Breaking the boom and bust cycle in Alberta

As Alberta struggles to emerge from one of its worst economic downturns

CALGARY — As Alberta struggles to emerge from one of its worst economic downturns, Premier Rachel Notley has been pushing to make the province less reliant on oil and the boom and bust cycle that comes with it.

The government has launched various grants and incentives in an effort to lure investment from a wide range of industries. Critics have instead called for lower taxes and a delay on environmental policies as a way of stimulating the province’s moribund economy.

Here’s a look at how the government’s efforts are playing out in a few key sectors:

Petrochemicals: To encourage more processing of its energy resources at home, the province has set up an incentive program to attract companies that will turn propane into plastic pellets used in everything from car parts to Canadian currency. This month, the government awarded $300 million in royalty credits to Pembina Pipeline Corp. to build a petrochemical processing plant that is expected to create about 2,250 construction jobs and employ another 150 people permanently. Inter Pipeline was handed another $200 million in credits for a similar facility, which is estimate to generate about 2,000 construction jobs and 95 permanent positions. The government says the incentives are needed to remain competitive, particularly with the U.S., but opponents say more jobs should have been created given the amount of public money being offered.

High-tech: Much of Alberta’s high-tech industry focuses on energy, so it is no surprise that it has been ensnared in the downturn as well. The government has been looking to foster growth by introducing a $90-million tax credit pool for investments in the technology sector set to start next year. The annual budget for the Alberta Enterprise, a Crown corporation that funds technology-focused venture capital firms, is also being doubled to $50 million for the 2016-17 fiscal year. It’s still early days for high-tech in Alberta though, with few big names moving into the province beyond the likes of General Electric, which set up an energy sector innovation hub in 2012.

Agriculture: Agriculture has long been a mainstay of Alberta’s economy. The province is looking to increase crop processing through programs like Alberta Innovates and the Agrivalue Processing Business Incubator, which help develop new products from farms. Ceapro, which received $2.4 million from the programs, is doubling its staff to 60.

It’s also expanding its Edmonton plant, which extracts natural ingredients that go into a range of products from an oat-based wrinkle cream to a lupine-derived hair care treatment. Hempco has announced plans to open a 56,000 square-foot facility in the spring that will make edible hemp products and employ up to 12 people. And Cavendish Farms says it’s investing $350 million to upgrade and expand its potato processing plant in Lethbridge, Alta., after the city and province committed to improving infrastructure in the area.

Film and television: Alberta’s film and television industry, which spent about $157 million in the province last year, is relatively small compared with Ontario and B.C. But it could be much bigger if it removed a limit on public grants of $5 million per production, says Bill Evans, executive director of the Alberta Media Production Industries Association. “We could double our production tomorrow if we were to lose the cap,” he said. Evans said the current system—with a total budget of $37 million—works well for attracting smaller productions, but if the province wants to compete for blockbusters it needs to boost the incentive allowance to compete with what others are offering. Neighbouring B.C. saw about $2 billion in spending in the film industry in the 2014-15 fiscal year with about $343 million handed out in a tax credits, while Ontario had about $1.5 billion in spending and doled out $292 million in credits last year.

Energy: Possibly the highest-stakes diversification bet of all, the government is pushing for an entire restructuring of the province’s power sector as coal-fired plants are to be closed, renewable energy installed, alternative fuels developed and further diversification explored. The government says the plan will spur major investments in natural gas-fired plants and development of about 5,000 megawatts of renewable energy, which alone is expected to attract more than $10 billion in spending and create at least 7,200 jobs. The government has also put together an energy diversification advisory committee to look at more ways of making use of, and creating jobs from, the province’s wealth of power rather than simply exporting it. A report is expected late next year.

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