TEC Talk ambled along to the Edmonton Economic Development Corporation (EEDC) annual 2012 Economic Outlook Luncheon on Tuesday (November 15, 2011), to see what the participants had to say about those topics near and dear to TEC Edmonton’s collective heart, i.e. wealth creation through innovation, productivity and new technology.
After all, that’s what we do.
Surprisingly, it was Clark Builders’ Paul Verhesen who transcended his own business sector, offering a good look around from 32,000 feet and sounding some warning bells that have to do with productivity or the lack thereof.
We’ve had it too good in Alberta, he suggested.
“We’ve fallen victim to our own success. Productivity and innovation are down because there’s no need to compete with anyone (in a thriving provincial economy) besides ourselves. We have an economic model that is producing profit without productivity gains.”
Which is OK in the short-term, Paul said. But our true economic success as a region will depend on how Northern Alberta-based companies compete on the world stage. And to venture onto that stage we need to be as lean and productive as the global competition.
“We are in a bubble,” the Clark Builders’ president said, “and that’s good … if nobody lets the air out.”
Mining Association President Pierre Gratton suggested that Canada (and Northern Alberta) may be hewers of wood and carriers of water, but we’re world-class hewers and carriers.
“The mining industry spends a lot on innovation, and is very high-tech. But we need to be more collaborative with each other on solving on-going science challenges. The oil sands are further ahead (compared to other mining industries) in that department. The rest can learn from Alberta.”
In terms of government policy, finance minister Liepert voiced an opinion rapidly gaining currency within the Alison Redford government: That when it comes to science and innovation, Alberta shouldn’t be diversifying “artificially” but should be building on its strengths, on already existing expertise in agriculture, energy and forestry, especially in value-added secondary processing.
He acknowledged the on-going Alberta challenge, that investment capital is centred on energy, to the detriment of other investment opportunities.
And don’t expect increases in provincial government funding for anything, Liepert warned.
Forecasts for the 2012 fiscal year
see revenue rising just $1 billion (compared to 2011), to $37 billion. The windfall revenue from unexpectedly strong energy lease sales (the right to explore, drill and then extract energy from Alberta land) in 2011 is unlikely to happen again, and oil royalties are softening with lower prices for oil.
And on the spending side, “No matter what, we will have expenses of $40 billion for 2012,” said Liepert. “Which leaves us with a gap that has to be addressed.”
Overall, concluded Mike Percy, Alberta and the Edmonton region is looking great compared to the rest of the world.
“We are in a bubble, thanks to investment (mostly in the oil sands). The risks are in our competitiveness and productivity, our need to access new markets for our resources, environmental stewardship, a skilled labour shortage and the need to improve our social infrastructure.
“The world may be full of doom and gloom, but so far we are creeping through the graveyard.”
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