Varcoe: For Calgary to recover, 'we have to transform our economy' – Calgary Herald

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Calgary has been gaining tech-sector traction this year, adding jobs and attracting investment that’s helping fuel an economic rebound.

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Can the city build on early momentum as the pandemic drags on and other challenges, such as labour shortages and inflation, crop up?

After attracting several major tech companies to the city — at the same time the energy sector is enjoying higher commodity prices — will Calgary shift into a higher gear?

“It is great to talk about momentum and optimism, but building on momentum is another thing,” Calgary Economic Development interim president Brad Parry said at the group’s annual outlook luncheon.

“Nationally, we are seeing companies and people placing bets on our city.”

At the virtual event, economists, government and business leaders spoke about the ongoing challenges the city faces, while painting a picture of rejuvenation ahead.

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Calgary is regaining ground after a terrible 2020, which saw thousands of people lose their jobs and businesses close after the COVID-19 pandemic struck.

ATB Financial chief economist Todd Hirsch told the event that Albertans endured an 8.2 per cent economic contraction last year. ATB expects the province’s gross domestic product (GDP) will expand by 6.3 per cent this year, followed by 4.3 per cent growth in ’22.

While the oilpatch is no longer the employment growth engine of years past, it will serve as the economic backbone, while new jobs and opportunities will be generated by digitally focused companies, agriculture, clean energy, tourism, and the film and television industries, Hirsch said.

Yet, a “paradox” confronts the labour market today. While high unemployment persists, more Alberta businesses are reporting worker shortages.

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Calgary should focus on education and training, social inclusion and diversity, and embracing decarbonization and clean energy, Hirsch told the audience.

“We stand at a crossroads in Calgary and in Alberta. To rebuild our economy, we have to transform our economy.”

There are signs an evolution is taking place in the heart of Canada’s energy industry.

Companies across the sector have rolled out billions of dollars this year in planned investments in new technologies and low-carbon initiatives.

A report from the Conference Board of Canada projects Calgary’s economy will expand by 7.6 per cent this year — its strongest growth in 24 years — and tops among the 13 cities it examined.

Higher oil and natural gas prices will play a key part in the recovery.

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Calgary’s economy is expected to expand by six per cent next year, although risks from the pandemic persist.

“There are a lot of positive signs in Calgary,” board senior economist Robin Wiebe said in an interview, pointing to strength in local housing prices.

“Calgary has fallen hard, so it has more ground to catch up. But the conditions with oil prices are uniquely positioned to give Calgary a good economic outlook.”

The conference board anticipates a rebound in employment, although the jobless rate will remain stubbornly high, averaging around nine per cent.

“Our city is facing economic uncertainty the likes of which we have never seen,” Mayor Jyoti Gondek said at the event , citing the pandemic, global energy crisis and lingering effect of past recessions.

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The new mayor wants to see Calgary grow as a global leader in clean energy production.

The tech sector is another area that continues to make gains.

In June, Bangalore-based Mphasis unveiled plans to establish a Canadian headquarters in Calgary , generating up to 1,000 new jobs, and the Royal Bank of Canada announced this summer it will create 300 technology positions at a new Calgary Innovation Hub over three years.

As well, India-based IT giant Infosys said in March it will bring 500 new jobs to Calgary within three years as the company expands in Canada.

These moves should help fill up some empty downtown office space, but with the vacancy rate in the core marooned at 30 per cent, it’s only a start.

“I am feeling optimistic as is everyone else, but we are also tempering it with moving forward to real diversification and focusing on the downtown as more than just a bunch of office buildings,” Gondek said in an interview.

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Homegrown tech firms are also expanding.

Companies such as Symend and Neo Financial are raising millions of dollars and are busy adding staff. Calgary-based Benevity said recently it is aiming to hire 300 people this year — it has already reached around half that goal — and the company had 54 job openings at the start of October.

However, there is plenty of work to be done.

As NDP MLA Deron Bilous noted Wednesday, a new report indicates Calgary still badly trails Toronto, Montreal and the Waterloo region in attracting venture capital, with local firms raising $271 million this year.

The Waterloo area raised $859 million, with Toronto topping $4.4 billion, according to website briefed.in , which tracks technology startup data in Canada.

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Inflation is also becoming a concern, although the Bank of Canada announced Wednesday it will keep its overnight interest rate at 0.25 per cent. The central bank projects CPI inflation will average 4.8 per cent in the final three months of the year.

“I’m not ready yet to hit the panic button and say hyperinflation is around the corner, but I am a little bit more concerned than I was three months ago,” said Hirsch.

Parry pointed out the city has seen record levels of venture capital investment flowing into local companies in the past 20 months, topping $600 million.

Calgary finally has some wind in its sails.

“Part of our work is also about trying to dispel some of the myths and help change some of the perceptions that are out there about our city,” he said.

“The momentum in our economy this year is something that we have to build on.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com