Can the tech sector really help Alberta "turn a page" in its struggle to diversify?

Alberta Economic Development and Trade Minister Deron Bilous held a press conference at the Assembly Coworking Space in northwest Calgary on Monday, for the release of his province’s Jobs Report, titled “Building an Economy for the Future”, which premier Rachel Notley entrusted him with the task of preparing.
Weirdly enough, the Assembly Coworking Space sits in the ex-headquarters of Bre-X Minerals Ltd., which remains an example of the preeminent cautionary tale about the type of company that Alberta doesn’t want to encourage if it’s serious about “building an economy for the future”.
Bilous’ jobs report arrives at the beginning of a slow emergence from the darkest days of sub-$40 oil, from which Alberta is finally making a sluggish recovery.
It’s worth pausing to note that Alberta’s current malaise is largely self-inflicted, being the result of several decades of short-sighted policy and an assumption that oil would remain in the $100 range, and perhaps climb higher than that, for the foreseeable future.
Norway had the good sense, back when good times were good, to put a little something to the side in the form of a sovereign wealth fund, which now sits at over $1 trillion, to help that country through its inevitable rainy day.
Not so Alberta. Its Heritage Savings Trust Fund had only $17.5 billion in the piggy bank as of March 31, 2014, the moment when the province most needed it.
The question hanging in the air for Alberta’s future, contained in the title of the report, is a Wizard of Oz-like fork in the road: one offering a path towards economic diversification, and another doubling down on the legacy of the oil sector, which artificially buoyed the province’s economy for several decades before suffering a spectacular collapse.
“We’re starting to turn a corner and trending in a positive direction,” Bilous told assembled reporters. “There are spaces like this one where people with ideas who may be in the past haven’t taken that chance or looked at turning it into a business or commercializing an idea, maybe now is the time for them to do that.”
Places like the Assembly Coworking Space do hold out the promise of entrepreneurship for people brave and/or foolish enough to start their own companies.
But it begs the question, given the relative hype that Canada’s technology sector has generated versus its actual capacity to deliver the type of jobs that people working in Canada’s oil sector would be interested in applying for, whether start-up culture really presents a model on which to build a healthy economy.
Payload CEO Sean Languedoc stood alongside Bilous to accept the challenge of repopulating Calgary’s increasingly vacant downtown office spaces.
“A company can start with two people. I’ve got 15, 16 now, and you create this ecosystem where you’re feeding off each other and then programs that help make money available to it to get start-ups going,” said Languedoc. “It’s tragic that there’s people like that living in south Calgary looking at a paper for a job somewhere else, when they could be coming back and working with entrepreneurs and helping build those companies.”
Alberta has historically talked a good game when it comes to free enterprise, but the reality is that the main reason for the climb in Calgary’s unemployment rate from 5% in October 2014 to 10.2% today is the collapse of the oil sector.
Edmonton, meanwhile, has an unemployment rate of 6.9%, mainly because of its public sector jobs.
The reality is that while promoting the creation of businesses that begin with only two employees and end up with a staff of less than 20 is exciting for a certain type of person, the vast majority of people are not well suited to becoming entrepreneurs.
People want actual jobs, not to mention that the long-term health of the actual economy demands full employment, and not self-employment supplemented by precarious gigs.
That’s why Alberta’s eventual economic diversification will make an interesting test case for whether or not the tech sector can materially help with the recovery of a suffering region.
Bilous’ jobs report points out that between 2011 and October 2016, the Alberta Enterprise Corporation’s venture capital funds and their syndicate partners invested more than $317 million in 30 Alberta technology companies, an investment that supported the creation of “more than 1,100 direct and an estimated 1,430 indirect jobs as of March 2016.”
This is promising on its own terms, but the scale of Alberta’s problems will not be solved by the fizzy promise offered up by start-up culture or the frankly stupid libertarian “gig economy” fantasy pushed by companies like Uber.
Over the same time frame, the four technology commercialization programs associated with Alberta Innovates resulted in annual revenue growth of $4.80 per dollar invested, a 53% increase in exports, the creation of 246 prototypes, 184 commercialized products and 138 patents, a sizeable chunk of outside investment, and the creation of “more than 400 jobs”.
“More than 400 jobs”? It’s better than nothing, basically, but between that and the “more than 1,100 direct” jobs created by investment from the Alberta Enterprise Corporation’s venture capital funds, we’re not even talking about a bandage on the province’s unemployment problem.
Investment in the tech sector has got a long way to go before it can seriously talk about meaningfully diversifying a resource-dependent economy like Alberta’s.
Iron & Earth, a non-profit Edmonton-based social enterprise led by ex-oilsands workers with the aim of re-focusing their skills on clean energy projects, estimates that the oil and gas sector shed 40,000 jobs in 2015 alone.
Those workers are not going to start app development or social media companies. They’re looking for actual jobs that feature benefits, vacation pay, and contribute to the tax base.
Some of those workers are being retrained by Iron & Earth to apply the skills they learned in the oil fields to fast-developing wind farm projects in the Maritimes.
The Alberta government’s recent plans to get serious about renewable electricity generation, aiming for a target of creating at least 7,200 new jobs and bringing C$10.5 billion into the economy is more like it.
Calgary’s empty office real estate, and whether those spaces can be filled by cleantech firms or the type of solid technology anchor companies being developed in central Canada, such as Shopify or Lightspeed or Thalmic Labs or Clearpath Robotics, may be the truest indicator for how the government is doing when it comes to “building an economy for the future”.