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                     What Province Is Leading The Canadian Economy -

                   Alberta, Ontario, Or None Of The Above?

 

By Randall White

If you’ve been around long enough, you may remember other times when the booming oil and gas economy in Alberta seemed to be supplanting Ontario’s more diversified economic base as the leading edge of Canadian economic growth. And then the bubble burst. 

Rising world oil prices after the 1973 energy crisis triggered a great boom in Canada’s oil-rich province. The same crisis had a less happy impact north of the Great Lakes. 

Ontario came close to receiving federal equalization payments in the late 1970s. Around that time, a young Stephen Harper dropped out of the University of Toronto and moved to Edmonton. 

Yet as the 1980s wore on, oil prices declined, and the great 1970s Alberta oil boom wore out - especially after a further steep fall in oil prices in 1986. 

By this time a decade of decline in the Canadian dollar against the US dollar had also made Ontario’s manufacturing exports more competitive in the still lucrative markets of the United States. Suddenly Ontario seemed back in the Canadian driver’s seat. 

The return of the old order did not last long. The early 1990s were difficult for the Ontario economy. 

Then the sudden viral growth of the Internet in the United States - and the confirmed arrival of big new global economic players in the form of China, India, Russia, Brazil, and beyond - helped revive regional economies in various parts of the world. 

The same international trends boosted demand for Alberta’s oil and gas resources in a very big way. Further, that province’s economic growth was dramatically accelerated by a long rise in world oil prices that started in 1999. 

A Canadian dollar rising on the back of rising oil prices also made Ontario manufacturing less competitive in US and other foreign markets.

Then on February 6, 2006, Stephen Harper from Alberta became prime minister of Canada.

At some point over Mr. Harper’s subsequent almost nine years in office, the booming Alberta energy economy did seem to supplant Ontario as the leading edge of Canadian growth.

Now, however, there are signs that the Alberta bubble may be bursting again.

Statistics Canada’s October labour force survey has prompted such exuberant headlines as: “Ontario's Job Numbers Point To A Reversal Of Fortune In Canada's Economy.”

Employment in Ontario increased for the second consecutive month, up 37,000 in October, pushing the unemployment rate down to 6.5%. Statistics Canada says that is the lowest rate since October 2008 - which was the start of the global economic crisis. 

BMO economist Robert Kavcic has stressed that in the past two months Ontario has created more than half of all new jobs in Canada. 

Mr. Kavcic also pointed to another striking trend. 

“Cities with the strongest job growth in Canada right now are not Calgary, Regina et al, but rather Guelph, Hamilton, Oshawa and Barrie — cities around the GTA with a manufacturing and trade presence.” 

All this is happening in a larger universe shaped by falling oil prices and a falling Canadian dollar. And, whatever else, this is helping make Canadian manufactured goods be more competitive in US markets once again.

A recent report from Export Development Canada predicts that a resurgent US economy will help boost Ontario exports as much as 7% this year, and 5% in 2015.

Falling oil prices, now approaching as low as $70 a barrel, will not be leading to any company shutdowns in the Alberta oil patch, said Alberta Premier Jim Prentice in an attempt at reassurance on CTV's Question Period this last Sunday.

But Alberta Conservative MP Kevin Sorenson, federal minister of state for finance, was less optimistic/

“It’s not so much that $70 is the plateau, but if it continued to fall, we could expect that there would be job losses,” he said.

It would no doubt be wrong for over-anxious Ontario regional patriots to break out the champagne just yet. The dynamic new Canadian resource economy of the early 21st century - not just in Alberta but also in Saskatchewan and all of Western Canada - has rearranged the economic tectonics of the larger Canada, coast to coast to coast. 

Something of all this is bound to live on, regardless of what happens in the 2015 federal election. 

Do the new Canadian labour force trends this fall nonetheless suggest at least some healthy resurgence of something vaguely like Ontario’s old more diversified leading role in the wider Canadian economy?     

Only time can tell. The provocative new prospects glimpsed by the BMO economist Robert Kavcic may not survive into the new year. 

Ontario today is also still collecting federal equalization payments. And the fall economic statement that Finance Minister Charles Sousa introduced last Monday is projecting somewhat less revenue and lower growth rates than anticipated in last spring’s budget. 

Yet, not long ago, just before her trip to China, Premier Kathleen Wynne was urging the importance of not underestimating Ontario - and Quebec - in the Canadian future that lies immediately ahead.

The latest employment statistics are suggesting she may be right.  

 

 

 

 

 

About Randall White

Randall White is a former senior policy advisor with the Ontario Ministry of Finance, and a former economist with the Ontario Ministry of Municipal Affairs and Housing. He is the author of Ontario 1610-1985: A Political and Economic History and Ontario Since 1985. He writes frequently about Ontario politics.
Posted date : November 18, 2014

View all of Randall White's columns
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