Andrew Eva moved to Edmonton from Toronto five years ago, seeking the high wages and living standard the province long afforded newcomers who don’t mind a little hard work.
He landed a job in construction, and a couple years later as the oil patch boomed, he took a position with a contractor that readies wellbores for rigs to begin drilling. Business was brisk with oil around $100 (U.S.) a barrel. Time off was rare.
Not any more.
“In the winter time, when it’s really busy, that’s when you’re making your money,” Mr. Eva, 29, said. “The winter was slow – there was still a bit of work – but now there’s nothing.”
As crude sank to about $50, companies clawed back billions of dollars of spending on drilling, prompting industry-wide layoffs. It’s also forced a rethink of how the government funds everything from health care to roads and bridges as Albertans prepare to head to the polls in a May 5 election.
Alberta’s worsening economy is the top issue of the provincial campaign. Albertans are being asked to accept or reject Premier Jim Prentice’s Progressive Conservative budget, which projects a $5-billion (Canadian) deficit, even after $1.5-billion in new taxes and user fees to replace some of the waning oil revenue.
Mr. Eva has the benefit of a base salary, a luxury in oil-field services. That and his savings will carry him through what is expected to be the slowest summer in years, but it’s not the route to the “big bucks” he expects. The downturn means, at the least, a pause for those like him seeking their fortune in the province, he says.
A year ago, the province was expected to maintain its record as a national economic leader as the oil patch boomed and the population kept growing with the influx of those seeking high-paying work. Now, cutting Alberta’s reliance on energy is suddenly job No. 1.
“The premise for calling the election, which Prentice talked about, was that we need a structural shift that is going to take the economy off of oil so that the proportion of the budget that’s accounted for by oil and gas resources goes down,” said Bruce Cameron, pollster and founder of the Calgary-based consultancy Return on Insight. “I think their biggest challenge is that is a five- to 10-year process, and when people start thinking politically five to 10 years, it’s just too far out.”
The latest polls are worrisome for the Tories. They show the right-of-centre Wildrose Party, led by Brian Jean, and left-wing New Democrats under Rachel Notley in a virtual dead heat for first place among decided voters. Mr. Prentice’s PCs are running third with three weeks before the vote.
The Wildrose has pledged to repeal the tax hikes and instead target inefficiency in government departments. The resurgent NDP has put forward a job-creation scheme funded through tax credits, and have promised to restore cuts to health care.
“Our sense in the first week of the campaign was people were much crankier than the PCs probably anticipated about the timing of the election and about the budget,” Mr. Cameron said. A recent uptick in oil prices could improve the mood and boost Mr. Prentice’s numbers, he said.
The Premier was forced into austerity. His budget assumes the take from energy at just $2.9-billion, or just 6.6 per cent of total revenue, as U.S. crude averages $54.84 (U.S.) a barrel. Last year, non-renewable resource revenue was 18 per cent.
In 2015, according to the government, the economy will hang a hairsbreadth above recession, with a forecast 0.4-per-cent increase in real GDP. Unemployment is projected to climb to 5.7 per cent with thousands of workers, directly and indirectly employed in oil and gas, being handed layoff notices.
The Bank of Canada said in its April Monetary Policy Report on Wednesday that oil’s collapse will have an adverse impact on GDP, and noted that migration from other provinces has declined by 65 per cent since the middle of last year.
The main culprit is the drop in energy-sector investment. The Conference Board of Canada has predicted that Western Canadian energy spending, the bulk of of which is in Alberta, will fall 21 per cent to $44-billion (Canadian) this year, and that job losses in the sector could total 8,000.
The prospect has had a ripple effect, no place greater than in the Calgary residential real estate market. In the first quarter, sales tumbled nearly 33 per cent from the year earlier, according to the Calgary Real Estate Board.
The government is also departing from the old PC script by borrowing big to fund infrastructure spending. It plans to issue $9.75-billion in debt this year, the largest financing in at least 15 years and a move that would have been unheard of in the tight-fisted Ralph Klein era.
Mr. Eva said conditions will eventually improve, a prospect that looks closer this week as oil prices trade above $56 (U.S.) a barrel for the first time this year.
“It will come back, but right now it’s pretty slow. I mean, if you’re looking for a job it won’t be as easy as it once was,” he says.Report Typo/Error