Alberta: open for business and ready for war

B.C. now politically isolated in wake of Jason Kenney’s election win in Alberta

Jason Kenney via Twitter

In his acceptance speech last week following his United Conservative Party’s (UCP) sweep of seats in Alberta, Jason Kenney declared Alberta is open for business.

He also declared war.

His enemies include the Justin Trudeau government, “foreign-funded” environmental organizations – several of which are B.C.-based – and banks that have divested from Alberta’s energy sector.

In his acceptance speech, Kenney extended an olive branch to Quebec, praised his conservative peers in Ontario, Saskatchewan and Manitoba and gave B.C. the cold shoulder.

Kenney has promised to scrap Alberta’s carbon tax, cancel the outgoing Rachel Notley NDP government’s plan to spend more than $3 billion on railcars (to move oil by rail), cut red tape and corporate taxes and balance the budget in his first term.

All of which is aimed at kick-starting a lagging economy that has been plagued by high unemployment, falling oil-sector investment and high vacancy rates in Calgary’s office towers.

“Tonight I send an important message to businesses everywhere,” Kenney said.

“If you want to benefit from what will be the lowest taxes in Canada, if you want to benefit from a government that will cut its red-tape burden by one-third, if you want to benefit from Canada’s most educated population and a deep culture of enterprise and innovation, help us. Come here, invest here.”

The one business he is not making welcome in Alberta is international banks like HSBC (TSX:HSB.PR.C), which last year adopted a policy of not lending to energy companies investing in Alberta’s oilsands.

“When multinational companies like HSBC boycott Alberta, we’ll boycott them,” Kenney said.

Much of Alberta’s economic woes come down to one thing: Canada’s inability to get new pipelines built and provide an outlet for Alberta oil. Kenney blames B.C., the Trudeau government and “foreign-funded” environmental groups.

Kenney said he will hold a public inquiry into the funding of environmental organizations that have campaigned against pipelines, and named three B.C.-based organizations.

He also plans to submit challenges to the Canada Revenue Agency of the charitable status of those groups involved in the Tar Sands campaign and cut off any provincial government funding to groups that have been involved in it, including the Pembina Institute.

“I have a message to those foreign-funded special interests who have been leading a campaign of economic sabotage against this great province,” he said.

“To the Rockefeller Brothers Fund, to the Tides Foundation, to Leadnow, to the David Suzuki Foundation and to all of the others, your days of pushing around Albertans with impunity just ended.”

In asking for Quebec’s help, Kenney said, “At a time when Alberta is hurting, we need to work together.”

On B.C., however, he was eerily silent – perhaps a deliberate ploy to underscore how isolated B.C. has become.

It is, after all, now the only province in Canada with a left-of-centre government – all of the others having voted in conservative, right-of-centre governments.

It’s also the only major province, with the exception of Quebec, that will have provincial carbon pricing, once Kenney has scrapped Alberta’s carbon tax.

The Trudeau government’s climate change policies are now at risk. They face mounting opposition from the provinces, and the federal Liberal government faces the spectre of Canada’s new conservatism wave replacing it with a Conservative government in October, and sinking its climate change plan along with it.

“B.C. is party to a Canada-wide federal-provincial world,” said University of British Columbia political science professor Richard Johnston. “We may find ourselves isolated sooner rather than later, if the federal government also turns over.”

While Kenney has identified many enemies, politically his two biggest ones are the Trudeau government and John Horgan’s BC NDP government.

On the campaign trail, Kenney vowed that his first act as premier will be to enact Bill 12, which gives Alberta the ability to control exports of oil and refined fuel products. He has threatened to cut off B.C.’s oil and gas supply if the Horgan government continues to “obstruct” the Trans Mountain pipeline.

The B.C. government has asked the BC Court of Appeal for a ruling on whether Alberta has the legal authority to limit the flow of bitumen via pipeline and rail through B.C. If the court says it has that authority, Kenney may not need Bill 12.

If the ruling goes in B.C.’s favour, however, Kenney has vowed to use the bill to “turn off the taps” to B.C.

In an affidavit filed as part of a premature attempt by B.C. to have Bill 12 declared unconstitutional, the B.C. government admitted that severe gas price spikes, shortages and even “civil unrest” could result if that happens.

A resumption of a trade war that erupted last year between B.C. and Alberta would not be good for either province.

In 2013, B.C. exported $9.4 billion worth of services and $7.2 billion worth of goods to Alberta, according to the Business Council of BC (BCBC). Annual B.C. wine exports to Alberta alone are estimated at $70 million.

BCBC CEO Greg D’Avignon said he hopes Horgan and Kenney can resolve their differences.

“Mr. Horgan knowingly made some decisions around the Trans Mountain pipeline, which has provoked the reaction that Mr. Kenney has suggested he’s going to take, and it’s for the two of them to sit down and figure out how they can resolve these issues between the most integrated economies in the country,” he said.

Even without a trade war, D’Avignon said, Kenney’s promise to cut taxes and red tape will put B.C. at a competitive disadvantage when it comes to its business investment climate. He said $5.2 billion in additional or new taxes have been added to business in B.C. over the past five years.

“It just means that there’s one more jurisdiction in Canada, and one more jurisdiction globally, that British Columbia has to compete with,” D’Avignon said.

“We have to compete for head offices, we have to compete for talent, and we have to compete for investment that pays the bills that provinces need to be able to support education, health care and social services.”

Following the UCP’s election win last week, Horgan said he called Kenney to congratulate him.

“Our brief conversation was constructive and focused on issues that matter to both Alberta and British Columbia,” Horgan said. “We agreed to talk about challenges in the days ahead. I look forward to further conversations and working together in the interests of both of our provinces.”

Stewart Muir, executive director for Resource Works, thinks Kenney’s win provides an opportunity for some serious hard bargaining between B.C. and Alberta.

“I think Alberta and B.C. can have a much more constructive resolution process, now that there is someone in Alberta who doesn’t need to dance around some of the political issues,” Muir said.