The Alberta government’s decision to commit billions of dollars to support the Keystone XL oil pipeline came as a surprise when it was announced last week, despite the government working with TC Energy for about six months, according to officials.
What was unsurprising about the announcement was the continued unabashed support by the government for the province’s oilpatch, which some tech sector companies say is driving them to consider leaving Alberta.
Premier Jason Kenney’s campaign promises during last year’s election included setting up a $30-million “war room” to attack those who criticize the industry on social media or elsewhere, urging oil companies to sue environmental groups like Greenpeace for defamation and, like U.S. President Donald Trump, pulling back regulations on oil and gas companies.
What is Alberta doing to become a successful player in the 21st century?– Trent Johnsen
Once in power, the UCP quickly made good on those promises, while also cutting property taxes for natural gas producers, providing a loan to clean up oil and gas wells and sending Kenney himself to London and New York to try and attract investment back into Alberta’s energy industry.
The Globe and Mail recently stated “A single talisman has defined Jason Kenney’s time as premier of Alberta: oil.”
The deep devotion to the oil and gas sector is why some technology companies in the province are now looking to relocate elsewhere.
“It’s frustrating as hell,” said Trent Johnsen, who has been involved in Alberta’s tech sector for about 30 years, including as the founder of Hookflash Inc. and president of Shift Networks Inc. He has also been involved with Innovate Calgary and the Creative Destruction Lab, and currently, he’s the founder and chief executive of Liveweb.io, which provides live video messaging services for companies to interact on their web sites with customers.
“We’re betting exclusively on oil and gas,” he said. “What is Alberta doing to become a successful player in the 21st century of the new economy?”
Trent Johnsen has been an outspoken advocate for diversification in Alberta for much of the last 20 years. (Google Chrome Developers/YouTube)
The billions of dollars of support for the Keystone XL project seems to be the last straw for Johnsen, who now wants to leave the province. In general, he said the majority of Albertans believe the quality of life and future of the province is predicated on fossil fuels.
“Not only am I actively looking to relocate my family and business, I am also going to publicly work with other technology companies in Alberta to help them move to more technology ecosystem, future-friendly cities,” he said. “My customers are in the U.S. and Europe. It doesn’t matter where we live and work. We can go anywhere.”
Johnsen said Alberta is moving backwards by cutting funding to organizations like Alberta Innovates and eliminating important tax credits.
The UCP faced criticism by some in the tech sector last fall for its decision to eliminate the Alberta Investor Tax Credit, which was introduced by the previous NDP government and provided a 30 per cent tax credit to investors who put money into specific industries such as clean technology and digital animation. The Interactive Digital Media Tax Credit and the Capital Investment Tax Credit were also wiped out, among other programs.
Those tax credits made a difference, he said, and are a better approach than choosing to support a single company, like a profitable pipeline developer.
“They shouldn’t be investing a billion dollars directly in anything. They should be making policy, where there is a billion dollars for the market to find its highest way to return. That’s the structure of an investor tax credit, where the government says ‘we’re not picking any winners,'” he said.
‘Like swimming upstream’
Trying to grow a tech company in Alberta can feel like swimming upstream because of the lack of provincial support, according to Anthea Sargeaunt, founder and chief executive of 2S Water, an Edmonton company developing technology that detects metals in water in real-time.
“We expect the Alberta government to support oil and gas. That’s what they have done up until now,” she said. “But, there is a lot of new industry coming up that could really make a massive difference to Alberta’s economy. We don’t have to be tied to this perpetual oil and gas chain.”
Growth of her business has slowed because of the elimination of the tax credits, she said.
“It’s been a difficult slog. Those tax credits were a really important part of our offering for investors. Knowing the government was supporting them coming in, was helping them take the risk,” she said.
Anthea Sargeaunt is founder of 2S Water, which is developing technology to detect water quality problems as water leaves treatment facilities. (Anthea Sargeaunt)
So far, Sargeaunt said she has received more financial support from the federal government than the provincial government. Relocating her startup elsewhere is a possibility.
“It’s a conversation we’ve had and will continue to have. It’s a tough decision to make and we don’t want to necessarily make, but we want our business to succeed more than we want to stay in Alberta at this point. That is something we are pretty seriously looking at.”
The provincial government did form a working group to develop ways to support tech companies in the province. Economic Development Minister Tanya Fir is currently reviewing the group’s report and recommendations.
Fir was unavailable for an interview, but in an email, her spokesperson said the tech sector will be a key part of diversifying Alberta’s economy.
Ninety-two per cent of Albertans think the province should do more to encourage the development of the technology sector, according to a recent poll by CBC News.
The survey of 1,200 Albertans was conducted between March 2 and March 18, 2020, with a margin of error of +/-2.8 percentage points, 19 times out of 20.
Alberta Premier Jason Kenney has said he wants an aggressive strategy to promote the province’s oil and gas sector. (Dave Chidley/The Canadian Press)
The government has often pointed to its decision to cut the corporate tax rate as a move that will help reduce costs for all industries in the province and compensates for the loss of some tax credits.
Some in the tech sector dispute that argument since many startups don’t turn a profit for several years.
There are differing viewpoints in the tech sector right now between those who want to relocate and those who want to keep the faith and stay in the province, according to Johnsen.
“There’s a lot of smart people who are trying to remain believers [in Alberta], but when you have provincial political leadership, with a singular focus, on a legacy industry — I honestly feel like we’re trying to keep coal mines,” he said.
He wants to see the oil and gas industry be successful, but said other industries in the province should receive the same support.
“We should be all-in on diversification and we’d be wildly successful,” he said.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
