Analysis

The reality of the recession bites some Albertans harder. What that means for the election — and whoever wins

The two-headed economy is shaping up as a major issue for voters — and a challenge for whichever party forms the next government.

Balancing pragmatic policy with popular politics is even tougher without a common frame for our shared dilemma

Whichever party forms government after the upcoming election, it will need to seek solutions to Alberta's troubles while contending with varying perceptions of what, exactly, is wrong. (Colin Hall/CBC)

EDITOR'S NOTE: This is the second in a five-part series that's a little different from what you usually read on CBC. In it, we add new reporting and analysis to the work of dozens of writers who have contributed to our Calgary at a Crossroads and Road Ahead projects over the past three years. The goal is to take stock of the turbulent times we've been through while exploring where we're headed next — and how we might get there.

The series was initially published in February. We're resurfacing it in March for those who may have missed it.


Let's call it the perception problem.

As Albertans are poised to head back to the polls after four years of NDP government, one of the main factors that will guide their ballots is the perception of where the economy is today.

When it comes down to brass tacks, we expect government to find solutions to our macroeconomic problems — whether through intervention or staying out of the market's way.

But if we plan to put our faith in the policy of a party, any party, and then later hold that party to account for achieving or failing to achieve its goals, it would seem important to agree on a set of terms and facts.

Yet, we don't.

And if that government is to have the political capital to enact policies in response to the realities the province faces — not necessarily the policies we'd prefer, in an ideal world — there needs to be some agreement on what those realities are.

Yet, there isn't.

What is and what isn't

Here's what we know from the economic data.

Out of the doom and gloom of 2015, Alberta's economy began a slow recovery in late 2016, which accelerated into a genuine rebound in 2017, and then began to sputter in 2018.

"Is our economy strong, or is it weak?" economist Trevor Tombe wrote in January. "Is the recession ongoing, or is recovery underway? Simple questions, but the answers are complex."

So complex that even the data can't fully provide all the answers. Only indications.

Some indicators suggest our province could be headed for another recession. Tombe doesn't say we are actually in one, yet, only that one is possible.

"Based on all the monthly indicators, the pace of recovery is slower than any recovery has been at least in the past 20 years," he said earlier this month.

And we had one hell of hole to climb out of.

Alberta employers shed 130,000 payroll jobs during the recession, leaving many people searching for new opportunities when few were available. (CBC)

"The scale of the recession was massive," Tombe said previously. "One-hundred-and-thirty-thousand job losses from when the recession started to when it ended in late 2016. So to say that it has come back from such a big shock is still to say that there is a long way to go."

A long way to go. A glacial pace in a province historically rooted in fast market changes, fast decisions, fast social consequences.

Now, this will feed into the fire of the debate — the complex issue of perception around recovery.

The economy is a large and complex thing and the recovery, to date, has not been even. It's been felt differently by different Albertans depending on who they are, where they live and what sector they work in. And our province remains divided over those who see any recovery at all, and those who do not.

A lot of people just ain't buyin' it.

Who's on board and who isn't

Some CBC polling data from 2018 gives us a pretty good sense of this divide.

While the poll was a snapshot of the province taken last spring, pollster Janet Brown, who conducted the research, says it's still a pretty good indicator of the general mood.

What the poll suggested is that 45 per cent — less than half — of Albertans thought the economy was recovering at that time. But 18 per cent thought the province's economic situation was getting worse, while 35 per cent thought the situation was staying about the same.

Remember. This was in the spring. And it was a poll of all Albertans.

A different poll, taken in November and December and limited to Calgary only, found a much sourer mood. In that survey, 67 per cent of Calgarians felt the provincial economy was getting worse.

Unemployment has been persistently higher in Calgary than in Edmonton since the recession and Calgarians have been cooler to the idea that the economy has, in fact, been recovering from the depths of the downturn. (Jeff McIntosh/Canadian Press)

Now, "recovery" is a pretty generic word. It's macroeconomic in a way most of us don't live our lives.

Whether we feel a recovery is likely based on our personal experience, and the experience of others in our lives. There are jobs, but you can't find one. There are jobs, but your sister can't find one. You have a job, but you're making half what you used to make.

This can be nuanced by ATB chief economist Todd Hirsch, who last August said improvement in employment has been slow and the quality of new jobs somewhat dubious.

As we wrote in 2018, this recovery just feels different.

Even gender plays a role. This recession was a "mancession," by many indicators. Men, who held most of those oil and gas jobs, saw more of their employment disappear during the downturn. Meanwhile, in the past couple of years, women have seen their employment rate grow at the fastest pace in decades.

Age also matters.

Ten employers greeted about 100 young job seekers when the City of Calgary’s Annual Youth Hiring Fair started two decades ago. Last year, 5,000 people showed up, resume in hand, to meet around 90 employers. (Terri Trembath/CBC)

"The share of workers in Calgary under the age of 25 that is employed is lower now than at any point in at least the past 30 years — and that's really just as far back as we have data," Tombe said recently.

"So, for them, I think it is fair to say the economy is getting worse."

And yet, counterintuitively, young Calgarians were three times more likely than those over the age of 65 to see the economy as being on a positive trajectory last year.

And it's not just individuals. Industry is also divided.

Recovery or exhaustion

"There is a recovery — and there is frustration," Calgary Chamber of Commerce president Sandip Lalli recently said of her members' mood.

When it comes to the energy industry, specifically, economist Peter Tertzakian said there's "a sense of exhaustion" and "in some cases, capitulation" in the face of ongoing challenges.

"These are not healthy symptoms for what has traditionally been an incredibly entrepreneurial (industry)," he said during a Chamber event in January that was moderated by CBC.

The panel, hosted by CBC's David Gray, consisted of pollster Janet Brown, ARC Energy Research Institute executive director Peter Tertzakian, Calgary Chamber of Commerce president Sandip Lalli and University of Calgary economist professor Trevor Tombe. (CBC)

​"We were feeling pretty good by summer of last year, " he added. "Then, we had the whole Trans Mountain judicial kiboshing — or delay — and then the (oil-price) differentials, and now we've come into '19 feeling beaten up. It's going to take most of the year to heal the wounds."

A year to heal. If all goes well.

During that year, Albertans will go to the polls and there's little doubt that, in some sense, the vote will be a judgment on the current government's economic record. In that CBC poll from last spring, 47 per cent of people said pipelines or the economy were the most important issues facing the province.

So, let's look at how the NDP government has approached the economy — and how their main rivals say they would do things differently.

Policy choices

Governments inevitably please some and anger others.

And this government's first few years "have been marked by contentious policy shifts," writes columnist Jen Gerson, "like carbon taxes, climate change policies, farm worker legislation, minimum wage hikes and high rates of debt accrual."

"None of it has gone over well in a deeply pro-energy province that was suffering a serious economic recession."

At the same time, Gerson has also described Premier Rachel Notley as "a capable, national leader during one of the most fraught economic periods of Alberta's recent history."

"Certainly, the Notley government has taken a very active, perhaps surprising, role in supporting the energy industry," she wrote.

So, we return — again — to the idea of agency.

What can the government, any government, actually fix? And what is beyond its control?

It's not like you can just ring up OPEC and make demands or suddenly convince the Americans to lay off the fracking. The global energy market is just that — global. Alberta's economy, wedded as it is to energy resources, is at the mercy of the whim and caprice of international markets and geopolitical decisions made in faraway places.

OPEC members arrive at a news conference in this file photo. (Heinz-Peter Bader/Reuters)

But there are some things an Alberta government can control.

Just yesterday, the province announced a deal with Canadian National and Canadian Pacific to lease 4,400 rail cars to transport Alberta crude to international markets. Prior to that, Notley also acted on calls from some players in the divided oil industry to curtail crude production, despite opposition from some of the biggest, integrated oil companies in the country. She's also been advocating for the energy sector across Canada.

In a bid to diversify the energy sector and create jobs, the provincial government has also provided $1 billion in royalty credits for new petrochemical plants. Then there was the provision of up to $1 billion in additional loan guarantees and grants.

Later, the government inked a letter of intent to provide a $440-million loan guarantee for construction of a $2-billion partial upgrading facility. And the idea of home-grown Alberta refineries are also on the table.

Meanwhile, the United Conservative Party has defined its own policies largely as a negation of the NDP's.

If his party wins in a spring election, UCP Leader Jason Kenney has promised a "summer of repeal" in which he would legislate away the current government's farm-work safety rules, renewable energy incentives and carbon tax.

At its founding convention last May, members of the newly formed party voted on a series of more specific policy proposals, but their leader stressed that these did not form an official platform.

Federal Conservative Leader Andrew Scheer greets United Conservative Party Leader Jason Kenney prior to his speech at the UCP's inaugural annual general meeting in Red Deer in May 2018. (CBC)

Kenney has since suggested some policies he'd like to see — like introducing a youth wage that is lower than the minimum wage, or reverting to a PC-era approach to pricing carbon on large-emitters only — with the caveat that these are not guarantees.

The UCP has yet to reveal a full platform but, in a speech this past weekend, Kenney promised it will be the "most detailed election platform in the province's history." He also offered a few more hints at policy proposals for the economy, including a tax cut aimed at "job creation" and new legislation aimed at cutting red tape.

As for the specifics, we'll have to wait and see.

In the meantime, the pre-campaign campaigning has seen both Notley and Kenney trying to position themselves as "fighting for" Albertans.

And that means fighting for pipelines.

Pipeline posturing — and perception

It is perhaps in this scrappy national dispute over the Trans Mountain pipeline that Notley has notched some of her most political success, as of late. Her approval ratings have tended to rise when she picked fights over the issue, a strategy she continues to employ.

"Albertans still need the federal government to step up and support the industry while we are trying to get through this ridiculousness of having not enough capacity to get our oil and gas to market," the premier said in January, reiterating a message she's been pressing for months.

It's the kind of rhetoric that plays well at home.

Alberta Premier Rachel Notley speaks at a press conference in January 2019. (Travis McEwan/CBC )

This kind of talk has even won the premier praise in some perhaps unexpected quarters. Ian Brodie, former chief of staff to prime minister Stephen Harper, wrote last year: "The party has some big political assets, some strong cards to play. The most important of which, is Premier Rachel Notley."

It is bandied about by political science types that, when it comes to perception, the Alberta NDP has elided with Notley, herself, which could be both a strength and deficit in the upcoming election.

Nevertheless, as Gerson described it: "The NDP's ideology may not be a natural fit for Alberta, but Notley is still one of this province's prodigal children. And after almost three years in office she seems to have finally hit her stride. She now has a statesman-like air, a polite but cutting defence of her province in the nation."

"Whatever Albertans think of her government's record," wrote Brodie, "Notley is an honest and sympathetic character from a family with deep roots in Alberta politics. Sunny, seen as in-touch with concerns of Albertans."

But we again return to the idea of perception.

While Brodie may see Notley as in-touch with Albertans, surveys suggest her party doesn't fare as well with the voting public.

We go back to that CBC poll from last spring.

Remember: the data showed Albertans see pipelines and the economy as the top issues facing the province. It also showed the NDP's chief rival, the United Conservative Party, to be dominant on those issues.

Pro-pipeline protesters gather and chant slogans outside a venue where Federal Finance Minister Bill Morneau was speaking in Calgary in November 2018. (Jeff McIntosh/Canadian Press)

Despite Notley's tough talk on pipelines, only 26 per cent of Albertans surveyed believed the NDP were best positioned to get a pipeline built. Fifty per cent thought the UCP is better suited to the task.

When asked who they thought was best suited to manage the province's finances, 52 per cent picked the UCP and only 18 per cent chose the NDP.

And when it came to strengthening Alberta's economy? Fifty-one per cent said the UCP versus 21 per cent who chose the NDP.

And let's take into this some more recent polling data.

An in-depth survey of Calgarians' beliefs about the economy shows a massive divide along political lines. Among UCP supporters, 87 per cent thought things were worse in 2018 than the year before. Among NDP supporters, 79 per cent believed the economy had improved or at least stayed the same.

So why is this?

It could be due the NDP's messaging on the economy, according to Mount Royal University political scientist Duane Bratt.

"They keep talking about recovery and good news, and as long as they're talking about the good news and not acknowledging the really serious concerns that we're seeing coming out of these numbers, that's coming off as really tone deaf," Bratt said, commenting on the polling data last year.

Brown, the pollster, would agree.

Janet Brown is a Calgary-based pollster. (CBC)

"First and foremost, I think the government has to acknowledge people's pain," she said at a recent forum.

"And I think one of the single biggest mistakes the NDP is making is they go too hard in their promotion of positive economic news. And every time they push a positive economic statistic, somebody with real anxiety is saying, 'You know, Rachel Notley and her team, they just don't get it.'"

This ties deeply into the idea of government finding solutions to Alberta's economic woes.

"Because," said Brown, "if you can't acknowledge how much anxiety I feel in my household, how am I ever going to trust you to find the solutions?"

But even if you were able to find solutions, what if nobody liked them?

Success without sacrifice

Let's recap.

The data suggests Alberta has been recovering from the recession, but the recovery is uneven and being experienced differently by different people. Therefore, a lot of anxiety remains.

Meanwhile, the government has been talking up the data that illustrates the recovery.

But it is quite possibly this emphasis on macro-level trends that is frustrating those people who have not experienced the recovery — or at least have not felt it. Instead, they feel the government isn't acknowledging the genuine challenges they face. They perceive no sympathy for their pain.

No matter which party forms government after the upcoming election, it will need to seek solutions to Alberta's troubles while contending with the varying perceptions of whether a recovery has occurred, or is occurring.

Albertans are set to head to the polls in the spring. (Jeff McIntosh/Canadian Press)

That's complicated enough, on its own. But the next government will also have to make difficult fiscal decisions in the face of another paradox in public opinion.

That same CBC polling data also suggests most Albertans want a government that balances its books without raising taxes and without requiring citizens to give anything up.

Fifty-eight per cent of Albertans want an end to government deficits. Seventy-nine per cent say now is not a good time to make significant cuts to social programs. And almost three-quarters (73 per cent) oppose a provincial sales tax.

So where's the cash supposed to come from?

"The conclusion here is simple," Tombe, the economist, wrote in a policy paper in November. "Substantial spending restraint alone is insufficient to close Alberta's fiscal gap."

There is also a need for "modest new revenues," according to Tombe's analysis, if we are to "create a sustainable economic future for Alberta."

Economist Trevor Tombe is with the University of Calgary's School of Public Policy. (Mike Symington/CBC)

But if the majority of us are opposed to raising that revenue through new taxes, then what?

This appears to be tied back into the overarching theme of "someone should do something." We face choices, or our government does, but we don't like any of the options so far.

Rather, we'd like a nice, easy, painless fix for the economy, please.

​At the same time, a related choice we face is how to end our public finances' dependence on the resource roller-coaster.

As Brodie puts it: the "bugaboo of public policy in Alberta."

The royalty roller-coaster

"When the royalty roller-coaster goes up," Brodie wrote, "money floods into the treasury and politicians promise more spending with lower taxes. We get new hospitals, new schools, better roads. And everyone on the provincial payroll gets a bigger paycheque."

But conversely, he says, when it comes down, the private sector is quick to cut spending while the provincial government is rarely so nimble.

There have long been bids to get us off this roller-coaster, but no government of any stripe has yet found a way.

The Klein solution of heavy cuts was deeply unpopular with many, though it had plenty of supporters, too. Ultimately, though, Klein's debt-free declaration was made possible by a royalty rebound, particularly a huge surge in revenues from natural gas.

The Prentice plan, which leaned more on tax hikes coupled with modest spending reductions, led to electoral defeat.

The NDP have fared no better finding a permanent solution, opting to borrow more money to cover the ongoing gap between Alberta's revenue and expenses.

Ron Kneebone with the University of Calgary's School of Public Policy says he was initially optimistic when the NDP won power in 2015, but his hope soon faded that the government would get the province off the royalty roller-coaster.

Ron Kneebone is professor of economics at the University of Calgary's School of Public Policy. (Robson Fletcher/CBC)

"I thought we were past that," he said last year. "We shouldn't be balancing the budget on the basis of oil and gas."

So what to do? Taxes? Cuts? Wage freezes?

Who wants to give up their hospital? Or their kid's school? Or their public-service job?

The upcoming election campaign will no doubt see fears raised around such choices — or at least their magnitude.

But if, as the polling suggests, Albertans expect low taxes, balanced budgets and no service cuts, it's unclear how any party can forge a winning plan that will stop the roller-coaster ride.

We might, over the decades, have waited too long for an easy fix.

A perception election

It will be intriguing to see how all the parties in the upcoming election deal with public perception of the economy and the types of solutions that are put forward. As we've seen, balancing what's pragmatic with what's popular will be a herculean task.

But this is what platforms are all about. Tangible, delineated solutions. And, it must be said, a healthy dose of telling people what they want to hear, which might sound quite different depending on the audience.

Albertans, it seems, have yet to agree on a frame for our common dilemma.

In the meantime, we must get on with business.

A pumpjack operates beneath the aurora borealis northwest of Calgary. (Robson Fletcher/CBC)

Alberta is, and looks set to remain, an energy-industry province.

But that industry has gone through a massive retooling over the last five years. Yes, tens of thousands of jobs have been shed, and companies were hollowed out of their human resources. But new and innovative technological advancements have also been made. New methods pioneered.

Perhaps most importantly, and in keeping with the theme that the recession and recovery feel different this time around, there appears to be a dawning awareness that the industry has entered a whole new era.

This, too, presents individual Albertans with new choices.

But that is another story: part three of The Road Ahead.


This is part two of a five-part series.

The Road Ahead is CBC Calgary's ongoing, special focus on our city and province as they pass through the crucible of the downturn: the challenges we face and possible solutions, as we explore what kind of future we want to create. And we're looking for your perspective. Have an idea for a future story? Email us: calgarytheroadahead@cbc.ca

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