Alberta scores top spot in Fraser Institute economic freedom report

Sep 19, 2012

Alberta is the most economically free jurisdiction in North America, beating out its provincial counterparts and all 50 U.S. states as Canada narrows the gap with its southern neighbour on economic freedom, according to a report released Tuesday.

The Fraser Institute’s Economic Freedom of North America 2011 report found Canadian provinces, on average, moved up in the ranks as compared to U.S. states when judged on the size of government, taxation, and labour-market freedom.

“The chicken is coming home to roost: Canada is staying on the course of economic freedom, while the United States has accelerated its spending and regulation,” said Fred McMahon, a Fraser Institute vice-president and co-author of the report. “It’s been a long-term trend that’s really beginning to bite now.”

The think-tank’s report uses 2009 data, so given the U.S. government’s continued stimulus spending since the 2008 recession, Canada will only continue to close the freedom divide, Mr. McMahon said. The rankings take into account all levels of government, including federal, provincial/state, and municipal/local.

Canada’s climb and America’s descent is ever-more significant because economic freedom is directly correlated with prosperity, according to the report: The 12 North American jurisdictions with the highest levels of economic freedom had an average per capita GDP of $54,435, compared to the 12 lowest-ranked jurisdictions where the average per capita GDP was $40,229.

Alberta’s Minister of Finance, Ron Liepert, said he is “not surprised” Canada — and Alberta specifically — is viewed as economically freer in terms of smaller government, less taxation and freer markets. As energy minister until recently, he met often with U.S. state legislators in oil- and gas-producing states.

“In almost every case, they had what I call ‘Alberta envy,’” Mr. Liepert said, referring to the resource-rich province that has a 10% flat tax on personal income and zero sales tax.

“I remember a conversation with a fellow from Wyoming. He had nothing but good things to say about the kind of climate we have here … In a general sense, they felt it was much easier to do business in Canada these days than it is in the U.S.”

Saskatchewan soared in the Fraser Institute’s rankings, moving to 32nd overall from 53rd and trailing only behind Alberta among the provinces.