Yedlin: We need an all-of-the-above approach to accelerate Calgary's economy
Calgary, February 11, 2023 – Alberta is at an inflection point. As a province endowed with an enviable resource bounty that has generated a significant budgetary surplus, we are also confronted with the twin challenges of decreasing emissions and energy security.
At the same time, we are faced with challenges not unique to other jurisdictions — a shortage of talent, rising costs and the need to invest in new infrastructure and renew existing facilities.
Finally, as price takers for our energy products, we continue to be vulnerable to global swings in energy prices and challenged by insufficient access to world markets.
That means there are priorities that need to be balanced as we look to set the stage to give Alberta the greatest optionality in terms of being able to seize opportunities for economic growth and diversification, leveraging our existing strengths and creating new ones.
We already have the building blocks: a young and educated demographic, a competitive tax environment and highly ranked post-secondary institutions. The University of Calgary was just ranked first in Canada in terms of the number of startups generated — for the second year in a row. But that won’t get us across the goal line of ensuring Alberta’s economy is poised for long-term economic growth. It will require collaboration across all levels of government and include both business and civil society.
As Canada’s third most diverse city — and the third most livable city on the planet — Calgary is arguably in pole position. Not only have we significantly diversified our economy in the last eight years, we’re home to more than 3,000 tech companies and are attracting the majority of venture capital funding that comes into the province.
But that’s not all.
In addition to our energy sector, which boasts the only energy industry alliance in the world committed to decreasing carbon emissions, Calgary is home to Canada’s only Energy Transition Centre, Fintech, AgTech and Biomedical startups. Much of this is thanks to our entrepreneurial spirit, commitment to hard work and our willingness — as so aptly represented by the University of Calgary’s tagline, “Start Something.”
The Calgary Chamber is as much a champion and cheerleader for Calgary as it is for the potential of the province. And today, with a generational surplus we didn’t plan for, much less expect in the aftermath of a global pandemic, now is the time to accelerate our economic future.
So first stop: what to do with the surplus?
We need a balance of paying down debt, growing the Heritage Savings Trust Fund, investing in one-time strategic infrastructure projects and, in the shorter term, helping businesses and people address affordability.
Like every jurisdiction on the planet, our debt has continued to rise over the last several years, currently sitting at 9.9 per cent of GDP. While this is the lowest in the country, interest payments are significant, accounting for 4.4 per cent of the provincial budget, which means paying down debt does free up funds for other important investments, such as restoring funding to post-secondary institutions.
Our Alberta Heritage Savings Trust Fund was the model for Norway’s $1.3-trillion sovereign wealth fund. It’s time we started to reinvest in the fund with revenues generated by the development of our non-renewable resources and ensure it can support the province in the future from the returns generated and by leaving the capital intact. That was the intent when it was established in 1976 — and it’s time for that discipline to be re-established for the benefit of Alberta’s future. If we don’t do this, eventually the other options for raising revenue will be to raise taxes or look at other revenue measures.
But, with $12.3 billion expected to come our way this year alone — about a fifth of our provincial expenditure — we have some room for thoughtful, one-time investments. To maintain the momentum behind Alberta’s diversification, we need investments in both our sectors of strength and our emerging industries.
Alberta is an energy powerhouse, and with the right policy landscape, that won’t change. Innovation in hydrogen and carbon capture utilization and storage, along with a focus on diversifying our energy mix means our energy economy will ensure we are global leaders.
Our expertise in natural resource development and a highly adaptable workforce means Alberta has two critical ingredients to diversify our energy mix as well as realize the potential of our clean tech sector. What’s needed is support from government that includes initiatives — and yes, funds — to de-risk technologies and support companies through their nascent stages so that they stay in Alberta and don’t go elsewhere for support and capital. This is of particular concern, given the incentives in place in the United States through the Inflation Reduction Act and the recognition by the European Union that they also must put in measures to be competitive with the IRA and ensure technologies and companies stay in the EU.
We also need government to invest in arts, culture, sport and entertainment — as major economic sectors — to make Calgary a magnet for tourism and talent and leverage the potential of our visitor economy. From the Saddledome to Arts Commons, the Olympic Oval to public transit, much of our infrastructure that was once state-of-the-art is now in dire need of being repaired, rebuilt or modernized. We need to show the world that we believe in our future — and that’s done by investing in bold projects.
While Alberta is expected to have strong growth relative to other provinces, 59 per cent of businesses remain concerned about rising costs and without an increase in the labour supply, the higher cost structure is unlikely to abate in the short term. Measures such as affordable transit, supports for non-profits and fuel tax and electricity rebates are welcome to both businesses and families — but they must be seen as temporary.
One of the key areas for longer term investments needs to be in growing our talent pool.
With almost 100 per cent of the growth in our labour force growth expected to come from immigration in the coming decade, finding work and a pathway to accreditation remains a major challenge for newcomers.
Additionally, our post-secondary institutions are experiencing record-high numbers of applicants and enrolled students and remain critical in our ability to upskill and reskill our workforce. Not only do we need to keep young talent in the province, we need to support those who are here, to augment their skills in order to stay here. In fact, the data shows that by 2030, and because of the growing number of in-migration, we will need to create another 34,000 seats for post-secondary students, including over 15,000 in Calgary. That’s the equivalent of creating another university the size of UCalgary.
Ultimately, people are our competitive advantage. With an increasingly transient and mobile workforce, investments in upskilling, community vibrancy, and social and physical infrastructure will materially impact our ability to attract and retain talent — and set us up for prosperity today and tomorrow.
So, it will be an all-of-the-above approach to accelerating our economy. But, between our entrepreneurial spirit, talented workforce and a good dose of funding, Albertans are in an enviable position to navigate a clear path toward long-term economic growth.
In a few short months, Albertans will be in the driver’s seat, deciding on the path they would like to see — for current and future generations, from our political parties. Albertans deserve a bold, ambitious vision that is inclusive and forward-looking, positioning the province for the economy of today — and tomorrow. We will be watching — and advocating — for what’s best for businesses in Calgary and Alberta.
Deborah Yedlin is CEO and president of the Calgary Chamber of Commerce.