Province should pick its winners in private sector

Now is the perfect time to invest, says Rick Peterson.

We all know governments can’t pick winners as well as the private sector can, right?

Maybe. But if ever there’s been a time to rethink that, it’s now.

In fact, the provincial government has a unique opportunity today to boldly step up and see if it can help some promising private sector projects. Timing has never been better.

When markets crash and the economy tanks, “cash is king.” In other words, whoever has cash when everyone else has none can more easily pick the winners and buy them at bargain prices.

Alberta today is ripe for picking winners. Hundreds of good companies and great projects, run by strong people, are on life support as the COVID-19 crisis has brought our province to a standstill. More than 117,000 jobs were lost in March alone, bringing our unemployment rate to 8.7 per cent. The April numbers promise to be even worse. Premier Jason Kenney warns that unemployment rates could go to 25 per cent.

In response, the Alberta government announced it will double its infrastructure spending budget to $1.9 billion.

And where is this money going? It will be used to fill potholes, pave highways and fix bridges. It will be spent in K-12 schools. It will provide HVAC upgrades in universities, and provide IT upgrades in courthouses.

These are timely investments, and hugely helpful. But, let’s not stop there. We also have an opportunity to do even more, and we should seize it. Let’s use government stimulus funds as a catalyst to support projects that will produce long-term jobs and wealth creation for all Albertans.

What’s stopping the ministries of infrastructure, health, Indigenous relations, transportation and energy and others from seeking out promising private sector projects that offer potential as solid public-private partnerships?

Relatively small amounts of taxpayer money invested strategically — in $3-million-to-$5million envelopes, directly into emerging IT companies, health care technology ventures, building projects, Indigenous businesses or sustainable energy technology developments — would diversify the investment risk and would have a huge impact on these ventures. And all have a potential for strong returns to taxpayers.

The province’s current rules and guidelines around P3 investments haven’t been updated in 10 years. It’s time for a refresh — and a fast one — since if we’ve learned one thing during the COVID-19 pandemic, speed is of the essence.

If the federal government can set up the CERB platform and send out $25 billion in cash to Canadians in a matter of weeks, the provincial government should have no problem working up a platform to allocate even $100 million of the $1.9 billion in infrastructure investments to 20 or 30 promising private-public partnership projects.

And these projects can be found everywhere in Alberta today.

The Town of Sylvan Lake, in partnership with a private sector group, has raised approximately 50 per cent of $7 million in funding for construction of a state-of-the-art baseball stadium that the town will own. It will be the crown jewel in an 85-acre sports and recreation development for the benefit of all Albertans.

Further private sector funding for the balance of the project evaporated as COVID-19 flattened the economy. The baseball stadium project is now seeking provincial and federal government infrastructure funding to help build the facility.

If this funding effort fails, so does the stadium project, slated to create 125 construction jobs and 25 full-time jobs with a total economic spinoff to the region of $7.85 million in the next 12 months.

Public sector funding supporting entrepreneurs, who have “skin in the game” for projects like these and others, should be a no-brainer.

So, let’s get to work filling potholes and fixing bridges, and let’s also step up to help our best private sector entrepreneurs pave the road to future prosperity for all Albertans.

Rick Peterson is the president of Peterson Capital, an Edmonton based capital markets advisory firm.

Premier Jason Kenney warns that unemployment rates could go to 25 per cent.