From the Fraser Institute

By: Dean Stansel, José Torra, Matthew D. Mitchell and Ángel Carrión-Tavárez

Alberta is, once again, the Canadian province with the highest level of economic freedom, while most other provinces rank in the bottom half in the annual Economic Freedom of North America report, published today by the Fraser Institute, an independent, non-partisan, public policy think-tank.

Individuals have more economic freedom when they are allowed to make more of their own economic decisions such as what to buy, where to work and how to start and run a business. And research shows that economic freedom is fundamental to prosperity.

The report ranks the provinces and states individually for each country (Canada, the U.S. and Mexico). In addition, there is a fourth measure comparing and ranking all states and provinces, across all three countries. All of the rankings measure government spending, taxation, regulations and labour market restrictions using data from 2022 (the latest year of available comparable data).

“Higher taxes, higher levels of government spending and overly burdensome regulations continue to depress economic freedom across much of Canada, which makes it harder for individuals and businesses to thrive and create jobs,” said Matthew Mitchell, a senior fellow at the Fraser Institute and co-author of this year’s report.

In the ranking covering all three countries, which includes both federal and provincial government policies, Alberta is once again the highest-ranking Canadian province. It tied four U.S. states at 12th, having improved its ranking from 41st last year.

The next freest province is British Columbia, which ranks 43rd out of 93, followed by Ontario (47th), Saskatchewan (50th), Manitoba (53rd) and Quebec (54th).

The four Atlantic provinces— New Brunswick (57th), Prince Edward Island (58th), Nova Scotia (59th) and Newfoundland and Labrador (60th)—have the lowest levels of economic freedom among all provinces and U.S. states, only outranking the Mexican states and Puerto Rico. New Hampshire, once again, earned the overall top spot amongst all provinces and states in the rankings this year.

“The link between economic freedom and prosperity is clear: people who live in provinces or states that have comparatively lower taxation, lower government, sound regulatory regimes and more flexible labor markets tend, on average, to live happier, healthier and wealthier lives,” Mitchell said.

For instance, according to the latest report, total income in the freest jurisdictions grew 29 per cent after adjusting for inflation over the last decade, while in the least-free jurisdictions, total inflation adjusted income fell 13 per cent.

The Economic Freedom of North America report (co-authored by Dean Stansel, José Torra and Ángel Carrión-Tavárez) is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars including three Nobel laureates.

Detailed tables for each country and subnational jurisdiction can be found at www.freetheworld.org.

Economic Freedom of North America 2024

• The indices in the Economic Freedom of North America 2024 measure the degree to which governments in North America permit their citizens to make their own economic choices.
• They include data from the 10 Canadian provinces, 50 US states, 32 Mexican states, and the US territory of Puerto Rico.
• In the all-government index—which takes account of federal as well as state/provincial policies—the most economically-free jurisdiction in North America is New Hampshire, followed by Idaho, Oklahoma and South Carolina tied for third, and Florida and Indiana tied for fifth.
• The lowest-ranking jurisdictions are all Mexican states. In last place is Ciudad de México. Above that is Colima, Campeche, Tamaulipas, and Zacatecas.
• Alberta is the highest-ranking Canadian province, tied for 12th place with Tennessee, South Dakota, Colorado, and Texas. The next-highest Canadian province is British Columbia, which is tied with Massachusetts, Minnesota, and New Mexico for 43rd.
• Average economic freedom across all 93 jurisdictions has fallen every year since 2017 and is now slightly above its all-time low.
• Incomes in the freest top 25 percent of North American jurisdictions were 21 times higher than in the least-free.
• From 2013 to 2022 the population of the freest US states grew 10 times faster and total employment grew three times faster than in the least-free states.

From the Fraser Institute

By: Julio Mejía, Elmira Aliakbari and Tegan Hill

According to a recent analysis by the Conference Board of Canada think-tank, the cap could reduce Canada’s GDP by up to $1 trillion between 2030 and 2040, eliminate up to 151,000 jobs by 2030, reduce federal government revenue by up to $151 billion between 2030 and 2040, and reduce Alberta government revenue by up to $127 billion over the same period.

According to an announcements last week by Premier Danielle Smith, the Alberta government will use the Alberta Sovereignty within a United Canada Act to challenge Ottawa’s proposal to cap greenhouse gas emissions from the oil and gas sector at 35 per cent below 2019 levels by 2030.

Premier Smith, who said the cap will harm the economy and represents an overstep of federal authority, also plans to prevent emissions data from individual oil and gas companies from being shared with Ottawa. While the federal government said the cap is necessary to fight climate change, several studies suggest the cap will impose significant costs on Canadians without yielding detectable environmental benefits.

According to a recent report by Deloitte, a leading audit and consulting firm, the cap will force Canadian firms to curtail oil production by 626,000 barrels per day by 2030 or by approximately 10.0 per cent of the expected production—and curtail gas production by approximately 12.0 per cent.

Deloitte estimates that Alberta will be hit hardest, with 3.6 per cent less investment, almost 70,000 fewer jobs, and a 4.5 per cent decrease in the province’s economic output (i.e. GDP) by 2040. Ontario will lose 15,000 jobs and $2.3 billion from its economy by 2040. And Quebec will lose more than 3,000 jobs and $0.4 billion from its economy during the same period.

Overall, the country will experience an economic loss equivalent to 1.0 per cent of the value of the entire economy (GDP), translating into lower wages, the loss of nearly 113,000 jobs and a 1.3 per cent reduction in government tax revenues. Canada’s inflation-adjusted GDP growth in 2023 was a paltry 1.3 per cent, so a 1 per cent reduction would be a significant economic loss.

Deloitte’s findings echo previous studies. According to a recent analysis by the Conference Board of Canada think-tank, the cap could reduce Canada’s GDP by up to $1 trillion between 2030 and 2040, eliminate up to 151,000 jobs by 2030, reduce federal government revenue by up to $151 billion between 2030 and 2040, and reduce Alberta government revenue by up to $127 billion over the same period.

Similarly, another recent study published by the Fraser Institute found that the cap would reduce production and exports, leading to at least $45 billion in lost economic activity in 2030 alone, accompanied by a substantial drop in government revenue.

Crucially, these huge economic costs to Canadians will come without any discernable environmental benefits. Even if Canada entirely shut down its oil and gas industry by 2030, eliminating all GHG emissions from the sector, the resulting reduction in global GHG emissions would amount to a mere four-tenths of one per cent with virtually no impact on the climate or any detectable environmental, health or safety benefits.

Given the demand for fossil fuels, constraining oil and gas production and exports in Canada would likely merely shift production to other countries with lower environmental and human rights standards such as Iran, Russia and Venezuela. Consequently, global GHG emissions would increase, not decrease. No other major oil and gas-producing country has imposed a similar cap on its leading export sector.

The Trudeau government’s proposed cap, which still must pass the House and Senate, would further strain an already struggling Canadian economy, and to make matters worse, do virtually nothing to improve the environment. The government should cancel the cap plan given the economic costs and nonexistent environmental benefits.

Julio Mejía

Policy Analyst

Elmira Aliakbari

Director, Natural Resource Studies, Fraser Institute

Tegan Hill

Director, Alberta Policy, Fraser Institute