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.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
