There’s been no lack of commentary on the weak state of Alberta’s economy. The double hit of low oil prices combined with the impact of the global pandemic has knocked the wind out of many businesses and sent unemployment soaring.
Even worse, there seems to be no quick rebound in sight. As 2020 draws to a close, the ongoing COVID pandemic is partially balanced by the optimism of the vaccine rollout. Still, the reality is that Alberta’s economy has been permanently altered and a snap back to normal is not on the horizon.
For so many years the energy sector was the growth engine of Alberta, pulling in foreign capital, creating good paying jobs and spurring construction and engineering spending. But now, the energy sector is taking on a new role: it’s no longer a growth engine, but a backbone. Our hydrocarbon production will remain significant for decades to come, but we can no longer rely on it alone to drive growth.
What sectors will take up the baton of “growth engine” in Alberta? There are some encouraging signs. Agriculture is having a great year — the warm, dry autumn helped boost yields and quality of wheat and canola. And a greater variety of crops including cannabis, pulses and beans, and vegetables are helping diversify the sector. Food and beverage processing is growing nicely. The tech sector is expanding smartly. And the transportation and logistics sector continues to gain momentum. Still, all of these combined are dwarfed by oil and gas.
With the challenges bearing down on us, adapting to new realities seems daunting. But what if adapting is easier than we think? Consider this story of adapting to change.
In the fall of 2019, my partner and I went to Australia for a vacation, traveling 2,500 kilometres along the northern coast along the Great Barrier Reef. Australia is a beautiful country, but full of danger: sharks, spiders, jellyfish, crocodiles and snakes seem to be lurking around every corner, ready to kill you.
Yet it wasn’t the spiders or sharks that scared me. I didn’t worry about crocs or snakes. I was terrified of one thing: driving on the left side of the road. I couldn’t wrap my head around how this was possible. I was sure I couldn’t do it.
In theory, I could have petitioned the Australian government to reverse lane direction to accommodate me during my vacation. Or I could have just driven on the right side of the road, dodging the oncoming traffic. Or I could have hoped my partner would do all the driving. Clearly none of these options was practical.
Finally, I had to take the wheel on the right hand side of the rented SUV. But when I did, something remarkable happened: it wasn’t nearly as difficult as I thought! That’s not to say it was easy — it required 100% of my concentration. It wasn’t as simple as driving at home, but it was not nearly as complicated as I had feared.
Adapting to change was made possible when I finally conceded that I was in a new system. I didn’t try to get Australians to drive like we do in Canada. I had to embrace the new environment. And once I did that, I adapted more quickly than I thought.
For Alberta, our economy has been jolted badly. The last few years have not been easy, especially for individuals and business owners who are at risk of losing everything. In the same way, adapting to a new economic reality will not be easy. But it may not be quite as difficult as we think, either.
Government actions to improve business competitiveness can be helpful. (The Business Council of Alberta has plenty of great recommendations.) But it can’t all be up to the government. Much of the heavy lifting around adapting comes down to our own attitudes and ideals.
First, we need to recognize that our energy sector needs diversifying. Fossil fuels will remain a backbone, but we need to add renewable energy, hydrogen production, minerals such as cobalt and lithium, carbon-capture technology, and geothermal technologies. It’s already happening, of course. But we must get past the belief that simply more oil pipelines and looser environmental regulations will get us back to the good ol’ days.
Second, Albertans need to embrace new realities of work. The traditional Monday-to-Friday, 9-to-5 jobs are gone. Workers in the knowledge and creative economy will be more flexible, working when and where it makes sense for them. COVID has accelerated this trend. The better employers can design flexible work systems, the faster our job market will recover.
Finally, we need to address the unacceptable gaps in income and opportunity. The old economic model of power and influence being held exclusively by a narrow demographic must be abandoned. Opportunities for women, racial minorities, youth and Indigenous peoples have to expand — and it has to go beyond lip service and sensitivity training. Misogyny and racism aren’t just loathsome personal qualities, they’re actually holding back our economy.
Let’s stop talking about getting our economy “back on track” — that’s just useless nostalgia. Instead, let’s embrace the new realities of the 21st century. Let’s forge new tracks and lead the world in energy, work and diversity.
Alberta’s economy has a bright future, but only if we act now.
The Modern Economist