Canada may soon taste Alberta’s economic pain

You might assume the rest of Canada has observed Alberta’s unfolding economic implosion with a bit of concern, if not outright alarm.

After all, as hard as it may be to recall now, this province was the country’s undisputed economic engine for over a decade.

Between 2000 and 2014, Alberta’s energy-fired economy generated more than $200 billion of net wealth for the nation’s coffers, while employing tens of thousands of Canadians who couldn’t find decent jobs in places like Moncton, Windsor or Kelowna.

As John Rose, Edmonton’s chief economist once put it, Alberta’s oildriven economic boom helped prevent a “social disaster” in many Canadian towns and cities where jobless rates remain perpetually high.

Before oil prices cratered in late 2014, crude ranked as Canada’s top export, and the energy sector attracted a third of the nation’s capital investment. When crude prices tanked, it erased $60 billion of annual income from our economy.

That works out to $1,800 for every Canadian, the Bank of Canada says.

Yet, the meltdown in the Alberta economy has triggered little concern in most other parts of Canada, where Prime Minister Justin Trudeau’s sunny post-electoral honeymoon continues apace, and few seem worried by our fragile economy.

Two years into the worst recession in history, Alberta’s economic meltdown rates little more than a mention in Toronto or Vancouver.

A recent interview with federal Finance Minister Bill Morneau did little to reassure me the Liberal government understands magnitude of the economic earthquake in Alberta. He offered no clear answers to pointed questions about the pressing need for new oil pipelines.

Perhaps that shouldn’t be a surprise. Morneau, who represents the upscale riding of Toronto Centre, exudes the same aura as his boss — someone who never had to get his hands dirty to pay the bills.

Most of my old Ontario pals have seldom set foot in Alberta, either. Ditto for my ex-colleagues on the west coast. Several have lived in Asia, but have never taken the hour-long flight to Calgary or Edmonton.

But, now that the source of Alberta’s wealth has evaporated, and the province’s NDP government finds itself grappling with a projected 201617 budget deficit of nearly $11 billion, who is going to fill the gaping hole in the national economy? High-tech? Auto manufacturing? Financial services? Aerospace? I seriously doubt it. None boasts the scale, global stature or cost advantages over their global competitors to replace Alberta’s all-important energy sector.

Without a healthy Alberta economy, and healthy energy sector, it’s hard to see how the struggling Canadian economy can get back on its feet soon.

While real estate has become the biggest contributor to Canada’s GDP, that sector also looks wobbly.

Meanwhile, Trudeau’s economic agenda seems vague at best.

Trudeau’s oft-quoted Davos speech touting Canada’s “resourcefulness,” his efforts to cultivate ties with likes of Bill Gates, and his calculated photo-ops at tech giants like Google and Microsoft are clearly designed to appeal to millennial urban hipsters.

That’s fine. But it won’t replace the value of a healthy energy sector.

Canada’s banks, insurance companies, design firms and hightech companies are minor leaguers on the global stage. Services account for just over 15 per cent of Canada’s exports, or less than the $60 billion erased from export revenues when oil prices headed south.

So far, that hasn’t mattered in the nation’s power centres, where Alberta’s economic pain is little more than a rumour. But with summer waning and the cool days around the corner, Canadians’ complacency may soon give way to something else.