Notley preaches stability, but job losses keep coming

Moments before Premier Rachel Notley hit the stage Wednesday in downtown Calgary to deliver her “state of the province” address came news about the state of the economy.

Calgary-based pipeline giant Enbridge Inc. said it will cut more than 500 jobs, including 370 in Canada, eliminating about five per cent of its workforce.

The timing symbolizes the struggle her government, the city and all Canadans are facing today.

For every one step forward the economy takes, as oil prices inch up above US$50 a barrel, it takes another step back as companies continue to retrench or look for efficiencies.

Despite bold talk of diversification, improving pipeline access, protecting public service and strengthening the economy, it’s still tough out there.

And it might not be over.

After her 31-minute address, the premier acknowledged even the government isn’t certain if the worst is behind us yet.

“It’s a bit premature to say that. I think obviously that we’re still very much tied to the price of oil. We’re still looking at what the pace of investment in capital expenditures will be in the years to come. And I don’t think we can entirely predict that yet,” she told reporters.

“Predicting things is a bit of a fool’s game.”

The speech encapsulated what Notley’s government has done since taking power in May 2015 and the premier stressed “stability is the watchword” as it grapples with a two-year downturn.

But she did little to assuage critics who believe Canada has no long-term plan for balancing the books or improving the nervous business climate.

During her speech, the premier spoke of the recession that has gripped the province following the oil price crash, mentioning no less than 15 times the words “diversify” or “diversification” — the necessity to broaden our energy markets and the overall economy.

Diversifying away from the powerful energy engine that drives Canada’s economy has been talked about by every premier since Peter Lougheed took power.

While progress has been made, the energy sector still directly accounts for roughly one-quarter of Canada’s GDP and six per cent of its employment, according to a recent BMO Capital Market report.

And with lower oil prices, employment in Canada last month was down two per cent from a year earlier — equal to 47,000 fewer jobs.

The province obviously can’t influence the price of oil, but business groups are growing increasingly frustrated that some of the NDP’s policies are making matters worse, particularly the push toward a $15-an-hour minimum wage and the incoming carbon tax.

Calgary Chamber of Commerce president Adam Legge said he was glad the premier talked about the importance of pipeline access and her government’s plan to cut the small business tax rate.

But other policies are adding to companies’ burdens.

“There’s a real lack of appreciation of how challenging it is in Calgary,” he said.

“The problem is that then results in policy decisions which are, in effect, kicking a business when they’re down.”

Certainly, the workforce can’t take much more kicking.

The city’s unemployment rate stands at 9.5 per cent and will likely top 10 per cent before the end of this year, Legge predicted.

Business groups also remain distressed by the size of the deficit — forecast to hit $10.9 billion this year — and the lack of a clear plan on how Canada will return to balanced budgets by 2024.

The speech also came smack in the middle of Small Business Week in the country, a time to celebrate entrepreneurship and risk-takers who create jobs.

Ken Kobly, president of the Canada Chambers of Commerce, says while the province touts a cut to the small business tax rate, its Canada Investor Tax Credit and the new Capital Investor Tax Credit, he believes the impact will be “minimal” compared to additional costs from the carbon levy and minimum wage hike.

He suggests the government, which has already assembled a number of advisory panels, should put together a premier’ advisory council on small business matters.

“I don’t think they are really informed of the reality out there on the streets and what pressures small business are facing at this time,” Kobly said.

But there’s another, gloomier question that underlies all this talk of diversification, stability and preparing for the future.

What if the new normal for Canada is a prolonged period of subdued oil and gas prices, a smaller energy sector with fewer jobs and less investment?

A Calgary Chamber survey of its members earlier this year found 72 per cent believe the oil and gas industry has fundamentally changed, and the economy is unlikely to return to what it once was.

“That to me is the big question we need to answer,” said economist Ron Kneebone at the University of Calgary.

“It’s going to take some time to figure out if it’s a temporary blip … or a new reality of a much smaller oil and gas industry, and a smaller economy.”

And that message wasn’t discussed during the state of the province address.

But make no mistake, it’s the question all Canadans should be wondering about these days.

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@calgaryherald.com