Alberta sending global investors wrong message
Back in 2008, I spent several hours in a committee room at the Manitoba legislature listening to the public present their views on some new legislation.
A key lesson from that day is quite relevant to Alberta’s current job losses, tax increases and other economic woes.
At the time, Manitoba’s NDP government had just announced, without any notice, new legislation that would stop most hog farms in the province from being able to expand. Just as startling was the government’s use of spurious ‘evidence’ as justification for their decision.
Hog farmers, who were part of a billion dollar industry at the time, were outraged. Hundreds of them traveled to the legislature in Winnipeg to speak out about the government’s legislation. But oddly enough, it was a presentation by a dairy famer that day that really struck a chord with me.
Dawn Harris had a dairy farm in southern Manitoba, so she wasn’t impacted directly by the hog legislation. Yet, Ms. Harris still took several hours out of her day to travel to the legislature and share her concerns. In her closing statement, Harris noted:
“…If Bill 17 had been under consideration when my husband and I had looked at going dairy farming, I don't think we would have gone dairy farming. It would have been too much risk.”
Harris was worried that in the middle of the night, the government could decide to freeze growth in her industry as well.
What does this have to do with Alberta? The example demonstrates how a relatively small company reacts to a government decision out of nowhere – even if it involves another industry. Now pause for a moment and imagine what CEOs of multi-billion dollar oil companies and other firms must be thinking about the past two years in Alberta.
If you were in their shoes, how would you feel about investing in Alberta after the Notley government raised business taxes by 20 per cent in the middle of a recession? How would you feel about the Notley government’s sudden decision to completely restructure the province’s electricity sector?
The Notley government’s carbon tax – a tax change that was not part of the NDP’s platform in the last election – is another example of a poorly thought out government policy that has come out of nowhere and hurt investor confidence. The Notley government’s decision to raise the minimum wage by 50 per cent has further exacerbated the situation.
Unfortunately for Albertans, the global investment community has taken note of the Notley government’s actions.
A Fraser Institute report from this past December shows the province of Alberta has dropped from 14th best place in the world for oil and gas companies to invest in 2014 to 43rd place in 2016. Meanwhile, Saskatchewan currently sits at 4th best in the world (while operating under the same market conditions and similar geography).
This begs the question – how many jobs could have been created in Alberta had the Notley government not scared off oil and gas projects?
Scotia Bank, in a report to investors back in July of 2016, discussed the province’s recent changes to the electricity sector then noted, “we believe this action by the gov’t will further erode investor confidence in the AB power market.”
How many electricity-intensive businesses reviewed that report and then decided to expand their operations, and hire employees, in a different, more stable jurisdiction?
This past December, Rafi Tahmazian, a Senior Energy Portfolio Manager with Canoe Financial (a firm that manages over $3.5 billion in assets), told the Business News Network – “there’s an insane amount of naivety on the part of [Alberta’s] government.”
“Naivety” is being polite. What Alberta’s NDP government has done is take a difficult economic situation and make it worse. One thing should be clear; the next election, and efforts to begin restoring investor confidence, can’t come soon enough.
Colin Craig works for the Manning Centre and is the author of The Government Wears Prada
This column was published by the Calgary Herald on February 18, 2017