Earlier this year, Statistics Canada published business investment data, spanning a 15-year period between January 2006 and January 2021. The investment data covers capital and repair expenditures on non-residential tangible assets.
Tangible assets are physical assets, and include such things as inventory, vehicles, equipment, and buildings.
Business investment on such assets was $52.28 billion in Alberta, as of January 2021.
Here’s how it breaks down by business sector:
| Mining, quarrying & oil and gas extraction | $17,064.50 |
| Transportation & warehousing | $8,772.40 |
| Utilities | $5,293.50 |
| Public administration | $4,450.30 |
| Manufacturing | $2,941.60 |
| Educational services | $1,820.30 |
| Real estate & rental and leasing | $1,753.20 |
| Construction | $1,560.20 |
| Health care & social assistance | $1,555.10 |
| Agriculture, forestry, fishing & hunting | $1,498.20 |
| Information & cultural industries | $1,416.50 |
| Retail trade | $966.90 |
| Wholesale trade | $933.70 |
| Arts, entertainment & recreation | $563.20 |
| Administrative & support, waste management… | $388.20 |
| Professional, scientific & technical services | $360.50 |
| Accommodation & food services | $348.30 |
| Other services (except public administration) | $238.00 |
| Finance & insurance | $217.10 |
| Management of companies & enterprises | $142.40 |
As you can see, the largest portion of the investment occurred in the mining, quarrying & oil and gas extraction sector. In fact, it came in at 32.6% of all capital investments.
To be fair, that means that 67.4% of the investments—$35.22 billion—came from outside the oil & gas sector.
And here’s how investment looks every year since 2006.
What we see here is that investment as of January 2021 was up from January 2020, increasing 5.8% from $49.4 billion to $52.3 billion. Which could potentially by portrayed as a good thing.
However, what the graph also shows is that investment is still pretty low compared to the last 15 years. In fact, the investment reported in January 2021 was the third lowest level of investment during this period. And that kind of makes sense since we were still less than a year into the pandemic.
What’s interesting is that the lowest investment numbers were actually reported just the previous year—in January 2020, before the pandemic had even shut down the economy.
Last January, Alberta reported a 15-year low of $49.4 billion. That was even lower than what was reported in January 2009, halfway through the Great Recession.
Both 2020 and 2021 numbers occurred under the UCP administration.
But what about the NDP? How did investment fare under them? Well, better than under the UCP, but not by much.
All 4 of the years under the NDP saw investment in the bottom 9 years, and 3 of them were in the bottom 7. Total investment in January 2015—just before the NDP took power—came in at $74.7 billion. In January 2019, just before the UCP was voted in, investment was at $59.4 billion, a loss of $15.2 billion.
The NDP averaged a loss of $3.8 billion in investment a year. Keep in mind that January 2016 was in the middle of a recession, coming on the heels of low oil prices the year before. If we exclude that year, the average loss was $462.1 million a year.
The UCP, on the other hand, saw a loss of $7.2 billion between January 2019, just before the provincial election that brought them into office, and this past January. That’s an average of $3.6 billion.
Unexpectedly, in January 2021, partway through the pandemic, investment was actually up over the year before, as I pointed out above. I would’ve expected that investment would’ve been down—not up—given the reports of the effects the pandemic was having on businesses.
But even though investment is up over last year’s levels, we’re still at the the third lowest level since at least 2006, as I pointed out earlier, lower than any year during the NDP administration.
Here’s how investment looks between January 2019 and January 2021 for each industry, sorted by the size of the change in investment.
| 2019 | 2021 | Change | |
|---|---|---|---|
| Utilities | $3,668.30 | $5,293.50 | $1,625.20 |
| Public administration | $3,643.70 | $4,450.30 | $806.60 |
| Health care & social assistance | $1,217.80 | $1,555.10 | $337.30 |
| Construction | $1,256.90 | $1,560.20 | $303.30 |
| Educational services | $1,699.50 | $1,820.30 | $120.80 |
| Arts, entertainment, recreation | $443.00 | $563.20 | $120.20 |
| Information & cultural industries | $1,333.20 | $1,416.50 | $83.30 |
| Wholesale trade | $915.70 | $933.70 | $18.00 |
| Management of companies & enterprises | $159.90 | $142.40 | -$17.50 |
| Agriculture, forestry, fishing & hunting | $1,542.50 | $1,498.20 | -$44.30 |
| Administrative & support, waste management and remediation services | $447.40 | $388.20 | -$59.20 |
| Finance & insurance | $276.90 | $217.10 | -$59.80 |
| Other services (except public administration) | $325.60 | $238.00 | -$87.60 |
| Professional, scientific & technical services | $462.00 | $360.50 | -$101.50 |
| Transportation & warehousing | $8,905.80 | $8,772.40 | -$133.40 |
| Retail trade | $1,162.60 | $966.90 | -$195.70 |
| Accommodation & food services | $707.50 | $348.30 | -$359.20 |
| Real estate & rental and leasing | $2,315.00 | $1,753.20 | -$561.80 |
| Manufacturing | $3,902.20 | $2,941.60 | -$960.60 |
| Mining, quarrying & oil and gas extraction | $25,055.20 | $17,064.50 | -$7,990.70 |
The largest increase in investment was in the utilities sector, which invested $1.6 billion more at the start of 2021 than they did the previous year.
The largest decrease was in mining and oil & gas, which saw a drop of just under $8 billion in investment money.
Now, let’s look at the change as a percentage increase of decrease.
| 2019 | 2021 | % change | |
|---|---|---|---|
| Utilities | $3,668.30 | $5,293.50 | 44.30% |
| Health care & social assistance | $1,217.80 | $1,555.10 | 27.70% |
| Arts, entertainment & recreation | $443.00 | $563.20 | 27.13% |
| Construction | $1,256.90 | $1,560.20 | 24.13% |
| Public administration | $3,643.70 | $4,450.30 | 22.14% |
| Educational services | $1,699.50 | $1,820.30 | 7.11% |
| Information & cultural industries | $1,333.20 | $1,416.50 | 6.25% |
| Wholesale trade | $915.70 | $933.70 | 1.97% |
| Transportation & warehousing | $8,905.80 | $8,772.40 | -1.50% |
| Agriculture, forestry, fishing & hunting | $1,542.50 | $1,498.20 | -2.87% |
| Management of companies & enterprises | $159.90 | $142.40 | -10.94% |
| Administrative & support, waste management and remediation services | $447.40 | $388.20 | -13.23% |
| Retail trade | $1,162.60 | $966.90 | -16.83% |
| Finance & insurance | $276.90 | $217.10 | -21.60% |
| Professional, scientific & technical services | $462.00 | $360.50 | -21.97% |
| Real estate & rental and leasing | $2,315.00 | $1,753.20 | -24.27% |
| Manufacturing | $3,902.20 | $2,941.60 | -24.62% |
| Other services (except public administration) | $325.60 | $238.00 | -26.90% |
| Mining, quarrying & oil and gas extraction | $25,055.20 | $17,064.50 | -31.89% |
| Accommodation & food services | $707.50 | $348.30 | -50.77% |
The utilities sector is still on top, having invested 44.3% more as of January 2021 than they had as of January 2019. This time, however, oil and gas (as well as other mining) wasn’t last place; that was the accommodation and food services sector, which invested 50.77% less than they had in 2019.
Oil and gas was second lowest, with investment in that sector dropping to nearly 32% less than what they had invested two years prior, just before the UCP took power.
It doesn’t seem as though lowering the corporate tax rate to 11%, then 10%, and finally to 8% has made any meaningful difference in that regard.
Sure, investment is 14% higher than it was at the start of 2020, before the pandemic, but it’s still 12% lower than it was right before the UCP took power.
Even then, investment increased 15.8% between 2012 and 2013, and that was with a 10% corporate income tax rate. There’s no evidence that any increases the UCP have seen are because of their corporate tax rate slashing.
