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Four years ago, when the election writ dropped for the 2019 campaign, Alberta’s economy was tilting on a different axis — a world before COVID-19, soaring inflation or the return of US$100-a-barrel oil.
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Benchmark U.S. oil prices were mired below US$60 a barrel, while the province was throttling back oil production due to a lack of pipeline capacity.
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The Keystone XL pipeline project was still alive and the $7.4-billion Trans Mountain expansion project was caught up in legal challenges, while the provincial economy was set to grow by a feeble 0.1 per cent throughout 2019.
On Monday, as UCP Leader Danielle Smith and NDP Leader Rachel Notley held separate Calgary events and officially kicked off the 2023 election campaign for the May 29 vote, the provincial economy is in a vastly different place, and both parties tried to burnish their credentials while lambasting the other’s record.
“It was all about the economy in 2019. That is not the case now,” Mount Royal University political scientist Duane Bratt said Monday.
“Those economic circumstances are completely different, and that affects the politics.”
Today, the economy across Canada is rebounding from the pandemic, while rising interest rates and the rising cost of living are critical consumer concerns. Oil prices are now hovering around $75 a barrel.
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Data released Monday by Statistics Canada shows the Alberta economy expanded by 5.1 per cent last year, as “the oil and gas extraction subsector had another strong year in Western Canada, as increased oil prices spurred higher output.”
The Trans Mountain project is more than 80 per cent complete — although its price tag has soared into a stratosphere at $30.9 billion — and oil output in Alberta averaged record levels of production at 3.7 million barrels per day (bpd) last year.
However, Keystone XL is long since dead and buried, costing the Alberta government an estimated $1.3 billion after its investment was lost when the project was nixed by U.S. President Joe Biden.
After a robust 2022, Alberta’s economy continues to expand, although it’s expected to slow down this year to 2.1 per cent growth, followed by 2.8 per cent in 2024, the Conference Board of Canada forecasts.
“In our underlying forecast, we do see Alberta as kind of the stronghold for Canada in the next year,” said Pedro Antunes, the board’s chief economist.
“That’s, in large part, because Alberta is still really recovering from what has been a long, drawn out, almost recessionary period.”
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Oil prices have moderated in recent months — after hitting more than $100 a barrel last spring following Russia’s invasion of Ukraine — and it’s unclear what effect a global economic slowdown will have on energy demand through the remainder of 2023.
But energy sector investment has gone up and drilling activity was strong during the winter months.
Another key economic force in the province today is the strong level of population growth, fuelled by rising immigration and interprovincial migration over the past year, said Alberta Central chief economist Charles St-Arnaud.
Alberta added more than 45,000 people in the final three months of last year, with a net increase of more than 29,000 new residents from international migration, and 11,000 people moving from other provinces.
“The fact our population is growing by about three per cent year over year is putting a lot of momentum into our growth,” he said.
“That has a spillover on the rest of the economy.”
However, wage growth has lagged the rest of the country recently, St-Arnaud noted.
The province’s unemployment rate stood at 5.7 per cent in March, down a half-a-percentage point from a year earlier, but it’s still above the national rate of five per cent.
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For business operators, ongoing labour shortages remain a key issue in 2023.
With new investments expected to flow into promising areas such as hydrogen, carbon capture projects and agricultural technology, companies need to fill open positions — and there’s a need for the province to invest in post-secondary institutions and re-skilling workers, said Adam Legge, president of the Business Council of Alberta.
“People and talent and skills are the No. 1 issue for our members and most companies I talk to,” he said.
“We have shortages now and we will have even more shortages if we’re trying to make (these) significant investments.”
On the opening day of the 2023 election, economic and pocketbook issues did surface on the campaign trail. Smith announced the UCP will create a new eight per cent income tax bracket — beginning next year — on income earned under $60,000 annually, with people making above that rate saving up to $760 a year.
Those earning less will see a 20 per cent cut to their provincial taxes.
“We have done an incredible amount of work over the last four years to rebuild confidence in our Alberta economy and it’s working,” Smith told reporters.
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Notley touted her party’s previously announced competitiveness, jobs and investment strategy, saying it will create more than 47,000 jobs and attract an estimated $20 billion in investment.
“With an NDP government, Albertans will see real action to grow and diversify our economy,” she said. “Diversification is an absolute necessity.”
The state of the economy may not play the same starring role as it did four years ago. Yet, given the importance of attracting investment and creating jobs for the future, it will remain a key campaign issue over the next four weeks.
Chris Varcoe is a Calgary Herald columnist.
Varcoe: Alberta's economy no longer plays starring role, but still key in 2023 election - Calgary Herald
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