KEVIN LIBIN: THE LIE THAT IS ‘DIVERSIFY.’

POLITICIANS GIVE SUBSIDIES CLAIMING ALBERTA IS NOT DIVERSIFIED, BUT IT’S NOT ACTUALLY TRUE.

Diversifying is hotter than ever in Alberta. Even Progressive Conservatives are diversifying into hard-core labour socialists, as Sandra Jansen did last week when, after bailing from the PC leadership race, she found a more secure gig by joining Rachel Notley’s NDP in bashing her former Tories.

Diversifying is breaking out among Alberta’s progressives, too, with Calgary Mayor Naheed Nenshi clashing with Notley over her flirtation with passing laws that would retroactively nullify inconvenient provincial contracts with power producers. And mayors and councillors from across the province, normally fans of big-spending lefty provincial governments, are letting their own diversity flags fly: They booed the deputy premier at last week’s convention of the Alberta Association of Municipal Districts and Counties, over the NDP’s climate policies.

Albertans from all walks of life are showing diverse ways of being miserable, either with the province’s bewildering politics or its battered economy, or most likely — given that the Notley government’s popular support has sunk below 20 per cent — the effect of politics on the economy. The latest polls show 80 per cent of Albertans nursing some personal list of grievances. As Tolstoy might say, every unhappy voter is unhappy in their own way.

Presumably that isn’t the kind of diversifying the NDP government was hoping to see in Alberta when the party launched to power last year promising to reshape the provincial economy to make it more diverse. What exact level of diversification would be the perfectly correct level, the NDP has yet to say. But it’s hard not to notice that no matter how much diversification happens in Alberta, it’s never quite enough for governments that spend as much they can get away with to encourage more of it.

Last week, the NDP government rolled out plans for new subsidies for tourism businesses, digital media businesses, film production and high-tech, as part of its ongoing plan to wean the province from its reliance on the finicky cyclicality of oil and gas revenues. There’s already new subsidies for craft brewers and cosmetic companies. Notley also planned more diversification by ordering the crown investment agency, AIMCo, to put half-a-billion dollars worth of Heritage Fund money into “growth-oriented companies,” and another $1.5 billion into the crown-owned bank, ATB Financial, as loans for “entrepreneurs and job creators.”

The NDP is holding forums to talk up the shift to a more “sustainable” diversified economy. Notley created a diversification committee, chaired by a big union boss, to create more “value-added” jobs in the province. Even the phasing out of Alberta’s coal plants and new carbon taxes is held up as part of the crusade to diversification by Alberta Environment Minister Shannon Phillips. “As soon as you price carbon, you open up investment opportunities that were not there previously,” she said at the UN climate meeting in Morocco last week.

Well yes, taxing fossil fuels and subsidizing renewables can draw investment, but that’s not to say the burden on taxpayers and the economy won’t be far higher than any benefits.

Somehow, the need for Alberta to be more diversified, into industries that are more “value-added” than oil and gas, is an idea rarely challenged. Yet, as University of Calgary economist (and FP Comment contributor) Trevor Tombe discovered in a crucial paper for The School of Public Policy last year, it is unlikely Alberta can create many businesses and jobs more “value-added” than extracting oil and gas. Processing, manufacturing and high-tech don’t come close to the value added by digging naturally occurring fossil fuels from the earth and selling them for cold, hard cash.

Now Tombe has come along with another study that gives Albertans yet more reasons to stop swallowing all this diversification hype. In a paper released through the policy school last week, Tombe and his co-author Robert Mansell point out that politicians seem simply to assume that Alberta is undiversified, but never bother to actually measure whether that’s true. Once you do, as Tombe and Mansell have, it turns out Alberta ranks alongside Saskatchewan as having the most diversified workforce in Canada — that is, one less concentrated into certain sectors than even Ontario and Quebec. Meanwhile, the real GDP contributed by oil and gas in Alberta has been outpaced over the last 20 years by growth in other sectors.

Where Alberta is distinctly undiversified, note the economists, is in its export markets, where it relies — for energy exports mainly — more heavily on the U.S. than most provinces, with Ontario not far behind (New Brunswick’s dependence on the U.S. is the highest of all).

It’s hard to escape the fact that one big takeaway from the Tombe and Mansell study isn’t just that the shamanistic mantra of “diversification” is tossed around dangerously by Alberta’s politicians and pundits who really have no firm idea what the diversification situation already looks like and what they’re hoping it will be. It’s also that, if Alberta wants to be better diversified, it needs to spread into new export markets. More oil and gas pipelines to Canadian sea ports that serve overseas markets is one obvious way to do that.

Notley has indeed been championing Energy East and Trans Mountain (but not Northern Gateway). Yet she seems just as determined to force Alberta’s economy away from fossil fuels and into something — anything — else. She isn’t the first; previous PC governments famously wasted fortunes on handing out money to non-energy industries, and they all went out of business. And she surely won’t be the last premier to squander money on forced diversification — at least until Albertans one day finally realize the foolishness of it.