“Never waste a good crisis,” EEDC President & CEO Brad Ferguson told the hundreds of Edmonton business leaders gathered today at the Shaw Conference Centre for EEDC’s annual Impact luncheon. He channeled local business pioneer Frank Spinelli and said “it’s what you do in the good times that determines how well you perform in the bad times.” He argued that Edmonton and EEDC in particular have done a lot of great things over the last two years when times were good and that means the year ahead won’t be as bad as many anticipate.
A short while later, Premier Jim Prentice took to the stage and disagreed. “It is what we are going to do in the bad times that will determine how successful we’re going to be in the good times,” he said. The Premier talked about the need to change both the income and expense side of the equation, and cautioned that all Albertans will have a role to play in making it through a difficult time.
So which is it? Well, it’s probably a little bit of both. The feeling I was left with after today’s luncheon is that Edmonton has been doing the right things and will weather the coming storm better than the province as a whole.
Mayor Don Iveson brought greetings to start the event and offered his two cents on the economic situation, saying “there’s no reason to panic.” He said the Edmonton economy is becoming more resilient as it becomes more diverse and that “our city’s entrepreneurial spirit has never been stronger.”
The mayor also took the opportunity to call upon the Province to keep Edmonton in mind as it tries to address a shortfall in revenue. “City building, I believe, is Province building,” he said. Later, Premier Jim Prentice referred to the comment and said, “I couldn’t agree more with that.”
Before the keynote began, EEDC showed their Build It Here video, highlighting the fact that it can be customized for businesses to use in their own materials.
Keynote
Brad Ferguson delivered the keynote address today, which you can read online. He began by talking about 2014, calling it “a great year”. There was a lot of euphoria in 2013 and throughout most of last year, so EEDC asked itself a key question:
“What should an economic development authority do when it is not in the job creation business? What should we do in the good times that will help us when the economic cycle turns?”
And with that in mind, the organization focused on ten themes throughout 2014 “that would strengthen our economy over the long term.”
- Direct Flights
- External Marketing
- Downtown Density
- Entrepreneurial Ecosystem
- Foreign Investment
- Event Attraction
- Regional Collaboration
- Unified Voice
- National Positioning
- Building the team at EEDC
Brad talked about the way EIA and EEDC are working together so effectively now, which resulted in the KLM flight. He discussed the new approach to tourism and marketing. He mentioned the big announcements that were made recently and said “more than anything else, 2014 will be remembered as the year of downtown.” He talked about the importance of event attraction, saying that big events “create a rhythm and a pulse and an energy that builds excitement and confidence.” He praised the mayor’s leadership in the region and on speaking with a unified voice. And he referenced the many newspaper and magazine articles that have been popping up across the country talking about Edmonton’s transformation.
Brad had a lot of praise for his colleagues. “I am extremely proud of the team we have built at EEDC.” He said the organization has reduced the portion of its operating budget that comes from the City, from 43% when Brad took over to 38% today. Brad said they’re on track to reduce that even further to 33% by 2017.
He then talked about oil prices and what they mean for the economy. If you want to understand the roller coaster, read this passage:
“If we look back over the last 7 years: In 2006-2007 this place was on fire, the world economy was expanding, oil prices were high, and everything was rocking. Until in March 2007 Bear Stearns collapsed and in September of that same year Lehman Brothers collapsed, the biggest financial collapse in recent history. The price of oil went from $140 to $40 (a $100 dollar drop) in six months than then settling around $58 which created a population boom scenario in Alberta and in Edmonton starting in 2010, 2011 and 2012 when the WCS (Western Crude Select) pricing traded at a significant discount, now known as the Bitumen Bubble, followed by 2013-2014 where the price rose again to $95-$100 range while the world started to rebound, and then half way through 2014 the price started to dramatically drop as the global economy started to pick up, which has us moving from a budget crunch which can be addressed into a competitiveness crunch that is more structural and tends to last for quite some time.”
He did not mince words, saying “our revenue model at the provincial level continues to fail us.” Brad said he sympathized with the Premier though, as he inherited this problem. Still, he cautioned that unless we make changes now, we’ll be experiencing the same revenue volatility in the 2020s, 2030s, and 2040s. “It’s time to be humble being from Alberta,” Brad said. “And it is time to have a serious conversation about our financial picture and to make incremental changes to our tax structure.”
Brad predicted that in Edmonton, the year ahead will be better than most people are predicting. He said we’ll outperform Calgary, and while the Province’s budget will capture the headlines, “there are many positives in front of us that cannot be forgotten.”
He urged attendees to do more than hope for a return to $100 oil prices. “We’re planning for a very competitive world and we need to operate with more intention than ever before.”
Q&A with Premier Prentice
After the keynote, Premier Jim Prentice joined Brad on stage for a fireside chat, sans fire. “This is a world class city, with world class leadership,” he said. He disagreed with Brad about the good times/bad times point-of-view, then said that “this year will be about leadership and confidence.” Premier Prentice predicted that 2015 will be a challenging year, but also a transformational one.
The Conference Board of Canada has predicted that Alberta will experience a recession in 2015, but Premier Prentice disagrees. “We are tough, we are resilient, we are entrepreneurial, we have the capacity to get through this, and we will get through this.”
At times the Premier seemed to be doing exactly what Brad cautioned against – hoping for a return to $100 oil. “The best solution for low oil prices is low oil prices, they will come back,” he said at one point. At other times, he was very clear that action was necessary. “People have had enough of the roller coaster,” he said. He has struck a new budget committee and confirmed that “everything is on the table.”
The Premier was also very honest about the challenges faced by the Province. “We have not done a good job with our public finances,” he said. “We have been living beyond our means.” He said that needs to change, and that “we are living on resource revenue that properly belongs to our children and our grandchildren.” He said the amount we spend in Alberta on health care “is not sustainable” and added that “we’re going to have to contain expenditures as we move forward.”
Premier Prentice did not shy away from the topic of taxation, either. Asked if the market is ready for a conversation about it, the Premier replied, “I certainly hope so.” He suggested that most Albertans probably don’t support the idea of a provincial sales tax, but did say that now is the time to discuss it. “We welcome the views of all Albertans on taxation,” he said. “Now is the time to speak up about this.”
Perhaps thinking ahead to the budget, Premier Prentice talked about what to expect. “First and foremost we need a fiscal plan than Albertans can look at and have certainty,” he said. And knowing that the roller coaster cannot continue, “it has to be a ten year plan.” He said that oil “may always be the family business” but said that diversification is important.
Given the opportunity to offer some closing thoughts, Premier Prentice said “you don’t win a bigger lottery than to be an Albertan.” He ended on an optimistic, hopeful note. “This is a remarkable province and we have a remarkable future.”
Extra Notes
EEDC Board Chair Barry Travers brought greetings on behalf of the board of directors, and introduced all of his colleagues. The event was hosted by Grant Ainsley and featured a giant Twitter wall powered by Freeman Audio Visual and SAM that received rave reviews from attendees. Everyone received a copy of “Navigating Your Economic Future in Edmonton: A Guide for Business Leaders”. The entire event was livestreamed by the Edmonton Journal, which you can watch here.
For additional context on this story, check out the following posts:
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