Alberta is set to release a multibillion-dollar economic recovery plan Monday that aims to bring the province back from the financial devastation caused by the COVID-19 pandemic and decimated oil prices.
The plan will be laid out in two stages: short-term investments centred on infrastructure and longer-term efforts to diversify the economy, according to a senior government source. Monday’s announcement will include more than $500-million for eight or nine initial, shovel-ready infrastructure projects.
The Globe and Mail is not identifying the source because they were not authorized to speak publicly about the issue.
While the province will move toward diversification, Alberta Premier Jason Kenney said the economic blueprint will also include policies that “ensure a strong future for the oil and gas sector.”
The first part of the recovery plan will provide support for municipalities and infrastructure projects, focusing on job creation and opening up parts of the province that have been hardest hit, the source said. That could mean twinning or expanding highways, for example, to create a better corridor to get agricultural products to market.
Long-term diversification plans to help specific sectors will be announced by the government in the coming weeks, but the source said they would include items such as logistics hubs for e-commerce, agriculture, technology and rare mineral development.
Mr. Kenney last week called the plan “a game-changer.” It will be a “bold, ambitious strategy,” he said, that will send a “clear message that Alberta is the best place in which to make job-creating investment.
“It will be, I think, by an order of magnitude, the most ambitious economic recovery plan offered by any province – at least to date,” he said.
Alberta may require more in the way of fiscal recovery plans than other provinces. The economy was already struggling when COVID-19 began its global spread. The unemployment rate hit 15.5 per cent in May – nearly two percentage points above the national average – and Mr. Kenney has warned it could swing as high as 25 per cent. The Conference Board of Canada forecasts the province’s GDP will decline 6.8 per cent this year.
Previous Alberta governments have talked about the importance of diversifying the economy to lessen its reliance on unpredictable oil and gas royalties, particularly when the price and demand for crude falls, affecting provincial revenues. The former NDP government, for instance, explored petrochemical programs and the technology sector as potential economic drivers.
Alberta Finance Minister Travis Toews said in an interview that although the current plan will present an “architecture” for diversifying the economy, he thinks there is only so much a government can do aside from creating an environment where other industries can flourish.
“I’ve come to the conclusion that, in some ways, there are limited things a government can do to truly diversify an economy,” he said.
“There are a lot of things the government can do to get in the way of true diversification, and so our view is that we want to get government out of the way,” Mr. Toews said. “We want to ensure we have the most attractive business environment where creative and innovative Albertans and businesses can allocate capital into sectors of the economy where they believe there’s promise and a future.”
Mr. Kenney last week pointed to the information technology, digital and information sectors as ripe for job-creating investment opportunities.
Changes on that front could go some way to repairing the damage caused to the sectors when his government axed a swath of targeted tax credits – introduced by the former NDP government – that helped boost technology and innovation in the province. They included the Scientific Research and Experimental Development Tax Credit, the Alberta Investor Tax Credit, the Capital Investment Tax Credit and the Interactive Digital Media Tax Credit.
The current government has instead focused on broad corporate tax cuts, which have been criticized for not helping startups in the tech sector that can’t take advantage of tax cuts because they are not yet profitable.
Cory Janssen, co-founder of AltaML Inc. – an Edmonton company that develops machine learning applications – was part of an industry working group formed by the government following an outcry over the tax-credit cuts. Conversations he had with the province as part of that group left him optimistic about the long-term plans for the tech sector that will be contained in Monday’s economic recovery strategy.
“All indications I have is that over the next few weeks and months, it will be a turning point about what tech could be in this province,” Mr. Janssen told The Globe.
Mr. Toews said he has no regrets about cancelling tax credits aimed at the tech sector and for research and development, and he noted ideas from the working group would be reflected in Monday’s announcement.
Long-time Edmonton entrepreneur James Keirstead, chief executive of Levven Electronics Ltd., said new government policies are crucial to Alberta’s reputation as a jurisdiction that welcomes tech investment – an image that took a battering when the United Conservative government axed the tax credits.
He said bringing back research and development credits would soothe jittery investors who are more familiar with the oil and gas sector, and create jobs by encouraging cash injections in startups and scale-ups.
“Let’s face facts: The technology industry is generating more jobs faster than anywhere else, so why wouldn’t we be investing in that?” Mr. Keirstead said.
Alberta’s Economic Recovery Council – chaired by economist Jack Mintz and including former prime minister Stephen Harper – provided some of its own ideas for the strategy, but did not write the plan.
Although Monday’s document is expected to pivot the province toward technology, it will also include policies aimed at the oil and gas sector. Those plans are likely to touch on the natural gas strategy the government is in the final stages of developing, which also includes policies around hydrogen and petrochemical development.
Oil lobby group the Canadian Association of Petroleum Producers (CAPP) would like a recovery strategy that reduces project delays, and sets the right tax and royalty terms to encourage investments in new projects.
“The global competition for investment is going to be extremely fierce in the face of a recovery. All jurisdictions are going to be faced with the need to kick-start their economies, so relative competitiveness for capital is going to be absolutely critical,” said Ben Brunnen, CAPP’s vice-president of fiscal and economic policy.
He said long-term plans must be developed in a way that enhances the sector’s environmental performance, and encourages companies that are advancing emissions-reduction technologies in the oil sands.
“We need a strong oil and gas sector, but we also need strong sectors across our economy. We need the right incentives to encourage environmental performance and technology advancement,” Mr. Brunnen said.
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