Liquid mine tailings are pumped into a drying area at a Suncor Energy Inc. oil sands operation.Nathan VanderKlippe
Albertan politicians and policy wonks have talked for a long time about diversifying their province's economy away from dependence on petroleum, without many results, but a new report published this week sets out a path toward that goal in a practical and well-thought-out way.
The 116-page policy paper, Shaping Alberta's Future, by the Premier's Council for Economic Strategy, has appeared in the final week of the current legislative session - the last in which Ed Stelmach will be present as Premier. It amounts to a good, forward-looking legacy for him.
The authors include the former federal cabinet minister David Emerson, David Dodge, the former governor of the Bank of Canada, and Sir John Bell, Regius professor of medicine at Oxford. They make clear that the reason for eventual diversification is not that Alberta's petroleum will run out. The problem is on the demand side, not about supply. The oil is heavy oil, costly to extract.
That is, the market is likely to dry up, long, long before the oil sands themselves do - because of cheaper sources of energy elsewhere. When that will happen is unknown, but it needs to be planned for. Moreover, public policies abroad may speed up that process.
The report persuasively argues that Alberta government revenue from non-renewable resources should no longer go into year-to-year public spending, or even into business-as-usual infrastructure or an investment portfolio, but rather into advanced infrastructure that will encourage the growth in Alberta of the industries of the future, such as biotechnology and information and communications technology.
Hitherto, efforts to overcome the quasi-monoculture of petroleum have been hobbled by the vagaries of the business cycle, and the resulting ups and downs of provincial revenue. In their report, Mr. Emerson and his colleagues have outlined how Alberta can steer a steady course toward long-term wealth and well-being. Mr. Stelmach's successor should read it attentively.