firewall? Stop trying? Separate? This is one of a series of opinion pieces adapted from the new book, “Moment of Truth: How to Think About Alberta’s Future,” in which some of Canada’s most respected thinkers on the subject debate what the best next steps are for Alberta — and for Canada.

For large federal democracies to remain politically stable, there must be a rough equilibrium between the country’s economy and its political institutions. In postwar Canada, this has been lost because of our electoral system’s systemic under-representation of Western Canadian interests. Our Constitution has failed to keep pace with our economy.

Historically, the preferred political status enjoyed by Ontario and Quebec may have made sense. As J. R. Mallory, one of English Canada’s leading constitutional scholars, wrote in 1954:

“The inequalities in size and population of the provinces of Canada have been recognized tacitly in a Constitution which to a large extent embraces two levels of federalism. The superior size and bargaining position of Ontario and Quebec give them a status and autonomy which are different in kind from those of the rest of the provinces.”

The Western provinces, Mallory observed, were “provinces … in the Roman sense … under the sway of the predominant economic interests of the central provinces.” This made sense, he said, because it “recognizes what have been so far, the economic realities of the country.” That was in 1954.

Today is 2020. Canada’s economic reality has changed, but our institutions have not. The West’s postwar self-assertion in national politics has been driven by the new economic strength of Alberta and British Columbia, and more recently, Saskatchewan. At the end of the Second World War, the combined populations of British Columbia and Alberta were only half that of Quebec’s. Today, their combined populations — five and four million, respectively — are almost one million greater than Quebec. With Saskatchewan, that number grows to over two million.

Economically, the change has been even more dramatic. As recently as 1961, the combined provincial GDP of Alberta and British Columbia was only half that of Quebec. Today, they are almost half again greater (46 per cent) than Quebec’s.

Canada’s economy has changed qualitatively as well as quantitatively. Historically, most trade was on an east-west axis. But over the last three decades, the old east-west economy has been replaced by a series of north-south, cross-border regional economies. Today, every province except Manitoba exports more to the United States than to the rest of Canada. Predictably, this change has been accompanied by declining internal immigration among provinces. Both these trends are found in other countries that have experienced regional conflicts and separation movements.

But the West’s postwar economic and demographic ascendancy has not been matched by a corresponding increase in political influence. Indeed, the opposite has been the case. For 50 of the past 60 years, the prime minister of Canada has been a Quebecer. Since 1960, Quebec has been the net recipient of $497 billion in various federal transfer programs. Quebec now receives two out of every three dollars in the federal equalization program. The constitutional veto Quebec lost in the 1982 Constitution Act was restored by the 1996 Regional Veto Act. Its preferred status in both the Supreme Court (a legal guarantee of three justices) and the Senate (one-quarter of all Senators) has been effectively made permanent by questionable Supreme Court decisions. In effect, the weaker Quebec has become economically, the more powerful it has become politically.

Alberta’s fate has been the opposite of Quebec’s. The more Alberta has contributed financially, the less it has received politically. Western Canada’s decades-long quest for an elected, more equal, effective Senate has been killed by the Supreme Court’s 2014 Senate reform ruling. Since 1960, Ottawa has taken a net $630 billion out of Alberta. In just the last 10 years, the average annual net transfer out of Alberta has been $20 billion a year — years in which the Alberta government had multi-billion-dollar budget deficits.

Alberta’s jurisdiction over resource development has been eroded by federal policy encroachments such as Bill C-69 and the carbon tax. Ottawa has vetoed, directly or indirectly, three new export pipelines: Northern Gateway, Energy East and Coastal GasLink. Others, such the Trans Mountain expansion, have been subject to costly delays — delays that could have been avoided if Ottawa had intervened. The predictable result: a collapse of investor confidence and a $100-billion exodus of capital investment out of the Western Canadian energy sector. In Alberta, unemployment and bankruptcies have soared.

Alberta’s future — if it is to have one — depends on its ability to continue to develop its oil and gas reserves. This means new export pipelines. Without this, the policy-induced recession that has devastated Alberta for the past five years will become permanent. Calgary and Edmonton will become like the next Winnipeg, a once prosperous Western city that an evolving economy left behind. For most Albertans, this is unacceptable.

If we cannot achieve economically competitive access to global markets and global prices under the current Canadian federal system, Albertans will look for an alternative. And there are several. Oil is the single most valuable commodity in the global economy. Nothing else is even close. Energy security remains both an economic and a strategic priority for our immediate neighbour, the United States, and all other developed and developing economies. Alberta’s oilsands are the third-largest reserve in the world. The first two — Saudi Arabia and Venezuela — are geographically distant, politically unreliable or both. Climate change zealots notwithstanding, a growing, developing global economy is going to need more oil and gas for at least another 30 years. And Alberta has lots of it.

Does this mean separation? No, at least not yet. But now is the time to build a new equilibrium between Canada’s 21st-century economy and our 19th-century Constitution. It will be up to Alberta’s leaders to craft a new balance. On this note, it is worth recalling a similar warning by Donald Savoie, a Canadian scholar from the other end of Canada:

“We need to rethink Canada’s institutional arrangements so that we have a two-way mirror that reflects the economic interests of Western and Atlantic Canada, not just Quebec and Ontario.… The Atlantic region does not have the political or economic clout to do something about extending the national unity debate beyond Quebec’s interest. The same does not apply, however, for Western Canada, and policymakers in Ottawa should take note before it is too late.”

National Post

Ted Morton is a co-editor of the new book, “Moment of Truth: How to Think about Alberta’s Future,” now available from Sutherland House.

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