NATIONAL

CANADA’S STICKING POINTS

MARTIN NEWLAND December 25 2006
NATIONAL

CANADA’S STICKING POINTS

MARTIN NEWLAND December 25 2006

OKAY, NOW WHAT?

Ed Stelmach has the keys to Canada’s economic engine. The pressure is on.

BY JASON KIRBY • This coming spring, workers in Calgary are set to break ground on the tallest office tower in Canada’s booming West. Once built, the shimmering steel and glass structure will befit a city that’s come to dominate Alberta’s economic and political landscape in recent years. At least that was the case until this month. Cowtown may still rule the oil patch, but on Dec. 3 a cow farmer from east of Edmonton named Ed Stelmach clinched the leadership of the ruling Tories. Overnight, the epicentre of legislative power shifted about 400 km to the north, to the village of Andrew: home to 485 people, and one large, fibreglass duck.

The race to replace Ralph Klein as premier was supposed to usher in a new era for Alberta, but few were quite prepared for this. Awash in cash from oil and gas royalties, the province has careened lately with no plan for how to accommodate the legions of migrants flooding into its towns and cities. Each Tory candidate boasted some sort of hazy road map to manage the boom. But none of the hopefuls was as enigmatic as Stelmach. He was the nice guy, the honest farmer handy with a wrench, who had somehow managed to

serve 13 years in cabinet without creating a ripple of controversy. In a leadership race that wallowed in mud in its final weeks, there was nary a trace of the stuff under his fingernails. And so, the dark horse labelled “everybody’s second choice” easily trotted past his high-profile rivals, Jim Dinning and Ted Morton. Now that Stelmach has seized the keys to Canada’s economic engine, he’s under a lot of pressure.

Until recently, the village of Andrew was best known as home to the “world’s largest mallard duck.” Here, in the land of kitschy roadside attractions, Andrew’s massive fowl sits southwest of Glendon’s giant perogy, west of Vegreville’s seven-metre-tall Easter egg, and just up the road from a towering, and vaguely disturbing, kubasa sausage marking the entrance to Mundare. The day after Stelmach won the leadership vote, the media hit town. Before long, Ma and Pa’s Restaurant on Main Street began to look like a speed-dating venue as reporters hopped from table to table interviewing locals happily spinning tales of Stelmach’s childhood, of his reign as county reeve, and his knack for farming— “He got out of hogs just before the market collapsed,” says one man admiringly.

The Stelmach clan has called this area home since 1898, when his Ukrainian grandparents cleared a plot of land south of the village. An old mustard yellow farmhouse still stands, though its front porch roof droops under the weight of snow. Stelmach, who married his high school sweetheart Marie and has four children, lives in a small white bungalow next door. It wasn’t always his plan

to stay on the farm, though. As a young man, Stelmach, the youngest of five siblings, set off to study law at the University of Alberta in Edmonton. When his

older brother Victor died in the early 1970s, Stelmach dropped out and returned to tend to the farm. He still keeps a couple dozen dairy cows. During one campaign speech, he thanked his brother for milking them while he was on the road.

Stories like that have helped Stelmach cement his wholesome reputation, an image that borders more on caricature with each telling. He’s a regular in the Ukrainian Catholic church choir, fixes his own furnace, and tears up when he thanks his campaign volunteers. “He’s not one of those backslapping politicians you sometimes see in retail politics,” says Ken Chapman, a policy consultant from Edmonton who worked on Stelmach’s campaign. “But he’s not a simple farmer. If you look at his life story, he’s a man of great character and huge life experiences.”

Despite a widely held perception that Stelmach doesn’t play politics, he has carefully crafted his image. He regularly harks back to his rural roots, and knows what plays well with conservative Albertans. That was clear the night of the leadership vote in an Edmonton aircraft hanger. In an informal “pizza poll,” delegates picked from each candidate’s favourite toppings. Stelmach’s “True Blue” beef and cheddar handily trumped Morton’s ham and pepperoni and Dinning’s pepperoni and mushroom. No one dared put his name to the vegetarian pizza, which sat neglected all night.

STELMACH REGULARLY HARKS BACK TO HIS RURAL ROOTS. HE KNOWS WHAT PLAYS WELL

After a stint in municipal politics in the 1980s, Stelmach ran for provincial office in 1993 when Klein came to power. Over the years, Stelmach has held several cabinet positions, travelled to China and Hong Kong to promote Alberta business, and helped push through a plan to build ring roads around Edmonton and Calgary by turning to private financing. None of it left much of a mark on opponents. “I sat in legislature across from Stelmach for five years while he was in cabinet, and he was so quiet he made no impression at all, good or bad,” says Kevin Taft, leader of the provincial Liberal party. “He was pretty much a non-entity.”

Stelmach certainly isn’t a media star, either, unlike his predecessor Klein, a former reporter who knew how to weave a compelling yarn for journalists. At one point during the leadership campaign, Edmonton Journal columnist Graham Thomson quizzed Stelmach about his plans to squeeze more value out of Alberta’s oil sands. Stelmach’s response lasted three minutes and 45 seconds, Thomson wrote, touching on “the whole issue of water,” something called “vulture venture capital,” and nanotechnology scientists developing “a little worm that will swim up the bloodstream and be like Pac-Man and eat up all the cancer cells.”

By the time he stood up for his first press conference last week, it was clear his handlers had coached him in the fine art of the sound bite. When a reporter asked Stelmach what he had to say to newly elected Liberal leader Stéphane Dion and his environmental

initiatives, Stelmach quickly fired back. “I’m going to tell them right off the bat that they have to be careful about the kind of policies they start articulating,” he said. “Any damage to Alberta’s economy is going to severely hurt Ottawa and the treasury as well.”

That’s not to say Stelmach is comfortable with the media. His office refused repeated requests for an interview, and last week when a Maclean’s photographer drove up his driveway to photograph the farmhouse, Stelmach showed up within minutes in a black sedan accompanied by a sheriff from the Alberta solicitor general’s office, who threatened to press trespassing charges, while Stelmach sat in the car talking on his cellphone.

But the constant demands of the press are nothing compared to the potentially crippling issues he faces as Alberta leader. The breakneck boom has showered Albertans with riches, yet Alberta’s infrastructure is buckling under the weight. At its current rate, the city of Calgary alone hoovers up 35,000 new residents each year, putting pressure on roads, schools and hospitals.

Stelmach has said his first priority is to deal with the acute shortage of affordable housing. According to Chapman, more than 17 per cent of the men in Calgary’s homeless shelters are fully employed but unable to find accommodation. The premier plans to form a task group to look at the issue, and has vowed to have a list of proposals ready within 45 days. He’s also vowed to tackle the lack of skilled workers in Alberta. To do that, he wants to wrestle more control over the province’s immigration policies from Ottawa, similar to those powers enjoyed by Quebec.

In a case of déjà vu, Stelmach must also rein in Alberta’s out of control spending, just as Klein did in his early years in power. Over the last five years, the province’s spending has jumped 40 per cent, and rocketed more than 120 per cent over the last decade, according to the Calgary Chamber of Commerce. By some estimates, the province that led the way on fiscal responsibility in the 1990s is quickly falling back into profligacy. “If spending keeps increasing at this rate, this province will be running into a deficit within seven to eight years,” says Ron Kneebone, an economics professor at the University of Calgary, “and that’s even with oil and gas prices where they are now.”

Stelmach has some options at his disposal. For one thing, he has pledged to revisit the agreements signed with energy producers that allow companies to pay only one per cent in royalties during the start-up phase of projects. According to a study from the Pembina Institute, that’s slashed Alberta’s natural resources returns by as much as 30 per cent over the last 10 years. Stelmach also wants more of the bitumen from the oil sands of Fort McMurray to be processed within Alberta, generating added tax revenue.

But Stelmach has stopped short of promising to set aside more money in special accounts, such as the Heritage Fund. The goal of the fund is to save for a rainy day—meaning a drop in oil prices—by investing royalties from

non-renewable resources outside of the sector. In Norway, a similar program sees the government invest 100 per cent of oil and gas royalties outside the country—a plan that has yielded $300 billion in a decade. Alberta started its fund 30 years ago, and it now has just $15 billion saved. Several Tory leadership candidates had promised to invest 30 per cent of oil and gas royalties each year. Not Stelmach, who has warned such a move could topple the province into deficit. But he will likely face repeated calls for the government to top up its piggy bank. “With all this cash gushing in, the hardest thing will be saying to Albertans, T can’t afford your pet project,’ ” says Kneebone. “A good way to do that is to say, ‘Remember, we’ve committed to saving your money.’ ”

Stelmach is expected to unveil his new cabinet on Dec. 15. The pressure is on. The government’s current mandate ends in 2008, which leaves just 18 months for Albertans to get to know him, and decide they want to keep the Tories around. All of this comes amid the hint of a slowdown. Albertans have been through enough booms and busts to know it’s inevitable. Even around Andrew, they’re starting to get nervous. “They were punching holes in the ground like gophers around here,” said Jason Hennig, a burly pipefitter, between sips of black coffee at the town diner. “I’ve noticed a drop in the last

six months. I don’t mean to be a pessimist, but the people of Alberta better watch out, because the oil boom is going to come to an end sooner or later.” M