Alberta tops Fraser Institute’s annual ranking as most economically free jurisdiction in North America

Alberta Premier Alison Redford. THE CANADIAN PRESS

It won't surprise anyone that the free enterprise-oriented Fraser Institute has dubbedAlberta the most economically-free jurisdiction in Canada. But would you be shocked to learn it tops the rankings for all of North America?

That's the finding of the Vancouver-based think tank's 2011 Economic Freedom annual report for this continent.

Alberta beat all Canadian provinces, as well as all 50 U.S. states on the institute's all-government index, which measures the impact of federal, provincial or state and municipal governments on economic freedom.

The index ranks jurisdictions based on the size of government, amount of taxation and level of 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," Fred McMahon, a Fraser Institutevice-president and co-author of the report, told the National Post. "It's been a long-term trend that's really beginning to bite now."

McMahon pointed out the rankings are based on 2009 data, which don't factor in even greater U.S. government stimulus spending, compared with Canada.

Alberta Finance Minister Ron Liepert said he was not surprised at his province's position. He said that while he was energy minister he met often with U.S. legislators who displayed what he called "Alberta envy" at the province's 10 per cent flat tax on personal income and zero sales tax.

A pumpjack sits surrounded by a field of Canola just south of Redwater, Alta.

"I remember a conversation with a fellow from Wyoming," said Liepert. "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."

Canada also topped the United States in the institute's previously released ranking of economic freedom in the world, dropping to 10th place with a score of 7.6 out of 10 while Canada rose to sixth, scoring 7.81. Hong Kong was first, scoring 9.01 out of 10.

Interestingly, on the institute's subnational ratings, which takes out the federal component, Alberta drops to sixth, with South Dakota in first place. The institute said the difference is due to the much lower level of federal spending in Alberta.

The institute said in a news release the level of economic freedom translates directly into living standards.

"The connection between economic freedom and prosperity is clearly seen in the report's finding that the 12 Canadian and American jurisdictions with the highest levels of economic freedom had an average per-capita GDP of $54,435 (Cdn) in 2009, compared to the 12 lowest-ranked jurisdictions in North America, where average per-capita GDP in 2009 was $40,229," it said.

But before Canadians start popping the Champagne corks, the report suggests the rest of Canada doesn't measure up so well on the institute's yardstick.

Delaware finished second behind Alberta in the rankings, followed by Texas, Nevada and Colorado.

"The Canadian provinces, with the exception of Alberta, are all clustered at the bottom of theeconomic freedom ratings, along with Hawaii, Mississippi, New Mexico, and West Virginia," the institute's report summery said.

However, it said, British Columbia, Saskatchewan and Newfoundland improved significantly. Saskatchewan took the biggest jump, climbing to 32nd from 53rd and second overall among the provinces.

But McMahon pointed out it's not because of any major change in the prairie province but due to U.S. states tending downward.

Newfoundland and Labrador, at 37th overall, was the third-ranked province.

Canada's two biggest economies, Ontario and Quebec, finished near the bottom of the 60 Canadian and U.S. jurisdictions, finishing 49th and 58th respectively.

"The low economic freedom scores for Ontario and Quebec are quite troubling, given that they are Canada's two most populous provinces," McMahon said.

"If governments in these two provinces want to boost prosperity and improve the standard of living for their residents, they should look to the successful policies of provinces where economic freedom has increased."

British Columbia was 43rd, Manitoba 56th, New Brunswick, 57th, Nova Scotia 59th and Prince Edward Island 60th and last.

The complete report is available online here.