The way to get a recession in Edmonton

John Rose, Chief Economist at the City of Edmonton, started his presentation at the Edmonton Real Estate Forum earlier this month with a bit of humor. “There are two kinds of forecasts,” he told the packed room. “Lucky and wrong!” He finished it on a much more serious note, saying “the way to get a recession in Edmonton is to have the provincial government make cuts.”

Edmonton Real Estate Forum

The general message from Rose was that because Edmonton’s economy is more diversified than Calgary’s or the rest of Alberta, we have handled the downturn better than those locations. “Lethbridge might be the only other jurisdiction that is less reliant on energy than Edmonton,” he said. But, there are reasons to be less optimistic about future growth.

Our unemployment rate went up during the economic downturn “primarily because our labour force grew faster than we could generate jobs,” Rose said, pointing to the increase in migration from other regions that fared worse. It has since gone down to 6.6% but that’s not necessarily a good thing. “The unemployment rate in Edmonton has been going down for exactly the wrong reason,” Rose said. Over 11,000 people have left the labour force in the last 12 months. “Nearly all the job gains we saw in 2017 have been eliminated in the first quarter” of 2018, Rose said. “Education, manufacturing, health care, and professional services have all gained jobs,” he said, while “trade, retail, public administration, transportation, and warehousing have all lost jobs” in the Edmonton area.

public sector employment

As the above chart shows, Edmonton’s public sector workers, which includes those in government, health, and education, make up about 25% of our workforce. The data hasn’t been updated yet for more recent years, but based on data from the 2016 census as well as the provincial Labour Force Statistics report for April 2018, I believe the trend holds.

You can see that the public sector makes up a larger part of Edmonton’s workforce compared with Calgary or the rest of the province. Which means that cuts to public administration, health care, or education hit Edmonton harder than the rest of the province.

So what’s a likely reason the government would need to make cuts? Though Edmonton may be diversifying away from oil, Alberta as a whole is still dependent.

Rose spoke for a while about the price of oil, and it’s impact on the province. “While we have seen North American and Global oil prices accelerate,” he said, “it is only recently that we have seen any benefit from that in Alberta.” He explained the difference between the Brent (the global benchmark price), WTI (the North American benchmark price), and WCS (the Alberta benchmark price), and noted the price discount we’re experiencing “due to export capacity constraints.”

WTI vs WCS

“We are now producing more oil than we can move due to limited capacity,” he said, “which is why the pipelines are so important.” Rose said he was shocked at the speed with which energy companies began to cut back due to the decline in oil prices a few years ago, in contrast with Ontario where he spent most of his career. There he said the economy is “much more like an ocean liner, it’s slow to turn.”

WTI vs WCS

“Oil production in North America is at record levels,” Rose said, “and given our inability to move product out of Alberta, there’s a real risk of oil prices continuing to decline, which would put the provincial government in an even worse position.” That could force it to look to cut costs, which could have a very negative impact on Edmonton’s economy.

Provided that doesn’t happen, Rose expects Edmonton’s economy to do quite well. He expects the unemployment rate to continue to drift downward over the year. “Population growth will continue but at a slower rate,” he said. Vacancy rates at about 7% have driven rental rates down, and thanks to a potential overbuild of single family homes in 2015, “there might be too much inventory”, helping to keep prices in check. “Low inflation will boost real incomes for Edmonton residents as average weekly wages are rising again,” he said.

Rose forecasts that Edmonton and the region “will grow more rapidly than Alberta and Canada” through 2023. Let’s hope he’s lucky, not wrong.

The two oil-related charts above come from Alberta Energy. Canada is the fourth largest producer and third largest exporter of oil in the world, with the oil sands accounting for 62% of Canada’s oil production, according to Natural Resources Canada. There’s more on Alberta’s energy industry at the National Energy Board.

Recap: EEDC’s 2012 Economic Outlook Luncheon

EEDCOn November 15, EEDC held its annual Economic Outlook luncheon at the Shaw Conference Centre. Hundreds of Edmontonians filled Hall D on Tuesday to hear from a panel of senior leaders moderated by Dr. Mike Percy, the former Chamber of Commerce president and until this year Dean of the School of Business at the University of Alberta.

This year’s panelists included:

  • Dr. Jodi Abbott, President & CEO, Norquest College
  • Diane Brickner, President & CEO, Peace Hills Insurance Company
  • Pierre Gratton, President & CEO, Mining Association of Canada
  • Ron Liepert, Minister of Finance, Government of Alberta
  • Paul Verhesen, President, Clark Builders

The five panelists each shared their thoughts on the local economy before fielding questions from the audience. Here are a few of the more memorable statements the panelists made:

  • “We are very, very lucky to live where we do.” – Paul Verhesen
  • “Productivity and innovation are down as a result of not having to compete with others.” – Paul Verhesen
  • “I’m not sure there’s a better place than Alberta in the world to do business.” – Ron Liepert
  • “We do not have the population base to meet the expected labour-market demand.” – Dr. Jodi Abbott, indicating Alberta would have 77,00 unfilled jobs by the end of the decade.
  • “Mining is back.” – Pierre Gratton
  • “That will go.” – Ron Liepert, indicating the Royal Alberta Museum would in fact move ahead.

For more, check out the Edmonton Journal’s Storify of the event.

At the luncheon in 2009, I learned that Alberta’s aerospace industry is a billion dollar business. This year I learned a little more about the mining industry in our province. The Canadian Mining Journal summed it up well:

Canada’s mining industry will invest as much as $140 billion in this country over the next five years, and almost 50% of it will be in Alberta. The province will grow thanks to 12 mining projects proposed for development by 2016 with combined costs of $67.7 billion.

The $67.7 billion will be invested primarily in the oil, gas and oil sands development that Alberta is most known for, however significant investment is also anticipated in coal, limestone, salt, shale, dimension stone, ammonite shell, sandstone and sand and gravel.

Apparently Alberta accounts for 70% of Canada’s coal production (by weight) and is home to more than 540 mining industry suppliers.

Here is the Edmonton Journal’s story about the luncheon. Here is the Edmonton Sun’s take. And here is Avenue Edmonton’s article.

The Bridge

I thought EEDC did a great job with the event. The luncheon was livestreamed by the Edmonton Journal, and though they ran into some issues with the sound, it did appear to get more Edmontonians involved than usual. EEDC smartly chose a hashtag ahead of time, and made it clear to everyone that they should use #outlook12. They also displayed the tweets up on the big screen, and although it consistently ran behind, I thought it was a useful addition to the event. I expect both will get better in future years!

As enjoyable as the luncheon was, I found myself wishing there had been a handout or better yet, a QR code to scan that would take me to more information. I thought the panelists were great, but I can’t say I left with a strong sense of how Edmonton’s economy is expected to do in 2012. Fortunately, there is a bit of information online if you look for it.

Here is Cushman & Wakefield’s prognosis:

Overall vacancy is expected to increase in 2012 as a result of the market dynamics caused by recently completed Epcor Tower in the downtown core. Regardless, confidence in Edmonton’s economy is strong, despite continuing global economic uncertainty.

Canada Mortgage & Housing Corporation (CMHC) predicts 18% more housing units will be constructed across the province in 2012 than were built this year.

Edmonton will likely have 3,750 construction starts of multi-family housing this year, down less than four per cent from a year ago, says CMHC.

And from the City of Edmonton’s long-term economic outlook:

Few economies have prospects as bright as northern Alberta, at the geographic core of Canada’s economic future. As the research and industrial workhorse of the province, Edmonton stands tall as one of Canada’s most dynamic and prosperous urban centres.

The Economics Society of Northern Alberta is holding its 2012 Outlook Conference all day tomorrow at the Sutton Place Hotel, so watch for more news to come out of that event.

What else have you come across related to our economy in 2012?

Economics and more with John Rose, the City of Edmonton’s Chief Economist

John Rose moved to Edmonton last May to become the City of Edmonton’s Chief Economist. It’s an important role at the City, though it is one that most people know very little about. I sat down with John last week to chat about his new job and to get his thoughts on Edmonton.

John loved geography when he was younger, and wanted to work in a field where he could apply that passion. He settled on urban planning, but while studying at the University of Toronto, switched to economics. He has been in the field ever since, working for the federal Foreign Affairs department in the 1980s in West Germany and South Korea before returning to Toronto to tackle the consulting business. He most recently worked for PricewaterhouseCoopers.

The move to Edmonton was a unique opportunity for John to combine his interests in urban planning and economics. “I’m interested in what drives the economics of municipalities forward.” He brings an outsider’s perspective to the City of Edmonton, something that initially made him wary. “I thought people would just say ‘here’s another Easterner showing up, telling us what to do’, but people have been very welcoming.”

As the City’s Chief Economist, John is responsible for publishing the reports that the City relies on for budget planning and strategy, among other things. Twice a year he publishes a long-range forecast, using a statistical model of Edmonton’s economy that looks both 3 and 10 years into the future. On a quarterly basis, he publishes City Trends, which provides current information on social, economic, demographic, land development, and transportation trends (here’s the PDF for Q3 2010, the latest to be posted to the website).

The City of Edmonton uses economic models developed by The Centre for Spatial Economics (C4SE). Somewhat surprisingly, Calgary and the Province of Alberta also use models from C4SE. The models can be complex, but John said recent technology improvements are making a difference. “In the 80s, you needed a mainframe to drive even the most simplistic models,” he told me. “Now the tech required is ubiquitous.” While acknowledging that economics is abstract – “you can’t touch the economy” – John said technology is increasingly getting rid of the mystique and mystery.

If you look at the Economic & Demographic section of the City’s website, you’ll find that most of the information is out-of-date. John explained that the transition from his predecessor is the cause, but he said to expect changes. “There’s a lot of value in the information and we want to get it out there, we want it in the public realm.” John noted there currently isn’t a way to notify people when new information is posted, but said an internal effort currently underway should change that. Getting everyone on the same page is a major push for his office this year.

John would also like to see a shift toward more regional forecasting. He works with a variety of organizations outside the City of course, including EEDC, the Chamber of Commerce, and the Finance department at the Province, but sees room for improvement. “We already do regional forecasting to a degree, because we do the CMA and extract a forecast for the City from that.” John noted that most statistics are available at the Census Metropolitan Area (CMA) level, and so it makes sense to look regionally when setting up models. “With a larger economic entity, the trends smooth out a little.” John suggested the Capital Region Board might be the logical place to host a regional forecasting effort.

Speaking of the capital region, John said that while 2011 will be a strong year for Edmonton, “most of the growth will take place outside the City of Edmonton proper.” This is partly because the City itself didn’t suffer as large a setback as a result of the recent downturn. “The manufacturing sector took a big hit in Alberta and Edmonton,” a sector largely concentrated outside the city, such as in the northeast. In a recent interview with the Edmonton Journal, John said we should see an annual growth rate of nearly 4% here in Edmonton.

He was also bullish on the province. “Alberta will be ahead of the national economy as a whole in 2011,” John told me. Again, this is due in part to the way the economic slump affected the province. “The impression is that Canada came through it very well, but the truth is the province didn’t.” In 2011, John expects Alberta to post the first or second best provincial growth rate in the country, depending on how Saskatchewan does.

Turning to individual sectors in the City, John told me that construction will show growth, but mostly due to commercial projects. The residential construction sector will be somewhat sluggish because “there’s just not a big demand for a lot of new housing.” FIRE will do well, but John cautions that increased regulation will have an impact. The retail sector will also grow more slowly this year, because people are reluctant to take on more debt and as as a result savings rates are going up. “The consumer-oriented durable component in particular” will grow slowly according to John, because as people buy fewer houses, the need for new vehicles, furniture, appliances, etc. also diminishes.

John talks about trends and forecasts all the time – he has made it part of his job to do interviews, meet people, and spread the word on Edmonton’s economy. He can rattle the numbers off with ease, and is obviously very knowledgeable. As our discussion shifted toward the city more generally, John became more thoughtful. We talked about the common refrain that Edmonton’s head office situation is dismal at best, and John pointed out that the larger question is how to “attract and retain investment, and talent.” He said we should do “exit interviews” with organizations that leave the City, to try to highlight any cross-cutting themes.

I asked John about the push to revitalize downtown, and in particular, about the City Centre Airport and the proposed arena. He called the ECCA redevelopment a “good move” by the City, because making such a large piece of land adjacent to the core largely residential will have a positive impact on our downtown. “The key to developing a vibrant downtown, is to have people living, working, being entertained, doing all those things, in the core.” He doesn’t think a blanket policy on financial incentives (such as the Railtown subsidy) to attract more residents to downtown makes sense, however. “If there’s an area that we want developed in a particular way, then the City could be come active, but otherwise there’s enough opportunity already.” John didn’t take a side on the arena, but said “it depends on how the development takes place” and said his main concern is that “we don’t want to be in a situation of two competing facilities.” He cited the Air Canada Centre in Toronto and the positive changes and increased activity it brought to the area south of Front Street. “It is very nicely integrated into the city.”

I asked John what he missed about Toronto, and he quickly replied “jazz clubs.” He said while the Yardbird Suite is great, there was more variety with regard to venues back in Toronto. John joked that by moving away from Toronto when he did, he avoided the current political drama that is taking place with new mayor Rob Ford. That led us into a discussion about transit, and LRT in particular, something John considers “the urban equivalent of an enabling technology – if you have it, you can do a lot of great things.” Projects such as the LRT expansion “are a big benefit to the local economy” in the short-term and are “vital for the City’s future,” John told me. The real value to the economy is what the LRT enables, rather than the jobs it directly creates. “If you don’t have mass transit downtown, you’re going to have a hard time developing nightlife, for instance.”

I really enjoyed talking with John (and not just because when I asked him if he was now an Oilers fan he replied, “that implies I was a Maple Leafs fan before!”). Stay tuned to his section of the City’s website for future economic updates.

Shifting the Alberta Advantage

The main thing we talked about yesterday at the ONEdmonton forum was economic development. In addition to breakouts and other discussion, we had two informative presentations that I hope to blog about over the next while. In her presentation on Diversifying Edmonton’s Economy, Tammy Fallowfield, EEDC’s Executive Director of Economic Development, touched on shifting the “Alberta Advantage”. Here’s what her slide said:

  • Remain relatively low tax
  • Not a low cost environment
  • Not a surplus of labour
  • Not a currency ‘bargain’

I think the phrase “Alberta Advantage” means different things to different people, but traditionally our low taxes, low cost of doing business, surplus of labour, and being attractive to investment, have all been considered important aspects. Here are a few notes on each.

Alberta’s low taxes remain a strength. From the Alberta Competitiveness Council’s 2010 report (PDF, 14 MB):

[Taxes and fiscal policy] represents the area of best performance for Alberta, with moderately low tax burdens for both corporations and individuals and a strong government financial position.

Of all the measures that report looks at, Alberta performs the best (unsurprisingly) in taxes and fiscal policy.

What about being a low-cost environment? From the same report:

Within Canada, business costs in Alberta (Edmonton) are lower than Ontario (Toronto), but higher than in each of the other provinces compared. This result is due to Alberta’s strong economy of recent years, which led to a much higher increase in business costs – especially labour, electricity, and facility costs – than seen in other provinces.

I haven’t yet found a good comparison of business costs with regions elsewhere in the world, so let me know if you come across something. I suspect the picture is not as rosy as it once was.

How about our labour force? All across Canada the population is aging, and that (along with our very low fertility rate) is going to lead to labour shortages. Here’s a graph from Alberta’s Occupational Demand & Supply Outlook, 2009-2019 (PDF), that shows this trend for our province:

There are many consequences as a result of this trend, not the least of which is Alberta’s challenge to attract and retain labour. Our taxes will likely also be impacted – an older population means higher costs for health care, and a slow growing labour force means a slow growing tax base.

Let’s look at the Canadian dollar (compared to the US dollar).

The strength of the Canadian dollar has an impact on foreign investment, among other things. As you can see, the dollar has been quite strong in recent years (aside from the dip in late 2008/early 2009), which may not be a good thing for Alberta.

So if being low-cost, having a surplus of labour, and being a relative currency ‘bargain’ are no longer part of the Alberta Advantage, what does that mean?

This diagram comes from the Institute for Competitiveness & Prosperity, based on a presentation that Professor Daniel Trefler of the University of Toronto gave here in Alberta on October 15, 2009. The diagram was originally used to illustrate the shift that China and India have yet to make.

On the same slide that listed the four points above, Tammy included this diagram. That’s the shift we need to make here in Alberta – from being a strong low-cost competitor, to being a strong innovation-based competitor.

How are we going to do that? By making strategic choices. Here’s (more or less) what Tammy showed next:

Tammy went on to talk about the industries that are important for us to focus on here in Edmonton, and a similar exercise would apply for Alberta. I’m not sure if what I have written above is exactly what she was trying to get across, but that’s how I interpreted it.

What do you think about shifting the Alberta Advantage?

Tough times for Edmonton charities

Times are tough right now if you’re a charitable organization. Here in Edmonton, the outlook is pretty grim for a number of organizations:

Add up the above numbers, and Edmonton charities are short about $3 million. That’s a lot of money. The scary part is that I’m sure there are more than I haven’t been able to find yet.

The two bright spots I’ve seen are Santas Anonymous, which said it would meet the demand this year, and Stuff-A-Bus, which exceeded its goal.

While the news is terrible, it’s not that surprising. Last year donations across Canada dropped 5.3% from 2007 to $8.19 billion, the lowest figure since 2005. I’m sure we’ll see a similar or perhaps larger drop for overall giving in 2009. The fact is, philanthropy is a lagging indicator. This data is from the US but I think it applies to us too:

During the last 40 years, according to data provided by Giving USA, charitable giving fell in real terms (i.e., adjusted for inflation) in years in which the economy was in recession, or in years in which there was a significant stock market dislocation. Giving fell in 1980, 1987, and 1990. The last time the economy contracted was in 2001. That year, according to Giving USA, charitable giving fell 2.3 percent in real terms, after having boomed along with the stock markets and the economy at large in the late 1990s. But while the economy resumed its growth in late 2001, charitable giving slumped in real terms in both 2001 (down 1.4 percent) and 2003 (down 0.2 percent).

It’s a lagging indicator because charitable donations are seen as a luxury. You pay your bills first, then you make a donation. Not everyone sees it that way, of course, but on the whole, that’s the reality.

Hopefully that means local charities will have a better year in 2010.

There’s still time to help this holiday season! Here’s how:

Edmonton Oilers Arena Feasibility Report – Link Roundup

edmonton oilers Earlier this week, the nine-member committee studying the feasibility of building a new hockey arena in Edmonton released their report. It contains no surprises, and recommends that if a new facility is to be built, it should be built downtown. I’m sure you’ve heard all about it on the news, but there are lots of excellent blog posts on the story that should not be missed. Here they are, with quotes.

From Covered in Oil:

The other question, whether a new arena would be better off in another part of the City will have to go unanswered, as the Feasibility Committee didn’t seem to even bother to look anywhere else.

From Grandinite:

If I get the underlying logic of this development, bringing people downtown will bring in cash. but that cash will flow out of the area if the owners do not live downtown. Sure, money will be spent at restaurants and casinos, but where do the profits go?

From Colby Cosh:

I’m not too clear after reading the summary just what is wrong with the existing Rexall Place. I was looking forward to some clear public explanation of this, but all we’ve been given is a lot of wind about “downtown revitalization.”

From The Battle of Alberta:

Dear Mr. Lowe,

We already have a hockey shrine in Edmonton. It’s called the Northlands Coliseum. You might remember it. You won five Stanley Cups there.

A arena without a history of accomplishment is not a shrine. It’s a mall with seats.

From Fighting for Taxpayers:

Dr. Brad Humphreys, the foremost expert on the economic benefits of professional sport teams and arenas has proven that there is not an economic growth, but merely a shift of where the money is spent.

From daveberta.ca:

Of course I want Edmonton’s downtown to become vibrant, but building a giant hockey rink won’t automatically put Edmonton in a position to rival downtown Montreal or New York (like some of the article’s have alluded). I’m still not convinced that spending upwards of $450 million (plus land costs) on an arena that will draw the suburbs downtown for a couple hours 2-3 nights a week is what will revitalize downtown.

From Alberta: Get Rich or Die Trying:

There will be a new arena and it will be downtown, any alternatives have pretty much been steamrolled over by the municipal government and the Edmonton media. There will be public funding, not direct tax increases, but by other means, and the province will give nothing.

From A Blog Of Pucks:

It would be an 18,000 seat 450 Million dollar arena. That’s great but once again I’ll ask the difficult question: Is this really going to make the wives like living in Edmonton any better? The committee better ask Pronger’s better half first.

And finally, this one isn’t a blog but an article at CBC today:

A new downtown Edmonton arena to replace Rexall Place could threaten one of the biggest annual events in the city, say officials with the Canadian Finals Rodeo.

The owners of Rexall Place, Edmonton Northlands, are ruling out the possibility of keeping it open as is, if a new arena is built.

“We can’t have two competing large-scale facilities,” Jerry Bouma, chair of the board, said Wednesday.

Also, be sure to check out this interview with Brad Humphreys.

It’ll be interesting to see how this plays out. Stay tuned.

Common Wealth: Economics for a Crowded Planet

International Week 2008 Tonight I attended a lecture as part of International Week 2008 on campus at the University of Alberta. The speaker was Jeffrey Sachs, who is probably best known as the Director of the UN Millennium Project. Unfortunately he was called away to a special meeting in Africa with Secretary General Ban Ki-moon and so he sent a pre-recorded video message instead.

His talk was very high-level and lacking in specifics. I suppose the idea is that you attend the lecture to whet your appetite, then you buy his new book (which, btw, he mentioned at least a half dozen times). All joking aside, I probably will buy it. I read his book The End of Poverty and thoroughly enjoyed it. I think his message is really important, and he’s great at delivering it.

Because Sachs could not attend, the organizers invited two other guests to make remarks and answer questions. One was Andrew Nikiforuk, a Calgary-based journalist, and the other was Dr. Rick Hyndman, Senior Policy Advisor for the Canadian Association of Petroleum Producers.

Nikiforuk presented after the Sachs video, and he delivered a great presentation with just some notes to refer to. Hyndman presented last, and he had a laptop with some PPT slides. There must be a law somewhere that if you’ve got two presenters and one uses slides, the person with the slides invariably has the crappier presentation! It just doesn’t flow as well, nor does it sound as convincing.

That said, Hyndman more than redeemed himself in the Q&A session, during which he was pretty much attacked. One guy who lined up to ask a question was wearing a bright green t-shirt with "Greenpeace" emblazoned on the front – how would you expect him to treat a representative of the oil companies!

The event tonight wasn’t long enough to delve into any details, but it definitely was an opportunity to think about some of the issues that Sachs is so passionate about.

Visit the U of A’s International Week 2008 website for more information.

The R Word

Post Image Every morning on the way to work I listen to podcasts. Usually I listen to the NYTimes Front Page, and BBC’s Global News. Lately, both have been talking quite a bit about "the R word". So has the rest of the press (see the R-word index). I’m no economist, but it seems to me that the USA is not bracing for a recession, they’re already in one. And that in turn has affected the rest of the world.

The media coverage of the recession has understandably increased this week, with world financial leaders meeting in Davos for the annual World Economic Forum. A couple quotes from those leaders in this article at the International Herald Tribute caught my eye:

George Soros, the financier who made a fortune betting against the pound, went so far Wednesday as to say that the downturn would put an end to the long status of the dollar as the world’s default currency.

"The current crisis is not only the bust that follows the housing boom," Soros said. "It’s basically the end of a 60-year period of continuing credit expansion based on the dollar as the reserve currency."

And on the completely opposite end of the spectrum:

Not everybody was grim. John Snow, the former Treasury Secretary and chairman of Cerberus Capital Management, said that if the United States slipped into recession, it would be "short and shallow."

"That’s been the pattern of recessions in the U.S., and there’s a reason for it," he said in an interview. "There is an inherent resilience in the U.S. economy. We’re already seeing an adjustment."

So which is it? Is the United States losing its status as the world’s top economy, the so-called "default" currency? Or is this just a temporary blip that won’t shake things up too much, the normal ebb and flow of the markets?

My money is on the latter. The economy follows a pattern of expansion and contraction, and perhaps it is time for another contraction. And Snow is right, with the US at least, periods of contraction are historically much shorter than periods of expansion.

You can read more about recession at Wikipedia.

Read: I.H.T.

5 Things Edmonton Should Invest In Before a New Arena

Post ImageRumors of a new hockey arena in Edmonton have been floating around since at least November of last year. The latest news, released yesterday, is that a new “arena feasibility” committee has been struck to determine whether such a project should go ahead, and if so, where, for how much, and who should foot the bill. Jerry Bouma, president of Northlands and a member of the new committee, said:

“You have to build a world-class facility. The Oilers have already said they need a new arena.”

I’m not sure there is anyone on the committee who is against the idea of a rink. So much for the word “feasibility” – it looks like we’ve moved past that. Seems also that most of the members are convinced it should be downtown. I’m all for revitalizing our city’s downtown core, as I’ve stated before, but I am not sure if a new arena is the best idea. There are good arguments on both sides of the debate. For some good discussion, read: here, here, here, here, and here.

Either way, I don’t think taxpayers should foot the entire bill. Certainly the city should contribute something if a new arena is built, but I think it should be the Oilers that pick up the bulk of the expenses. In my opinion, there are better things that Edmonton should be investing in (these are in no particular order):

  1. South Edmonton Common. Talk about congestion! Seriously, we need an overpass/underpass at 23rd avenue and Gateway Blvd. Especially once the new business park just to the south of SEC is built.
  2. LRT. Finish it faster! Or keep it on track, and add a West Edmonton Mall to Downtown line. I think an East-West line would be great for the city, especially if it were to go to WEM.
  3. Potholes. There are far too many of them around the city. What happened to that research with rubber/asphalt roads? Did it work or not? Let’s get the roads fixed!
  4. Startups. Alberta just isn’t the best place to start a company, oil & gas related or not. Everything I have learned suggests that Ontario, B.C., and other provinces ofter much better incentives for entrepreneurs. Certainly this is a provincial issue, but there’s no reason that Edmonton can’t get the ball rolling. Let’s help individuals take advantage of the hot economy.
  5. Housing. Speaking of our hot economy, how about more money for housing? You can’t turn on the news these days without hearing about the housing crunch in our city.

Or how about making our city cleaner? Five Canadian cities made this Forbes list, Edmonton was not one of them. And don’t forget about the ring-road project that continues. Obviously you could add new schools, hospitals, and other “usual suspects” to the list. I am tempted to mention city-wide wifi too, because I think it would have a positive impact.

The point is that a new arena benefits the Oilers first, and Edmonton second. Funding should follow that order. I’m not against a new arena (I have to admit I am a bit excited about the prospect) but I am against it being funded entirely (or even mostly) by taxpayers.

Make the music free and sell the show

Post ImageChris Anderson’s post today at The Long Tail is about the music industry and provides a really good analysis of what should be happening with music. Essentially, bands should give the music away for free and make their money on live shows. He explains:

Music as a digital product enjoys near-zero costs of production and distribution–classic abundance economics. When costs are near zero, you might as well make the price zero, too, something thousands of bands have figured out.

He points out that the average price for a ticket increased 8% last year, reflecting demand. Indeed the fastest growing part of the music industry is live performances, up 16% in 2006 in North America.

And don’t think that live shows are not profitable. They are extremely profitable for the artists, just not for the record labels. Chris includes a list of the top ten grossing touring bands of 2006 – and their numbers total a truly astounding $970.3 million.

I say – goodbye record labels, hello free music and awesome not-free shows!

Read: The Long Tail