New report says global recession will hit Alberta harshly

EDMONTON – A new report released this morning by the U of A’s Parkland Institute shows that Alberta is not immune from the current global recession, and may in fact be impacted more harshly than other jurisdictions.

Breaking the Cycle: Stimulus with Responsibility, Stewardship, and Sustainability, co-authored by Calgary public finance economist Greg Flanagan and Parkland research director Diana Gibson, highlights that Alberta’s over-dependence on construction and oil and gas exports makes its economy especially vulnerable during this downturn.

“The provincial government has a responsibility to intervene to stop the downward spiral of the economy,” says Flanagan, “and we currently have the wealth and resources to do so.”

The report points out that the current downturn actually provides a great opportunity for Alberta show some vision and put otherwise idle resources to work creating a new economy—one that is less dependant on fossil fuels, less susceptible to volatility, and sustainable over the long-term both environmentally and financially

“There is a growing consensus around the world that governments need to be increasing public spending to stimulate their economies,” points out Gibson, “but this needs to be done intelligently. Our research shows that tax cuts, royalty breaks, and oil industry incentives are not the way to go—they are poor choices in terms of both job creation and economic growth.”

The report concludes by outlining the key principles and actions that must form part of a provincial economic stimulus plan for Alberta. These include such measures as a return to counter-cyclical spending, targeting 2% of provincial GDP for stimulus spending, focusing on high job-growth areas like health, education and transit, tackling Alberta’s infrastructure deficit, and investing in renewable energy and green infrastructure.

The Parkland Institute is a non-partisan public policy research institute in the Faculty of Arts at the University of Alberta. Breaking the Cycle is available on the Parkland website.