Saturday, 7 December 2019

Is Kenney Costing Alberta Investment and Jobs?

Calgary Economic Development CEO Mary Moran reported recently that a tech company that had considered setting up its head office in Calgary had changed it mind. The reason? Talk of separation. "We as an organization just lost a 1,000-person company that didn't come to Calgary, selected another city, because they're concerned about Wexit," she said. The loss of those 1,000 jobs should not come as a surprise—investors do not much like political instability.

And Kenney is at least partly to blame. While he claims to be a loyal Canadian, not interested in separation, he keeps stirring the pot. He rants endlessly about how Ottawa, or more specifically Justin Trudeau, is out to get us. The fact the feds bought us our very own $4.5-billion pipeline has not dampened his rhetoric. He knows separation would be folly but he also knows that it's great leverage to use against the feds. And it's unlikely his pugilistic nature will allow him to tone down the rhetoric even as Wexit talk loses us jobs and dollars.

This isn't the only factor discouraging investment in Calgary's tech sector. This growing field has been a beacon for diversification aided by tax credits, including the Alberta Investor Tax Credit and the Capital Investment Tax Credit, to help startups get funding. Kenney's government has now axed the credits. According to Brett Colvin, CEO of Goodlawyer, an online marketplace for micro-legal services, "When they froze the credit, that was definitely some wind out of our sails. It's definitely going to have a huge impact for my company going forward and many other startup companies and companies in the technology space." Many smaller tech companies have already laid off employees and others have had to consider whether they even have a future in Alberta.

In the same vein, the UCP have cut Alberta Innovates, the province's largest research agency, funded primarily by the provincial government. It will lose up to 125 jobs, 20 per cent of its workforce. Alberta Innovates offers grants and programs to assist entrepreneurs and researchers in a wide variety of industries. Imperial Oil CEO Rich Kruger, emphasizing that new technologies can take a long time to develop, expressed concern about the cuts. "Research is an area where continuity and focus tends to be of a longer-term nature," he said.

Chad Saunders, at the University of Calgary's Haskayne School of Business, suggests the government may be relying on larger companies. Businesses making a profit of over $500,000 per year will enjoy a tax cut from 12 to eight per cent. Let's hope that works.

Aside from dependence on large companies, Kenney has also doubled down on oil. Among those who have noticed this dependence on fossil fuels is Moody's. The credit rating agency has downgraded Alberta's credit rating, observing "a structural weakness in the provincial economy that remains concentrated and dependent on non-renewable resources."

Moody's was also no doubt paying attention to the 30 percent increase in the province's budget deficit under the UCP, due in large part to reducing the corporate tax and ending the carbon tax. Mount Royal University professor Duane Bratt also noted that the agency was influenced by a looming battle with labour. Labour strife, muted under the NDP, now rampant, will not encourage investment.

Nor did the province's environmental behaviour escape notice. The report states, "Alberta's oil and gas sector is carbon intensive and Alberta's greenhouse gas emissions are the highest among provinces." The new government's climate change policies, including rolling back the NDP's climate programs, won't help. Even wiser heads in the oil patch recognize the need for strong measures to deal with global warming. And investors in other industries are likely to look with suspicion on a jurisdiction that appears anti-environment, particularly when the premier displays a hearty aversion to environmentalists.

Cutbacks in health care and education are not likely to help either. Companies looking to set up shop look for more than economic opportunity. They look also for quality of life.

At a recent business forum in Lake Louise, presenters mentioned ongoing environmental criticism, delays in building pipelines, and a surge of separatist sentiment as hurting Alberta's reputation. Kenney is contributing to two of the three. Even as he flits about the continent looking for investment—New York, Houston, wherever—his policies at home undermine his goal.

1 comment:

Anonymous said...

Good summary. Shows what happens when you put all your eggs in one basket - digging up tar sand. The civilized world says, what else you got? Should we put our tech centre there so our employees can enjoy a decent life? And the answer is nothing - you are in a jurisdiction run on ideological principles and we expect you to respect that. In fact Kenney's cutting back on funding options for the future. How far up your own ideological backside do you have to be to double down on neoliberal nonsense? Kenney far.

When Alberta's provincial employees have had their pension pockets fully picked and wages reduced, Kenney will outsource their jobs to sort of super temp agencies, where third party private robbers will employ people for less than they make now and pocket the difference. How to respect your fellow citizens. Not.