Diversifying the Economy

"We know we need oil in Alberta, but we also need to diversify our economy. How are you going to attract startup businesses and old business to Alberta?"

First of all, some good news. Alberta's economy has diversified significantly in recent decades. About 30 years ago, one-third of our GDP–that is, one-third of the economy–was tied to oil and gas. That's now down to about 19%. So, oil and gas have shrunk as a share of the Alberta economy by about a third, even while that industry has grown in absolute terms. Meaning that other sectors of the economy have grown more quickly than oil and gas. A lot of that has happened because of population growth and immigration/migration to Alberta.

Second point: what I don't want is politicians and bureaucrats trying to impose centralized schemes for economic diversification. We've seen this movie before. We all remember what happened in the late 1980s, when the Alberta government "invested" billions of tax dollars through grants and loan guarantees to industries that were meant to diversify the Alberta economy, and they lost our shirt. Many of those so-called investments went belly up, which so often happens when politicians are "investing" other people's money. So, I prefer to let the market take the lead on diversification. Let's get the economic fundamentals right to make Alberta a destination for capital and investment in the whole spectrum of industries.

The third point should be to do no harm, but the NDP policies of higher taxes, additional regulations, higher labor costs, and especially higher power prices, which I believe are going to reduce diversification of our economy. What are some of the industries that we would like to diversify into? Manufacturing, agri-food, or food processing are a good example. These kinds of industries are very tied to power prices. Yet the NDP is in a rush to shut down our coal-fired electricity plants, replace them with much more expensive forms of intermittent power, and then also to subsidize base-generation through natural gas, for example. All of this is estimated to cost us about $30 billion dollars. It's going to be passed on to consumers in the form of higher power prices and taxpayers with higher taxes. How are you going to bring manufacturers here while you're increasing one of their major input costs, which is power prices?

The fourth point: I've got some ideas about how we can attract the kind of human capital that can create a startup culture in Alberta. Alberta controls about 6000 positions for primary economic immigrants from around the world through the Alberta Immigrant Nominee Program. There are tens of thousands of some of the brightest young people in the world, in the United States, many of them graduates of some of the top research universities on the planet that are working for tech companies, for example, in Silicon Valley. But they can't get their green cards. I'd like to develop a pilot program, within the Alberta Immigrant Nominee Program, to offer immediate permanent residency to some of these brilliant young people, if they have a credible offer of financial support for their startup enterprise to try to create a Silicon Valley North.