Unrest and uncertainty: Alberta an unfamiliar battleground for Harper

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Alberta's ailing economy and its new left-leaning provincial government are combining to turn the province into an unfamiliar battleground for Stephen Harper's federal Conservatives.

Previously the most reliable stronghold for conservatism in Canada, Alberta may no longer be a lock for the Tories as its conditions have worsened. The steep decline of the energy sector - the industry Mr. Harper has promoted as key to the country's global ambitions - has displaced thousands of workers and the effects have spilled over into other parts of the economy as the campaign begins toward an Oct. 19 election.

Meanwhile, a widespread desire for change that vaulted Premier Rachel Notley's New Democratic Partry into power provincially, ending 44 years of Progressive Conservative rule, may linger to play out on the federal stage. The question is, to what degree?

"Given the international collapse in the price of oil, there's not a lot that Harper and his government could have done," said Bruce Cameron, pollster and founder of the Calgary-based consultancy Return on Insight.

"But just like when times are good and there's a halo effect for the governing party, when times are bad there's a negative halo effect," Mr. Cameron added.

"I think that's what the Conservatives will be facing. There's unrest, there's disquiet, there's uncertainty, and all of those things don't really lead to a strong, positive feeling about the governing party."

In the lead-up to Sunday's election call, the Conservatives have shown they are indeed worried about weakness on their western flank, with Alberta MP and Defence Minister Jason Kenney lavishing the province with more than $2-billion in funding announcements, including $1.5-billion for a massive light-rail transit project in Calgary and $583-million for construction of the city's long-planned southwestern ring road.

Crude's collapse, and the retrenchment of oil and gas companies large and small, have led many forecasters to project that Alberta has already lurched into recession after several years of leading the country in growth. Related

The industry's capital expenditures are expected to drop by $31-billion this year. As many as 125,000 direct and indirect jobs could be eliminated in Alberta, the Petroleum Labour Market Information Division of the industry group Enform has predicted.

Indeed, Cenovus Energy Inc. and Encana Corp. announced additional job cuts last month to cope with oil prices that settled just over $47 (U.S) a barrel on Friday in a second major dip in the fall that began nearly a year ago. Cenovus's chief executive officer, Brian Ferguson, said Thursday the company was planning on the commodity-price trough to last as long as three more years.

This could be troublesome for the government's re-election hopes, as the prime minister has made energy-industry expansion the cornerstone of his economic policies. Meanwhile, under Mr. Harper's watch, major pipeline proposals that the government has championed, such as TransCanada Corp.'s Keystone XL and Enbridge Inc.'s Northern Gateway, remain stalled several years after the companies applied to build them.

Still, it would be a mistake to wager that Mr. Harper has lost all support in the province that embraced him first and most enthusiastically, and where energy is still very much the dominant industry, said Faron Ellis, political science professor at Lethbridge College.

"[The energy downturn] is most likely to affect the Conservatives outside of Alberta than inside," Mr. Ellis said. "They are susceptible to the argument that far too much energy and political capital has been invested in promoting a industry that is cyclical, that can't sustain the economy when the cycle turns."

Ms. Notley's provincial NDP has begun with energy policies that clash with Ottawa's, including more stringent environmental rules and carbon emission reduction policies, even while trumpeting the importance of the oil sands. She raised corporate taxes by 20 per cent to help cope with a steep decline in energy revenues and has started a review of royalty rates.

Mr. Cameron said Ms. Notley's early popularity and apparent pragmatic approach to the economy stand to benefit Thomas Mulcair's federal NDP.

Early poll numbers show the Conservatives entering the campaign with a strong lead in Alberta, but with support for the opposition growing. In last spring's provincial vote, the NDP started in a distant third place behind the PCs and Wildrose, and rallied throughout the campaign.

"There are people - though they're a small minority - who are talking about the dire consequences of having voted NDP in Alberta," Mr. Cameron said.

"I think a major turning point in the federal election campaign may be the release of the Alberta budget in the fall. That will be a critical thing to watch - we'll see if the halo that she created survives that."

If it does, Mr. Mulcair could take several seats in Alberta and even sweep British Columbia, he said.

The Notley government is expected to table a budget in October with a deficit of at least $5-billion, a similar figure to the last PC budget in March.

Mr. Ellis said he wonders if the provincial government would delay its budget if it contains worse-than-expected news, so as not to derail Mr. Muclair's hopes.

Nationally, a Globe and Mail/Nanos Research poll published last week found that 47 per cent of sample of 1,000 Canadians said a Mulcair victory would have a "positive" or "somewhat positive" impact on the economy. That was well ahead of Mr. Harper's 31.7-per-cent positive result. Liberal Leader Justin Trudeau garnered 41.4 per cent.