TAPPING INTO NAME TALENT
Harper joins Alberta recovery panel
Premier Jason Kenney calls it the greatest economic challenge facing Alberta since the 1930s and there are signs to back up the sobering assessment.
More than 500,000 Canadians have applied for employment insurance in the past week, compared to 27,000 a year earlier.
Officials in the prime minister’s office reached out to contact oilpatch leaders this week to discuss the short- and longer-term implications of the dire situation facing the energy sector and how to support it.
It could lead to a multibillion-dollar assistance package for the industry and its workers next week.
The provincial government is assembling its own fiscal stimulus package, while DBRS Morningstar downgraded Alberta’s credit rating on Thursday. It cited slumping oil prices and the downturn tied to combating the coronavirus as the underlying reasons.
Each one of these issues is daunting.
Government attention is rightly focused on an immediate response to slow down the spread of the virus and protect the public, while keeping the economy going and ensuring people have enough money for necessities.
With so many fires to put out at the same time, it makes sense for Alberta to announce a separate Economic Recovery Panel. The group was unveiled on Friday and includes former prime minister Stephen Harper and an array of industry leaders.
Former Westjet chairman Clive Beddoe, ATCO chief executive Nancy Southern and Mac Van Wielingen, founder of
ARC Financial Corp. are some of the members of the 12-member council, which will be chaired by economist Jack Mintz.
The group isn’t so much focused on the enormous dayto-day issues facing the provincial economy, which has been stopped in its tracks.
Instead, it will help with the broader issues of what needs to occur in the medium- and longer-term, once the immediate crisis of the pandemic passes this year.
Then there is the pressing issue of oil prices sinking to almost US$20 a barrel this week as Russia and Saudi Arabia open the production taps at the same time as energy demand is being destroyed.
Benchmark U.S. oil prices fell more than $3 a barrel on Friday to close at US$22.63 a barrel for May delivery. It’s uncertain how long these low prices will last.
There are many questions to tackle. What will Canada’s oil and gas sector look like a year from now?
What will happen to the tourism industry, restaurants, bars and airline companies that have already been hammered, along with many other sectors?
How do policy-makers best position the province to come back?
Speaking to reporters on Friday, Kenney noted government revenues are “falling through the floor with the oil price crash and a global recession.”
He noted that if Western Canadian Select heavy oil prices fall much more — some bearish projections see Brent crude averaging just $5 a barrel in the second quarter — that would “probably mean we’d be paying people to take Alberta oil off our hands.
“Look, I am not saying these things to cause people to have a sense of despair, but I think it’s important for Albertans to be psychologically and financially prepared for what is coming at us,” he added.
The premier expects the panel will examine and come up with ideas for the longer term, such as what the future structure of the economy will look like.
Observers agree this is uncharted territory and it will need a broad strategy once the crisis passes.
University of Calgary economist Trevor Tombe noted this week’s 500,000 EI claims across the country were the highest ever, six times larger than at the worst point of the 2008 financial crisis.
“We’re so far off the map, it’s really hard to know where to proceed,” he said.
“I don’t think this panel should be focused on the short term. … They can help in terms of answering questions around where we go from here, what’s next, and where are we headed after we get through this crisis.”
With the oil price collapse, Alberta’s economic challenges will be greater than in most other areas of the country. But the province probably has the strongest balance sheet in Canada, noted Mintz.
“There is a path forward, but we’re going to see there’s a lot of economic damage,” he said.
“The fact we have the former prime minister, who went through a major financial crisis (in 2008) and understood these issues, I can’t think of a better person in this country right now to have on the panel.”
At a minimum, the new group can act as a sounding board for the government as it begins to make critical economic decisions in the weeks ahead.
Van Wielingen said the issues are unprecedented and will require significant short-term government measures, such as dealing with liquidity issues and taking steps to protect jobs and businesses.
During the group’s initial meeting this week, he also emphasized the need to think about what the future should look like for Alberta’s economy and the need for a strategy to get there.
“We need all these short-term measures, but we also need a vision,” he said in an interview.
“It layers on some inspiration, so it helps people when you go through some really tough times, to think that not only are we going to get out of this, but we’re actually going to emerge with real strength and capability.”
There’s a lot of work to do. The panel will have its work cut out for it.
Former prime minister Stephen Harper will be one of 12 members on the newly formed Economic Recovery Panel that will look at medium- and long-term issues related to the province’s economy, which has taken an unprecedented double hit.
Mac Van Wielingen