11The Decline and Fall of the PC Empire: A Post-Morton

In democracies like Canada, all political dynasties have within them the seeds of their own destruction. The demise of the Alberta PC Party in 2015 was not simply the result of Jim Prentice’s flawed election strategy,¹ nor the significant shortcomings of his two predecessors, Ed Stelmach and Alison Redford. Yes, each in their own way contributed to the decline and fall of the forty-four-year-old PC empire. But the PC dynasty was much larger than just its leaders. The last three leaders were as much the effect as the cause of the party’s demise. There were deeper structural factors that contributed to the party’s eventual downfall. What follows is a post-mortem—an autopsy—of five of these larger factors.

Flawed Leadership Selection Process

Historically, the Alberta PC Party was a unique urban-rural coalition. Its urban wing was grounded in the dynamic, ever-expanding oil and gas sector that has transformed Alberta since 1947. Its rural wing was supported by the prosperous farm and ranch communities that have defined Alberta from its beginnings. For four decades, the Alberta PC Party was the only conservative party in Canada that bridged the urban-rural divide. But as a result of the leadership selection process, this coalition slowly came apart.

The flawed leadership selection process contributed directly to the decline and fall of the PC party dynasty. The party lost control of choosing its own leaders. The “open primary” system, preferential balloting, and lack of any cut-off date for party memberships meant that thousands of Albertans who did not normally vote for the PCs could and did vote in the PC leadership contests. This was aggravated by the one- and two-week windows between leadership votes that allowed strategic “gate-crashers” from the Left to decisively influence the outcome of the last two PC leaderships. For these “two-minute Tories,” the “least worst choice” meant the least conservative candidate: Stelmach in 2006 and Redford in 2011.

The “two-minute Tory” liability was magnified by the more liberal leadership candidates’ strategy to directly solicit new voters from organized interests whose members could be quickly mobilized. In theory, this bias might be ideologically neutral. It certainly helped me in 2006. But in the context of second-round voting in the 2006 and 2011 leaderships, this meant recruiting primarily teachers, nurses, and members of other public sector unions—all more urban constituencies. The result has been the election of the most “liberal” of the three finalists in each contest. Not surprisingly, a growing number of disillusioned “small-c” conservatives began looking for a new political home and found it in the Wildrose Party. This vote splitting between two conservative parties then opened the door for the NDP victory in 2015.

The 2006 leadership race weakened the PC party by electing a compromise candidate who turned out to be a weak leader. From the outset, Stelmach had low support in Calgary and southern Alberta. On the first ballot, he did not win a single rural constituency in southern or central Alberta. On the second ballot, he received only 14 percent of the votes in Calgary and did not win a single constituency. His subsequent oil and gas royalty policies pushed many Blue Tories and federal Conservatives into the Wildrose Party.² If either Dinning or I had won in 2006, it’s hard to imagine that either of us would have mishandled the royalty issue as badly as Stelmach. And without the royalty debacle, it’s hard to imagine the Wildrose would have garnered the financial support it received in the run-up to the 2012 election.

If the 2006 PC leadership race created the opportunity for the Wildrose, then the 2011 leadership contest sealed the deal. All three finalists were Red Tories (Mar, Redford, Horner). All three eliminated candidates were Blue Tories (Morton, Orman, Griffiths). And the “reddest” of the three Red Tories (Redford) won.³ These results suggest that the shift had already occurred. In the 2011 PC leadership race, the total number of votes cast in the second round (77,816) was only about half the number cast in 2006 (144,279). As David Stewart and Anthony Sayers discerned: “Almost 60% of the decline in Conservative participation can be associated with the Morton loss of support. If he had simply turned out those who voted for him on the second ballot in 2006, Morton would have led Mar by more than 17,000 votes and the total vote would have exceeded 93,000.”⁴

This decline in PC voters was sharpest in southern and central Alberta—where the number of votes cast was only one-third of what it had been in 2006. Almost all the ridings I won in the 2006 PC leadership race were in these two regions. Not surprisingly, so were almost all ridings that the Wildrose won in the 2012 election.⁵ The PC establishment had finally gotten rid of me, but a big chunk of their electoral base had also left.

Some commentators predicted that Redford’s leadership victory would “renew” the PC party by allowing it to reflect Alberta’s changing demographics—younger, more urban, more liberal.⁶ This prediction seemed to be confirmed when, nine months later in the 2012 provincial election, Redford led the PCs to a strong majority government. Given these back-to-back successes, Redford has been credited with running sophisticated campaigns.⁷

But this sanguine interpretation of Redford’s early successes ignores an important fact. In 2012, the Wildrose established a strategic beachhead by winning nine of the twelve rural seats in southern Alberta and—now with seventeen MLAs—replaced the Liberals as the Official Opposition. This regional concentration gave Wildrose staying power. Over the next two years, the Wildrose effectively destroyed not just the political career of Alison Redford, but the reputation of the PC party itself. By the time Redford’s caucus forced her to resign, her approval rating had dropped to 18 percent, and support for the PCs to 19 percent. Support for the Wildrose had risen to 46 percent.⁸ A year later, when Jim Prentice’s “unite the Right” rescue mission failed, the PCs lost sixty-one of their seventy seats. With only nine MLAs, they did not even achieve the status of Official Opposition. The dynasty was over.

It merits noting here that after the virtual destruction of the PCs in the 2015 Alberta election, the party abandoned the one-member / one-vote leadership selection process and returned to the traditional delegated convention process. They also added a two-week cut-off for membership sales prior to constituency elections to select delegates to the convention. This meant no more “two-minute Tories” crashing the gates on election day to vote for the “least worst” (i.e., the least conservative) candidate.

I would like to think that an article I wrote in 2013 for Canadian Parliamentary Review detailing the negative consequences of the open-primary, preferential balloting system contributed to this reform.⁹ The irony of this is that I never could have even considered running for the PC leadership in 2006 if it had been a delegated convention. The PC establishment would have controlled the delegate selection process and crowned the “Prince in Waiting,” Jim Dinning, as the new leader and premier of Alberta.

Vote Splitting on the Right

The 2015 NDP majority government was the result of vote splitting on the Right. In single-member, first-past-the-post electoral systems, winning does not require a majority of votes. To win, a candidate simply needs a plurality, more votes than any of the other candidates. When there are candidates from three or four different political parties, the winner may sometimes have less than 40 percent of the total vote. Of the fifty-four ridings won by NDP candidates in 2015, almost half—twenty-one—were won with less than 40 percent of the vote.

Province-wide, the NDs won 61 percent of the seats with only 41 percent of the votes. This counterintuitive result was made possible by vote splitting on the Right. The PC/Wildrose votes combined equalled 52 percent of the provincial vote, but together, they won only 35 percent of the seats.

In Calgary, the foundation of PC majorities since 1971, the effects of vote splitting on the Right were even more devastating. The NDs won sixteen of the twenty-nine ridings in Calgary and surrounding areas with only one-third of the votes. The PCs and Wildrose combined won 54 percent of the votes, but only eleven seats. If the PC and Wildrose vote totals had been combined, together they would have swept all twenty-nine Calgary ridings and been able to form a majority government.¹⁰

The NDP majority was augmented by the collapse of support for the Alberta Liberal Party. For decades, the PCs had been the beneficiary of vote splitting on the Left. In the 1997 election, the Liberals (32.8 percent) and the NDP (8.8 percent) combined won 41.6 percent of the popular vote. but only 26 percent of the eighty-three seats (22). More recently, in 2004, the NDP and Liberals combined received 39 percent of the vote, but they won only 24 percent of the eighty-three seats (twenty-two). This ended in 2015. With only 41 percent of the votes, the NDP won 61 percent of the seats (fifty-four). Notley was able to consolidate the left-wing vote. What had been a weak showing for the Liberals in 2012 became a complete collapse of support in 2015: only 4 percent of the vote and one seat. Vote splitting was now a problem for the Right, not the Left in Alberta politics.¹¹

Dynasty Syndrome: Power Replaces Principles

The dynasty was over. But it was not simply Jim Prentice’s fault. Nor Alison Redford’s, nor Ed Stelmach’s. In one-party states over time, the dominant party has an incentive to move to the centre. It does this to pre-empt the opportunity for growth of its leading competitor by adopting some of its policies. For the Alberta PCs, this meant moving toward the Liberals and NDP. Policy-wise, this meant appeasing public sector unions’ salary and benefits demands in the months leading up to the next provincial election. Both Stelmach (2008) and Redford (2012) did this.

This is how a dominant party tries to ensure that it continues to be win majorities. In political science terminology, this dynamic is known as “convergence,” and it reflects each party’s attempt to capture the “median voter”—the undecideds or “moderates” in the political middle.¹² It both explains and describes the PC’s drift toward the Liberals that began in Klein’s last years.

In a one-party state like Alberta, this drift to the centre was strengthened by the fact that the dominant party attracts candidates who simply want to be on the winning side. For them, policies and principles are secondary to winning. In Alberta, from 1971 until 2015, if your goal was to be elected to the legislature—especially if you had any aspirations to ever serve in cabinet—you had to join the dominant party, the PCs. It didn’t matter if your values were liberal or conservative, left or right. With the exception of a few central city ridings in Edmonton and Calgary, you had to run as a PC candidate. As Taras notes, it was the only game in town for over four decades.¹³

The result was that the PC party and caucus filled up with people who were not particularly conservative. For them, policy was a way to access power, not vice versa. By the time I arrived in 2004, many of the MLAs were conservatives-of-convenience, people who would have run as Liberals or even NDP in any other province. Or, as it turned out, even in Alberta, if they became unhappy with their prospects in the PC Party. Examples include:

• After losing the 1992 PC leadership race to Ralph Klein, Nancy Betkowski/MacBeth joined the Liberals in 1998, and then became the Liberal leader.
• In 2011, Raj Sherman crossed the floor and joined the Liberals, and soon became the Liberal leader.
• Sandra Jansen crossed the floor and joined the NDP in 2017 after it became clear that Jason Kenney was going to win the PC leadership.

Politely, these types of politicians can be described as pragmatists. Less politely, as opportunists (or worse!). For them, policy is a means to power. You say what you need to say to win the next election. At the other end of the spectrum are what might be called principled politicians. Or, less politely, ideologues. For this type, power is the means to influence policy. The purpose of engaging in politics is to influence public policy. You say or do what you think is “right,” even if it costs you votes.¹⁴

Successful parties require a balance of both types. At different times and in different circumstances, a stronger case can be made for one or the other. But by the time I arrived in 2004, the Alberta PC caucus was top-heavy with “pragmatists.” Taras argues that being a “big tent” political party was the PC’s deliberate strategic choice and contributed to its success. At best this is only half right. However much this centre-left strategy may have helped earlier PC governments, it contributed directly to the party’s demise in 2006–15.¹⁵

This “big tent” character of the PC Party was more of an effect than a strategy—the effect of the caucus filling up with Red Tories from Edmonton whose prospects for re-election depended on more centrist government policies. This was predictable. Edmonton is a government town and a university town—both communities that are more supportive of left-leaning political parties. To win in “Redmonton,” as some of us called it, it helped to be a Red Tory. But the more Redmonton Tories we had in our PC caucus, the further left we drifted. To try to ensure their re-election, in caucus they consistently advocated for more liberal policies. Lukaszuk and Hancock, for example, led the effort to prevent my Bill 208 from coming to a vote in 2006. In the Redford years, Hancock and Horner were her strongest supporters in caucus. My favourite example of this mindset comes not from an Edmonton MLA but from Calgary MLA Ron Liepert’s exhortation to the PC caucus that to win the 2012 election, “We have to out-NDP the NDP.”

In the post-cutback years—after 2001—this quip captured the mindset of the PC leadership and caucus. It started with Klein after 2000 and accelerated under Stelmach and Redford. Winning the next election became the overriding consideration—policy and principle be damned. This uber-fixation led to the PC party’s ultimate demise in 2015. As the PC party abandoned more conservative Conservatives, they abandoned the party. By the time Prentice took the helm, the PC ship was already sinking.

The Resource Curse

Ten years from now, twenty years from now, you will see: oil will bring us ruin. … Oil is the Devil’s excrement.¹⁶

—Juan Pablo Pérez Alfonso (1976), former Venezuelan
minister of energy

The “convergence” theory explains the tendency for successful political parties to drift toward the ideological centre. The competition for the median or undecided voter pulls them there. But for the Alberta PC party, it was exacerbated by the “resource curse”—their overreliance on annual oil and gas revenues to fund annual government services and programs.

To most Albertans, this will sound counterintuitive. Wasn’t the political dynasty that Peter Lougheed founded and that then governed Alberta for the next forty-four years built on the ever-expanding oil and gas industry? Yes. Absolutely! But in the end, it also contributed to its demise. How to explain this paradox?

Alberta is a textbook example of what Daniel Yergin describes as the “petro-state”—a nation whose economy becomes overly reliant on oil and gas exports. These exports create significant revenues for the governments, in the form of royalties, taxes, or both. The result, Yergin writes, is, “In a petro-state, the competition for these revenues and the struggle over their distribution becomes the central drama for the nations’ economy.”¹⁷ This type of politics is described as “rent-seeking.” For the petro-state, rent-seeking “means that the most important ‘business’ in the country (aside from oil-production itself) is focused on getting some of the ‘rents’ from oil—that is, some share of the government’s revenues.”¹⁸

Yergin’s leading example of the dysfunctional “rent-seeking” politics of petro-states is Venezuela. But the parallels to Alberta politics are clear. The most obvious example was Ed Stelmach’s ill-fated 2007 New Royalty Framework (NRF) and 20 percent increase in oil and gas royalties—projected to increase the government’s non-renewable resources revenues by $1.4 billion annually by 2010. It was not by coincidence Stelmach announced his new “Fair Share” policy just prior to the 2008 provincial election. Stelmach publicly linked these new revenues—which in fact never materialized—to payment for his new policy promises: eliminating health care premiums; a five-year contract with the Alberta Teachers’ Association (ATA); assuming the ATA’s $2 billion unfunded pension liability; and a one-time, $1,500 lump-sum payment to every teacher (see chapter 6).

This new spending did help the PCs win another crushing majority government—seventy-two of eighty-three seats. But it also opened the door for the then-tiny Wildrose Alliance to grow. The negative backlash to the New Royalty Framework in the oil and gas sector pushed many former PC supporters to Wildrose and contributed directly to the party’s improved fundraising leading up to the 2012 provincial election.¹⁹

But Stelmach did not invent the strategy of buying votes with oil and gas revenues. As far back as 1982, Lougheed’s home-mortgage interest rebate program—funded by energy revenues that were diverted from the Heritage Savings Fund—helped the PCs win that year’s election (see below). Similarly, Klein announced a new program to subsidize the cost of natural gas for home heating just prior to the 2001 election. This strategy went from subtle to obscene in 2005 with Klein’s “Prosperity Bonus Cheques.” This previously unannounced program doled out $1.4 billion in new energy revenues, with every Alberta resident receiving $400 in what quickly became known as “Ralph Bucks” (see chapter 3).

In 2011, Alison Redford doubled down on this strategy. First, she won the second round of the PC leadership race by recruiting thousands of “two-minute Tories” with her promise to restore the $110 million that had been cut from education in (my) Budget 2010; and to bail out the underfunded Alberta policemen’s pension fund. Next, by delivering on these promises in the 2012 general election, Redford won substantial support from the public sector unions (see chapter 10). But like Stelmach’s 2008 spending spree, Redford’s 2012 budget sent still more disillusioned fiscal conservatives over to the Wildrose Party—contributing to the subsequent vote splitting and the demise of the PC party in the 2015 provincial election.

None of this was lost on Rachel Notley, who in 2015 consolidated the NDP’s control of public sector union votes by promising not to cut budgets for health care (nurses); public education (teachers); or government services (government employees).²⁰ Not by coincidence, Notley’s husband sat on the governing board of the NDP and was then a senior communications official for the Canadian Union of Public Employees, a union that had over 12,000 municipal employees and 7,000 K–12 workers in Alberta.²¹ Just for good measure, in the newly elected NDP government’s first Speech from the Throne, Notley promised a new royalty review to help pay for her spending promises. Just to round out the vicious circle of “rent-seeking” politics, Ed Stelmach then praised her for doing so.²² In a petro-state like Alberta, no party can afford NOT to be in favour of a “Fair Share” of energy revenues.

A second defining characteristic of the petro-state is what Yergin calls “fiscal rigidity.” Global oil and gas prices are inherently volatile. As they rise, government revenues and government spending rise too. “But,” Yergin points out, “when world oil prices go down and nations’ revenues fall, governments dare not cut back on spending. Budgets have been funded, programs have been launched, contracts have been let, institutions are in place, jobs have been created, people have been hired. Governments are locked into ever-increasing spending. Otherwise, they face political backlash and social explosion.”²³ All of the beneficiaries of the status quo—public sector and private sector—fight any government attempts to cut back programs that benefit them.

Yergin wrote this to explain the political instability and economic mismanagement of petro-states like Venezuela. But for anyone who knows Alberta’s fiscal odyssey since the 1980s (reread chapters 5 and 7!), this will sound disturbingly familiar. Over the past fifty years, seven consecutive Alberta governments from three political parties have ramped up spending during years of high energy revenues, and then run deficits when oil and gas prices inevitably declined.²⁴ All of the political incentives are to spend energy revenues, not to save. Spending gives voters more services and benefits without imposing more taxes to pay for them—a politician’s dream.

When oil and gas prices tanked in the 1980s, the PC government of Premier Don Getty ran up $23 billion of debt with seven consecutive deficits. PC Premier Ralph Klein then spent the next decade cutting GOA spending by 30 percent to pay off this debt. Klein famously announced during Stampede in July 2004 that Alberta’s debt was “PAID IN FULL.” “Never again,” Klein told the cheering crowd at McDougall Centre, “will this government or the people of this province have to set aside another tax dollar on debt.”²⁵ This lasted less than four years.

Oil prices hit their historical high of $147.27/barrel on July 11, 2008. By Christmas, the price of oil collapsed to $30.28/barrel. Similarly with natural gas: it peaked at $13.06/mcf in July of 2008. A year later it dropped to less than $5/mcf and stayed there—and in some years much lower still—for the next thirteen years. The Stelmach 2008 “Fair Share” budget—whose then record spending ($37 billion) helped the PCs win another majority government in March—had projected a $1.6 billion surplus. By July, spiralling oil and gas prices had pushed the projected surplus up to $8 billion. But by the end of the fiscal year, we were left with a deficit of almost $1 billion.

This set the pattern for the next seven years. By the time the PCs were defeated by the NDP in the 2015 election, Alberta’s accumulated debt had reached $11.9 billion.²⁶ So much for the party of “fiscal responsibility.” If it’s any consolation, this overspending accelerated during the next four years (2015–2019) of NDP government.²⁷ When Jason Kenney led his newly created United Conservative Party to a majority government in the 2019 provincial election, he inherited a net debt of $85.9 billion.²⁸

But if this addiction to spending is found in all petro-states, then why would we expect Alberta to be any different—regardless of which party formed government? Does the “resource curse” syndrome absolve the Stelmach and Redford PC governments of responsibility for their overspending, deficits, and massive new debt? No, it does not.

As Yergin points out, other petro-states have adopted at least a partial antidote to the resource curse: sovereign wealth funds (SWFs). In boom years, legally required deposits of a specified percentage of energy revenues into a SWF reduces government revenues available for annual budgets, which then curbs overspending. In bust years, the earnings from SWFs can be used to offset declining energy revenues and thus minimize if not eliminate budget deficits. In sum, a properly constructed SWF can act as a stabilizer of volatile oil and gas prices and revenues.

The two most well-known—and successful—SWFs are in Norway and Alaska. In the beginning, Alberta had its own SWF: the Alberta Heritage Savings Trust Fund created by Peter Lougheed in 1976. As originally designed, 30 percent of the province’s annual non-renewable resource revenues (NRRR) were legally required to be transferred to the Heritage Fund. In the high-NRRR years of the late 1970s, the Lougheed government complied with these rules, and the Heritage Fund grew rapidly. Between 1976 and 1982, it accumulated assets with a net value of $8.3 billion.²⁹ Early estimates were that the Heritage Fund could top $50 billion by 2000.

This was short-lived. As the price of oil dropped, NRRR declined. Faced with an election in 1982, the Lougheed government slashed NRRR deposits into the Heritage Fund from 30 percent to 15 percent. The PCs then used the remaining revenues to win the election with a new home-mortgage interest rebate program.³⁰ Any homeowners (a.k.a. voters) with a mortgage interest rate above 12 percent received government cheques to offset the difference. As I was then an untenured junior assistant professor with an 18 percent mortgage, I remember it well!

Four years later, Lougheed’s PC successor, Don Getty, had to deal with another election and even lower oil prices. To help win that election, the Getty government “temporarily” stopped making any deposits in the Heritage Fund. It used all NRRR revenues to help fund the annual budget with no service cuts and no tax increases. This “temporary” policy quickly became permanent. Other than the three one-off deposits in the boom-year budgets of 2005–7, PC governments for the next seventeen years did not deposit a single dollar of NRRR into the Heritage Fund.

The result is that in real dollars, accounting for inflation, the Heritage Fund’s current value of $18.6 billion is actually less than it was thirty years ago. Other than the inflation-proofing that began in 2005, under current government policy, virtually all of the fund’s realized annual earnings are transferred to general revenues for in-year spending. This means that the fund’s value cannot grow as the market goes up. But then when there are down years—such as 2009—investment losses permanently reduce the fund’s size. Combine this with the fact that the Alberta government has made only three new deposits in the fund since 1987, and the fund begins to resemble the old Slinky toy—holding steady in good years but dropping down in bad years, slowly but steadily working its way to the bottom.

The Heritage Fund’s deteriorating value is even worse when population growth and inflation are taken into account. Prices have increased fourfold since the fund started in 1976. Alberta’s population has nearly tripled. In per capita real dollars, the fund’s value peaked in 1983 at $12,380 per Albertan. As of 2022, that figure was approximately $4,200.³¹

The sad fact is that of the $263 billion in NRRR that the Alberta government collected between 1977 and 2022, less than 6 percent has been saved.³² The fund’s current value is approximately $18.6 billion. If the $9.7 billion that sat in the Heritage Fund in 1982 had remained untouched (and no further contributions made) and allowed to grow simply at the rate of inflation, the value would have stood at $24.2 billion in 2010.³³ If 30 percent of NRRR had been deposited in the Heritage Fund—per the original design—the fund’s value would have been at least $79 billion higher than it is today. Not only were these deposits not made, but most of the fund’s annual earnings—over $39.2 billion since 1976—were transferred from the fund to the province’s general revenues to pay for current annual spending.³⁴

Oil and gas revenues became the crack cocaine of Alberta politics. The politicians became addicted to spending it. And their “customers”—Alberta voters—became equally addicted to enjoying it; for not having to pay for much of the government services we used. As Ron Kneebone observed, “The taxpayers rewarded them for it.”³⁵ Look what happened to Jim Prentice in 2015 when he made an offhand comment that to understand the past decade of government overspending, “We need only look in the mirror.” The next day social media was on fire with the message: “Prentice blames Albertans.”³⁶

By way of comparison, the Alaska Permanent Fund—created in 1976, the same year as the Heritage Fund—now has a balance of US$79.6 billion. And that’s after paying out US$20 billion in dividends to Alaska residents. Norway’s NRRR savings fund was started in 1990 and now has a balance of US$1.6 trillion.³⁷ Even the tiny state of Wyoming—with a population of only 581,000—has its own sovereign wealth fund, created in 1975, with a current value of almost US$10 billion.³⁸

How have the Alaska and Norway SWFs succeeded where Alberta has failed? The answer is simple: They were put beyond the reach of the short-term political interests of politicians. The Alaska Fund was created by a constitutional amendment that mandates that 25 percent of annual energy royalties and rents must be deposited in it. To change this would require a constitutional amendment and a referendum. To date, no Alaskan governor has ever proposed this, knowing that it would fail. The Alberta Heritage Fund was created by a statute, which means it can be changed unilaterally by a majority government any time it is politically advantageous.

Norway’s fund is not constitutionally entrenched in a legal sense, but it is universally understood to be off limits to the governments of the day. In Canadian terminology, we could say the fund’s status as politically untouchable is a constitutional convention—widely recognized and followed. Originally named the Petroleum Fund of Norway, its name was changed in 2006 to the Government Pension Global Fund. While it is clearly not a pension fund in the normal sense (i.e., member-funded), this name change emphasizes that the fund belongs to the people of Norway, not the government of the day. In short, the Alaska and Norway funds were made politician-proof by protecting them from the government of the day’s inevitable short-term priority—winning the next election.

The Alaska and Norway funds also differ from Alberta’s Heritage Fund in how their principal is managed and invested. They cannot be used for domestic economic development, the kinds of politically useful but economically risky projects that Alberta governments indulged in during the 1980s. In that decade, the Lougheed-Getty governments lost over $2.2 billion using the Heritage Fund to invest in new Alberta start-up companies.³⁹

In 1996, the Klein government put an end to using the Heritage Fund for high-risk diversification projects, and instead directed it to be used to maximize long-term returns. The creation of the Alberta Investment Management Corporation (AIMCo) a decade later further insulated the fund from cabinet micromanagement. AIMCo’s directive emphasizes that these monies are to be professionally managed for the long-term interests of Albertans, not the short-term interests of the government of the day. Recent developments, however, suggest that the PCs have already forgotten their past mistakes.

Redford’s 2014 budget proposed to resurrect the practice of using money in the Heritage Fund for “strategic investments.” Bill 1, the misleadingly named Savings Management Act, would have diverted $2 billion from the Heritage Fund into a new spending program to “provide government with the financial resources to take advantage of new opportunities, yet to be determined, that may require a large, one-time investment from the province.”⁴⁰ Such politically driven investments are all but guaranteed to achieve the same dismal results as they did during the 1980s and with the more recent North West Upgrader fiasco (see chapter 7). Following Redford’s sudden resignation in March 2014, Bill 1 was never implemented.

Not to be outdone, the NDP’s first budget directed AIMCo to invest $540 million from the Heritage Fund into Alberta-based “growth companies” to promote diversification of Alberta’s economy. Both of these initiatives are reminders of the Heritage Fund’s vulnerability to short-term political objectives.

I have written elsewhere about how a future Alberta government could and should “politician-proof” the Heritage Fund.⁴¹ The rules requiring mandatory annual transfers of NRRR into the Heritage Fund must be entrenched constitutionally, not just statutorily. The models of success—Norway and Alaska—are out there to be adopted by and adapted to Alberta.

To conclude, the “resource curse” may explain why successive PC governments so mismanaged the $263 billion of NRRRs, but it does not excuse it. Since 1986—with the important and praiseworthy exception of Ralph Klein (1992–2006)—successive PC governments chose to spend Alberta’s oil and gas revenues rather than deposit them into the Heritage Fund. This choice is entirely predictable. How many politicians prioritize long-term fiscal responsibility ahead of short-term re-election prospects? Since 2006, the Stelmach, Redford, and then Notley governments chose the latter over the former. And with those choices comes responsibility for the consequences: as of 2022, an accumulated debt of $93.9 billion with annual interest payments of $2.8 billion.⁴²

Western Alienation

A fifth and final cause of the demise of the PC Party was the refusal of the PC leaders, both elected and unelected, to recognize Alberta’s chronic vulnerability to harmful federal Liberal policies, and their consequent failure to embrace reforms that would better protect Albertans’ interests. Starting with the 1993 federal election, the Reform Party and its successor parties, the Canadian Alliance (CA-2001) and then Conservative Party of Canada (CPC-2004) dominated Alberta politics federally. Their message to Albertans: That the West wants in! That the constitutional status quo is stacked against Western provinces in favour of Ontario and Quebec—and the Liberal Party governments that these two central Canadian provinces routinely elect.

In the first three decades of the Tory dynasty, Premiers Peter Lougheed and Ralph Klein successfully rode the wave of Western alienation to majority governments—the same wave that Preston Manning rode to take the upstart Reform Party from nothing to the Official Opposition in the 1990s. As Taras observed,

The Tories’ popularity was that they came to be seen as the great protector or Alberta’s rights against encroachments by the federal government. … The best way … to stand up to Ottawa was to give the Tories a strong majority. Economic interests were therefore merged with identity politics so that, for many, being a strong Albertan also meant being a strong Tory.⁴³

Taras’s analysis was right as far as it went. But then he ignores the fact that starting with the end of the Klein era, the PCs turned a blind eye to the growing number of Albertans who wanted meaningful reforms to our relationship with Ottawa. Taras correctly notes that “Jim Prentice never played the alienation card.”⁴⁴ But he ignores the fact that neither did Stelmach or Redford. Taras’s account of the “rise and fall” of the PCs does not even mention Preston Manning or the domination of the Reform Party in Alberta’s federal elections. Stewart and Sayers make a similar omission. They attribute the success of the PC Party to its rejection of “more right wing candidates” in the 1993, 2006, and 2011 leadership elections.⁴⁵ In addition to being wrong about 1993—Klein, the winner over Nancy Betkowski, was clearly the “right-wing candidate”—it was the leaderships of Stelmach, Redford, and Prentice that drove more conservative Albertans out of the PC Party into Wildrose, resulting in the vote splitting that finally destroyed the PCs in 2015. And it has been the election of “more right-wing candidates” as leaders—Kenney in 2019 and Smith in 2023—that has ended vote splitting on the Right and produced two majority UCP governments.

From the mid-1990s on, the PCs not only ignored the Reform Party and its supporters but were actively hostile. Remember the “welcome” I received when I was first elected as the PC MLA for Foothills-Rocky View in 2004. As the Edmonton Journal reported, “Veteran Tory MLAs are eagerly awaiting Morton’s arrival at the legislature after the election, simply so they can cut him down. There haven’t been this many knives in a welcoming committee since Julius Caesar dropped by the Senate.”⁴⁶ The PC Party’s hostility toward me and later the Wildrose Party may be understandable, but it was also a mistake.

This hostility was understandable, because by the time Ralph Klein stepped down as premier, Albertans had enjoyed four decades of growth and prosperity under PC governments and the unique urban-rural coalition that kept re-electing them. Many Albertans, both urban and rural, had done very well, and they were prepared to spend money—lots of money— to protect what was working. The Alberta auditor general’s reports document how PC governments have been funded by donations from corporate friends and clients to an extent unprecedented in any other province.⁴⁷

In my early years as an MLA and then minister, I was often surprised that some of the same people I would see at PC party events in the evenings were the people who had come to my office to lobby me in the morning. After a few years, I was no longer surprised. The same people who did business with the Alberta government were well represented at all levels of the PC Party organization.

This is how the PC dynasty sustained itself for forty-four years. The last thing they wanted was a new guy (Ted Morton) from another party (Reform) with a new set of issues (Alberta Agenda) to upset the apple cart. So they strongly supported the PC establishment candidates: Jim Dinning in 2006 and Gary Mar in 2012, both of whom went on to lose. But they lost to candidates—Stelmach and Redford—who continued to ignore the growing support for the Wildrose Party and the threat this posed to the PC’s electoral coalition.

In theory, this strategy might have worked. It usually serves the electoral self-interest of a dominant major party like the PCs to suppress new cross-cutting issues, preserve the existing “dimension of conflict in voters’ minds, and occupy the position of the median voter.”⁴⁸ But for the Tories, ignoring Albertans’ growing support for change turned out to be a mistake.

Alberta was the birthplace of the Reform Party. Its influential founder, Preston Manning, was the son of popular former Alberta Premier Ernest Manning, who had governed Alberta for twenty-five years (1943–1968). From the Reform Party’s beginnings, Alberta has been the financial and intellectual foundation of the Reform/CA/CPC parties. Throughout the 1990s and 2000s, Albertans routinely gave Reform/CA/CPC over 60 percent of our votes and 90 percent of our MPs. Thousands of Albertans of my generation spent decades of “blood, sweat, and tears” to build Reform from an upstart Western fringe party to a national party. Many of our children—including one of mine—went to Ottawa to work with the Reform/CA/CPC parties. And we finally helped to elect Albertan Stephen Harper as the prime minister of Canada from 2006 to 2015.

Yet despite Reform/CA/CPC success in the federal elections, PC leaders never embraced—much less accommodated—either the policies or the people that built the Reform movement in Alberta. The PC Party refused to advance any reforms—such as those proposed in the Harper, Morton et al. “Firewall Letter”—that would address Alberta’s constitutional vulnerability to Ottawa and the predatory policies of the federal Liberal Party.

The Liberals’ policy attacks on Alberta’s energy sector are inevitable. It’s how they win elections. As Keith Davey, Pierre Trudeau’s campaign manager, summarized their strategy to win the 1980 federal election—the National Energy Program—”Screw the West. We’ll take the rest.”⁴⁹ It worked for the Liberals then and continues to work today.

Predictably, disillusioned Alberta Reformers decided to form their own party—the Wildrose. And once they did, the more the PCs ignored the Western alienation issue, the more Albertans were attracted to the Wildrose Party. But it was not just the Alberta PCs that contributed to the rise of the Wildrose.

The Wildrose Party also benefited from the federal CPC’s evolving de-emphasizing of the Western fairness issue. First Manning, with his United Alternative initiative, and then Harper with the CPC, sought to transform the Reform Party from a Western-based protest party to a competitive national party—a party that had a plausible path to displacing Liberal majority governments in Ottawa. But this meant catering more to voters in Ontario and Quebec. As early as 2005, Faron Ellis predicted that disillusioned Western voters would form a new party.

Alienated, right-of-centre western voters will again witness a national party they solidly support expend most of its efforts chasing votes in Central Canada. Given the history of western Canadian federal party politics, it also seems likely that as the process plays itself out, at some point in the future, some westerners will again be agitating for a new party to represent their dissenting opinions.⁵⁰

Ellis turned out to be right about a new party, but it turned out to be a new provincial party, not a new federal party. Actually, he was proven right twice. The new Saskatchewan Party and its leaders—Brad Wall and now Scott Moe—also have their origins in the Reform Party movement.

But it was not until 2016, when the PC Party was destroyed by vote splitting with the Wildrose, that Jason Kenney—a first-wave Reformer in the 1990s and never a PC party member—could stride in from Ottawa and take over the party in less than one year.

In a plan that he unveiled only a year earlier, in 2017 Kenney first won the PC leadership contest (March); then the vote to merge PCs and Wildrose (June); and then won the leadership of the new United Conservative Party (October).⁵¹ In the PC leadership contest, he raised over $1.4 million—nine times more than the next highest candidate.

Almost all of Kenney’s campaign team consisted of friends and staffers he brought with him from his Reform/CPC years in Ottawa. Other than myself, there were virtually no former PC cabinet ministers or senior PC operatives on the Kenney team in 2016–17. When he later ran to win the leadership of the newly merged UCP, most former PC MLAs and cabinet ministers backed his opponents. Kenney’s relationship with the PC caucus was most memorably captured by a leaked email he sent to his fellow Alberta MPs in which he described Thomas Lukaszuk—then Redford’s deputy premier—as “a complete and utter asshole.”⁵²

A less colourful but more reliable indicator of Kenney’s complete break with the old PC party is that out of the sixty-three UCP MLAs that were elected with Kenney in 2019, only two—Ric McIver and Mike Ellis—had been in either the Stelmach or Redford governments. Indeed, only eight had ever been in the Legislative Assembly before. When he was sworn in as Alberta’s eighteenth premier, Kenney had effectively cleaned house of former PC MLAs.