Bruce Graham is a senior adviser with Osborne Interim Management and the founding president and CEO of Calgary Economic Development.
The COVID-19 pandemic has been devastating and has left Canadians feeling desperate. Albertans, especially, have been shaken by the continued plunge of the price of oil. But now, as we look at how we can safely reopen our economies, we should start seeking inspiration in the many opportunities that will present themselves.
That’s more of an uphill climb when it comes to major energy projects, which have had trouble getting built in this country. Even before the pandemic, resource-based projects were either being abandoned or languishing under bureaucratic and legal delays. As a result, Canada has been developing a worrying reputation among foreign corporations as a place where major projects can’t happen.
The challenges don’t exist solely at the national level. They transcend to more routine projects that often require myriad municipal and provincial approvals. It is often local communities that wind up being branded as “business-friendly” or “hard to deal with."
All businesses that contemplate making a major capital investment evaluate risks as they relate to regulator approvals – that is, how much time it will take before work can get under way and how much it will ultimately cost. Similarly, decision-making authorities in the development-approval process need to find the right balance between supporting community benefits and the impact on the feasibility of new development projects.
It can be expected that in periods of strong economic growth, the demands for increased community benefits tend to occur through the development approval process. While in periods of slower economic growth, it can be expected that municipalities would be more accommodating for improved economic development outcomes.
When it comes to the global recession we are now experiencing, virtually all jurisdictions will be rolling out the red carpet and hanging up their “open for business” signs. However, when we begin the process of rebuilding Alberta’s economy, we will need to be far more aggressive and creative to attract business growth and reduce the risks for investors, while acknowledging the structural changes that have taken place. These changes have been amplified by controversial oil-and-gas divestment campaigns, exemplified by this week’s decision by Norway’s sovereign wealth fund – the largest in the world – to exclude four of Canada’s largest oil-sands producers from its portfolio.
Jurisdictions that can safely emerge from physical-distancing measures to rebuild their economies earlier will have an advantage. The economies of Singapore, Taiwan and Germany have been touted at different times as being able to ramp up capacity; other economies, including Canada’s, are still emerging from the pandemic. That doesn’t mean Canadian jurisdictions can’t compete globally, but surmounting the obstacles will require a more nimble regulatory environment to make up for that lost ground.
While businesses may see local expansion as lower-risk due to familiarity and the potential for closer management oversight, investing globally may still be necessary to address speed-to-market and cost-competitiveness issues in an increasingly protectionist world. What is even more important to local jurisdictions coming out of the pandemic is the fact that foreign investors will likely validate their investment decisions by the activity that has been initiated by local businesses and community-infrastructure projects. In other words, Canada can’t hope to attract foreign investment if local businesses are still sitting on the sidelines.
Jurisdictions with superior customer service and a reputation as being business-friendly, cost-sensitive and tax-competitive will be rewarded with increased business investment, along with the jobs that go with it. For municipal economic developers, targeted industry-sector development strategies will need to take a back seat, at least in the short term, to focus efforts on supporting the growth of any local businesses that have the ambition and the financial wherewithal to invest if we hope to generate the momentum needed to kick-start the economy.
There will be many lessons coming out of this pandemic, and one is that where you live, where you work and where you need to be to do business will be less relevant. This will put increased stress on those communities that generate a disproportionate amount of their property-tax revenue from their commercial-assessment base, particularly office and retail properties that may see reduced demand after the crisis.
Work forces of the future that are not location-sensitive will be increasingly mobile and dispersed, with cost-sensitive warehouse and distribution location choices driven by market access. For those jobs that are location-sensitive, people and migration will increasingly follow businesses – not the other way around. Vibrant communities will follow the jobs and the opportunities created by growing businesses.
The vibrancy of the communities we live in and the opportunity to prosper after COVID-19 will initially have to come from within, generated through robust business-retention rates and the expansion of communities of all sizes. Jurisdictions that have efficient, streamlined development processes that businesses can bank on and that effectively foster business growth will be better positioned to attract new jobs and investment. And the pandemic has put these facts into stark relief – it’s now or never to rebalance Alberta’s economic priorities.
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