Allan Gregg (“The True West, Strong and Free,” September) is worried about how to tap Alberta’s wealth for the advantage of other provinces. It’s a sign of progress that Gregg doesn’t propose to steal it, as the Liberals did in the early 1980s, but he’s still not asking the right question. The right question for other provinces to ask is not, “How can we get our hands on Alberta’s wealth? ” but rather, “How can we become as wealthy as Alberta? ”
Natural resources do not create human wealth. If they did, Japan, Singapore, and Hong Kong would be poor while Nigeria and North Korea would be rich. Alberta’s oil and gas are not intrinsically more valuable than Quebec’s hydro power or Ontario’s proximity to major American markets. Wealth grows from institutions and public policies that foster its creation. Below are the Ten Commandments of the “Alberta Model.” They were not revealed on tablets of stone but worked out by trial and error under sixty years of enlightened conservative government, in which Ernest Manning, Peter Lougheed, and Ralph Klein were the main figures.
1. Avoidance of public debt and investment of fiscal surpluses to help pay for the needs of government.
2. Low taxes. No provincial sales tax and the lowest personal and corporate taxes in Canada.
3. Private-sector development of natural resources. The provincial Crown owns most of the oil and gas, but exploration, production, refining, transportation, and marketing are done entirely by private enterprise. Thank God we never created a “PetroAlberta” to run our major industry.
4. No monopolistic Crown corporations in other areas. Treasury Branches have to compete with other financial institutions. Power generation, automobile insurance, and liquor marketing are dominated by tax-paying, profit-making private enterprise, not bloated, debt-ridden public corporations. We flirted with public ownership in the Lougheed years (Pacific Western Airlines) but got over that failed romance.
5. No subsidies to business (apart from farmers — no one’s perfectly consistent). Again, we wasted a lot of money on corporate welfare in the Lougheed-Getty years but learned from the experience.
6. The best education results in Canada, aided by frequent testing of both student and school performance as well as by a more or less level playing field for Catholic, other religious, and secular private schools to compete with public education.
7. Reliance on market prices. No rent controls, underpriced hydro, or ridiculously cheap daycare, which subsidizes two-income families at the expense of one-income families.
8. Return of surpluses to citizens in the form of personal cheques or universal rebates (e.g., for natural-gas consumption).
9. A labour code that does not give absurd privileges to trade unions — a stark contrast to what ndp and PQ governments have done in BC, Manitoba, and Quebec. Alberta does not tolerate union violence, keep out workers from other provinces, or force employees to accept bargaining agents without a democratic vote.
10. A tough-minded attitude toward welfare. Social assistance is the least “generous” in Canada. Not surprisingly, welfare dependency is lower here than anywhere else. The best welfare program is still a job. And we make sure that entry-level jobs remain available by keeping legislated minimum wage rates no higher than what the market would set in any event.
Ontario under Mike Harris and BC under Gordon Campbell made conscious decisions to imitate the Alberta Model and are now reaping the gains. Leaders in all provinces will do more for their citizens by learning from what has worked in Alberta rather than trying to redistribute the results of Alberta’s success.
Professor of Political Science,
University of Calgary
Allan Gregg notes that over 60 percent of Albertans have a university or college education. The actual percentage, for the population over fifteen years of age, was 32.5 percent according to the 2001 Census — respectable enough by national standards but lower than in Ontario and British Columbia. Gregg also notes that service industries account for about 60 percent of the provincial economy, to emphasize Alberta’s economic diversity. In fact, that puts the province behind the national average of 68.3 percent of gdp.
Gregg describes the National Energy Program as a “power and money grab” by Ottawa that diverted exploration activities to other areas of the country. A more careful reading of history shows that the nep had two main objectives. The first was to set a made-in-Canada, below-market price for domestically produced oil, which was not favourably received in Alberta for obvious reasons. The second was to develop new sources of supply through incentives to explore in expensive and difficult areas such as the Atlantic coast. The energy sector has shown that it is able to mount major new exploration projects (the oil sands, for example) without abandoning other viable activities.
High oil prices in the late 1970s, one of the triggers of the nep, were caused by collusion within the Organization of Petroleum Exporting Countries cartel. A recession in the early 1980s, combined with consumer resistance to high energy prices, led to a decline in the demand for oil, falling prices, and a retrenchment within the North American oil sector. This retrenchment was damaging to Alberta, just as it was damaging to Texas and other jurisdictions with economies driven by oil. The only difference was that Albertans blamed it on the nep. This misinterpretation has endured in Alberta, especially among economic conservatives, who use it as an example of government interference stifling industry.
Gregg also seems to endorse the idea that equalization funding is contributed by richer provinces (notwithstanding one reference to it as a federal program). In fact, equalization is paid out of federal tax revenues, and everyone who pays federal income tax contributes to the pool. The disparity, in terms of provincial finances, lies in the way the money is distributed. Ontario premier Dalton McGuinty’s argument for additional transfers to provinces based on percapita grants rather than equalization is rational, at least in terms of economic self-interest, since this would benefit rich provinces as well as poorer ones. Alberta premier Ralph Klein’s anger over the possible inclusion of resource revenues in the equalization formula is not rational, since this would make no difference to Alberta. His posture is attractive as political demagoguery, however, and presumably it is intended to build political support by raising fears about the “enemy at the border.”
Halifax, Nova Scotia
Whether the Eastern political establishment likes it or not, Alberta is the basis for much of the country’s current economic strength. Allan Gregg fails to recognize the amount of federal tax generated by oil-sands development, and despite a passing reference, does not give Alberta its due when it comes to the national impact of transfer payments. These are passive benefits, sometimes difficult to notice because they are absorbed into national figures, care of the federal government. A more active indicator would be a glance at the Toronto Stock Exchange and the number of energy and oil companies traded there. I assume at least one broker in Toronto has made money from the Alberta cash cow. Despite what Gregg says, Alberta’s wealth should not represent a threat or concern to the rest of Canada. Rather than look to the West with envy, Ontario would do well to clean up its own act. I, for one, am moving to Alberta.
Allan Gregg writes, “Alberta spends significantly more than the national average on education, culture, and industrial development.” According to the most recently available figures from StatsCan, Alberta spends less than the national per-capita average on culture, and less per capita than any province save Ontario and Nova Scotia.
After billions of barrels of oil have been extracted from Alberta’s soil and billions of dollars have flowed into Alberta’s coffers, what will become of the barren ecological wasteland “the size of New York State” ? By that point, the oil companies will have cut and run with their profits, leaving polluted groundwater and contaminated sludge. It is not clear to me who will clean up this mess, but I feel that it would at least have merited a mention in a discussion on how the cash bonanza should be spent.
Editor’s note: Allan Gregg will respond in the next issue.
Deborah Campbell’s in-depth report on Iranian society (“Iran’s Quiet Revolution,” September) left me with mixed feelings. I enjoyed Campbell’s study of the diversity of opinion in Iran’s socially and culturally divided population, as well as the vivid portrayal of the hospitality she encountered in Iran. I wasn’t surprised, however, by Campbell’s final analysis that ” Iranians are staunchly nationalistic.” Iranian president Mahmoud Ahmadinejad is aware of this fact and exploits it in an attempt to avoid the pressing social and economic issues facing his country.
Only a few years ago, Iran experienced a moderate relaxation of the hold ultraconservative Shia religious leaders had on society. But Ahmadinejad and his fundamentalist followers were able to thwart the demand for a more open and democratic society by focusing Iranians’ attention on developing nuclear weapons and on a hate campaign against Israel. Ahmadinejad can unite north and south Tehran — regions that are substantially different and often hostile to each other, as Campbell observed — in their shared nationalism. All the hospitable people that Iran is blessed with could conceivably be led to join street marches, harass dissenters, persecute “others,” and devastate neighbouring nations in the quest for empire.
Despite Campbell’s well-written and sympathetic portrayal of the quiet revolution in Iran, particularly of the changes that are taking place among its middle classes, I could not escape being reminded of similar occurrences in Germany in the 1930s, when a small extremist faction took control of the entire society, including its cultured middle classes. As an Israeli and a Jew, I cannot stay calm after reading Campbell’s report.
I have taught a course called “Life on Other Worlds” at the University of Toronto since 2002. This has been a wonderful diversion from my theoretical work on the creation of stars. Reading Monte Paulsen’s article (“Far from Home,” September), I was reminded how often my students view space travel as a means of escape from a dying Earth.
Like many astronomers, I expect that solar systems somewhat similar to ours pepper the Milky Way, spaced approximately fifteen to thirty light years apart. To travel this distance would take hundreds of millennia using conventional rockets, or one millennium with nuclear propulsion. The craft would have to carry a viable human population (many as frozen embryos) and an entire ecosystem, for we do not yet know how to support a colony on synthetic food.
In the 1950s, physicist Freeman Dyson envisioned a space ark powered by fusion bombs. He even tested scale models, until a nuclear-test ban killed the project. Dyson provided no guidance, though, on how to nurture a fledgling colony on a new and possibly lifeless world. The Polynesian expansion through the Pacific offers a historical precedent for interstellar colonization, but it failed dramatically on some islands.
Still, if humanity could manage a viable space ecosystem, it might mean we could also learn to control our own use of natural resources. Our ability to launch a space civilization stable enough to survive for thirty generations might mean we could bridge divisions of class, race, and ideology. But like Dyson’s hypothetical spacefarers, we must ask ourselves, “Are we there yet? ” The answer, for now, is an emphatic no.
Assistant Professor of Astronomy,
University of Toronto
candu Will Do
Paul Webster (“Will candu Do?,” September) exposes his apparent surrender to a classic Canadian stereotype: if it’s Canadian, it must be inferior. Canadians deserve the correct facts about what has been hailed as one of the top scientific and engineering achievements in our country’s history.
candu 6 reactors built by my employer, Atomic Energy of Canada Limited (aecl), are operated in five countries and have consistently performed well. Data by the Nuclear Energy Institute and the candu Owners Group confirms that candu 6 reactors designed, supplied, and supported by aecl rank ahead of the competition, with an average lifetime capacity factor of 88 percent (based on 2004 data) compared to 72 percent for French-designed reactors and 69 percent for US-designed ones. Three of these candu 6 units were in the top ten performing reactors in the world during the last decade.
aecl has designed, built, and delivered six candu 6 reactors to international customers in the last nine years. These projects have been delivered on or ahead of schedule and on budget. In fact, the first unit at China’s Qinshan project took only four and a half years from first concrete pour to completion, a record for power reactors built in China. The project was praised by China as the best nuclear project in the country’s history.
aecl has been building reactors for the past thirty years and has the strongest core-delivery capability of any nuclear vendor in the world. We have been able to leverage this expertise in partnership with our international network of suppliers, and are now once again active in Canada, with projects underway at the Point Lepreau Generating Station in New Brunswick, the Bruce Power Generating Station in Ontario, and Wolsong 1 Generating station in Korea.
Canada has invested about $6 billion into its nuclear research and development program since 1952. The return has generated more than $160 billion in gdp benefit to Canada via power production, research and development, candu exports, uranium mining and refining, production of medical radioisotopes, and professional services. Canada has achieved this superior payback in spite of a relatively low national investment in nuclear research and development. The vast majority (about 80 percent) of aecl’s revenues are generated by our commercial operations, which include the design, construction, and servicing of candu nuclear reactors. These operations earned returns averaging 15 percent in the past five years. In fact, in the last ten months, aecl has won $1.5 billion in commercial contracts and hired more than 900 people.
Team candu is a joint initiative among five of the world’s leading nuclear technology and engineering companies — Atomic Energy of Canada Limited, Babcock & Wilcox Canada, General Electric Canada, Hitachi Canada Ltd., and snc-Lavalin Nuclear Inc. Together, Team candu is a powerhouse of expertise, resources, and experience that is prepared to offer Ontario a turnkey, fixed-price solution for building new nuclear power plants. This is a business model that we have successfully used around the world. Canadians can be proud of candu and be assured that the investment in aecl is delivering a healthy return and producing thousands of jobs and millions of dollars for the Canadian economy, plus contributing to greenhouse-gas reduction in Canada and abroad.
Senior Vice President and Chief Operating Officer
Atomic Energy of Canada Limited
Paul Webster has provided a fair historical overview of the candu nuclear power plants, but in his critique of their shortcomings, he omitted certain facts that would have made his article more balanced. For example, in comparing the three major nuclear power generating facilities in Ontario — Pickering, Bruce, and Darlington — it would have been fair to mention that the power output per reactor was increased by approximately 50 percent in the Bruce reactors and about 100 percent in the case of Darlington compared to the Pickering reactors. Each design was, in a sense, a new one, and the engineers were well aware of the limitations of scaling and problems associated with it — hence the cost overruns Webster indentifies. One can perhaps fault the decisionmakers during the planning stage but certainly not the reactor type.
Also, in calculating the total cost of a power plant for the purpose of comparison, Webster should take three factors into account: the initial cost, the operating cost over the plant’s life, and the cost associated with a catastrophic failure and the release of radioactive substances. The latter is admittedly difficult to determine, but using advanced probability theories one can make a good estimate. While a candu reactor may initially cost more, with respect to the last category (safe operation), it has a considerable advantage. To paraphrase the famous nuclear physicist, Edward Teller, the candu reactor is the safest reactor, and superior to its light-water US and French counterparts.
Professor Emeritus of Engineering,
University of Alberta
Malick’s Eerie Light
Pico Iyer did a beautiful job capturing the odd but riveting mysticism of Terrence Malick’s films (“The Promise of Beauty,” September). One thing: “magic hour” refers to the hour after sunset when the sky is still light but there is no natural light source, and therefore no shadows. It was Days of Heaven, not The Thin Red Line, that Malick and cinematographer Nestor Almendros filmed almost entirely at magic hour, as the article’s accompanying photos nicely illustrate.