MLA Report: Alberta challenge is how to even out economic peaks and valleys

By Medicine Hat News Opinon on January 26, 2018.

The province is seeing positive economic indicators such as increased employment, higher oil prices and growth in retail sales but as Alberta takes tender steps towards a recovery it’s important to remember the past five decades of boom-bust cycles we have faced.

One past trend has been to stress the need for diversifying our economy when oil prices are low but quickly disregard that philosophy once the boom returns.

Make no mistake, there will be another oil boom.

Likewise, there will be another oil bust.

The challenge our province has faced is how to flatten out the peaks and valleys of an oil-based economy.

We need to disentangle the important public services Albertans expect from their government from the price of a barrel of crude.

This government has taken actions to do just that, investing in much needed public infrastructure, standing firm on the need to retain doctors, nurses and teachers while supplying the framework to allow for petro-chemical diversification and expansion of agricultural processing. The commitment to energy diversification and conservation has resulted in investment in large-scale electric generation projects and households spending less on energy costs respectively.

For southeastern Alberta, this leadership has resulted in tens of millions of dollars in investment to improve emergency services, enhance flood resiliency, and replace roads and sewers.

It has also attracted investment in the local energy sector with the announcement last month of renewable energy projects that will provide a competitive price for electricity along with the earlier announcement of Cavendish Farms potato processing facility which will be a boon for local farmers.

But it is important to look at the past to understand why this government is taking this leadership path.

The creation of the Alberta Heritage Fund in 1976 was to “provide prudent stewardship of the savings from Alberta’s non-renewable resources by providing the greatest financial returns on those savings for current and future generations of Albertans,” according to the legislation.

But the idea of the Heritage Fund being funded directly through a portion of Albertans’ non-renewable royalty revenues to smooth out the boom-bust economy in the future ended by the late-1980s.

In the 1990s, Albertans paid a heavy price for continued lack of a diversified economy with hospitals sold off, investment in infrastructure cut off and no shortage of public sector layoffs.

By the first decade of the 21st century, despite the oil boom, the money flooding into provincial coffers was going right back out to replace hospital capacity lost a few years earlier, stemming the tide of crumbling infrastructure on an ad hoc basis and hiring back teachers to provide some relief to burgeoning classrooms.

There are those who look back fondly at those roller-coaster days rather than seeing those years failed to provide stability to future Albertans.

Alberta is a better place when governance of the province isn’t turned over to the price of a single volatile commodity.

Leadership requires more than criticism.

It requires a vision that inspires us towards a brighter future rather than a regressive past.