The Government of Alberta recently released a website for Alberta’s Recovery Plan. Launched in June 2020, their plan is supposed “to build, to diversify, and to create jobs.”
The new website is basically a landing page that provides various snippets of claims about the economy, as well as links to the website that was launched in 2020, where readers get more detail.
One of the things I noticed is that the claims on the new website, while technically true, were misleading because they lacked critical context.
I decided to list the claims here and then provide that missing context.
Claim 1: Alberta’s business tax rate is the lowest in Canada and among the lowest in North America.
There’s not much context to provide here. It’s a pretty straightforward fact. The biggest issue I have is that it comes right after the text “Alberta’s Recovery Plan is already working.”, which implies that if it is working, it’s because the UCP cut the corporate income tax rate by a third. But they have yet to provide any concrete evidence of a causal link to their tax cut and any economic growth the province has seen since they’ve been in power.
Claim 2: Housing starts and building permits are both up over 30% from 2020.
You’ll notice that 2020 is a common benchmark year in the datapoints mentioned on this website. There’s a reason for that. We were in the early months of a recession that year, driven primarily by pandemic restrictions and low oil prices. Of course any growth after 2020 will look positive, which is why we must look at the data prior to 2019 as well.
Either way, it’s true.
Housing starts were up over 30% last year. According to data on the Economic Dashboard, there were 30,612 housing starts last year but only 23,042 starts in 2020. This is an increase of 32.85%.
Now, keep in mind that there was a drop in housing starts in 2020. In fact, housing starts had dropped that year by 11.24%, compared to 2019.
In 2019, there were 25,960 total housing starts. Which means, compared to 2019, 2021’s housing starts were up only 17.92%, for an average annual increase of 8.96% in 2020 and 2021.
Even then, we’re still nowhere close to the 37,268 starts we saw in 2014 or the record-setting 40,882 starts seen in 2016.
As far as building permits go, there were roughly $14.315 billion worth of residential and non-residential permits issued last year, according to Economic Dashboard data. In 2020, that number was $10.722 billion. That’s an increase of 33.5%, which, once again, fits into the claim that it increased by over 30%.
However, that’s on the heels of a loss of 7.94% in total permit value in 2020 from the 2019 value of $11.647 billion. Not only that, but the 2019 value itself was 13.46% lower than the $13.459 billion worth of permits issued in 2018.
In fact, last year’s data is only 0.49% higher in value than the value of all permits issued in 2017, the last time Alberta saw an increase in building permit value. And even then, it’s still 21.59% lower than the high of $18.256 billion Alberta saw in 2014.
So, even though last year’s permits were higher than in 2020—the poorest performing year in the last decade, it’s not that impressive. 4 of the last 10 years performed better, and 2 other years had values that came in at only 0.49% and 0.80% lower than 2021’s values.
Claim 3: Retail trade is at an all-time high. Sales are up 60% from its low in April 2020
It’s true that retail trade is at an all-time high. In November 2021, retail trade hit $7.734 billion. The next highest was just the previous month, when it was at $7.725 billion.
The disingenuous part is comparing it to April 2020, when retail trade was at $4.843 billion, the lowest level it’d been at since December 2009. But I guess saying it increased 60% over April 2020 sounds more impressive than saying it increased 0.11% over October 2021. Or 6.9% over November 2020.
And that 6.9% year-over-year increase isn’t even the largest increase seen in a November. In fact, over the last decade, November 2020 saw an increase of 9.2%, 2011’s numbers increased 8.71%, and 2013’s numbers increased 7.79% As well, November 2017 was close behind last November, at 6.87%.
Plus, if we compare the last 10 years to previous decades, we find it even less impressive.
|Decade||Retail trade growth|
Claim 4: Manufacturing is at an all-time high. Sales are up 31% from 2020, the highest YTD growth ever recorded.
Manufacturing sales also are at an all-time high. That part is definitely true. So is the part about 31% growth over 2020 sales. Well, kind of. Between December 2020 and November 2021 (the most recent data available), seasonally-adjusted manufacturing sales increased 30.3%, not 31%, but it’ pretty close.
It’s also true that the 30.3% growth during that period is the largest growth seen in any given year. The next largest year-over-year growth was 28.72%, set in 1994. 1999 wasn’t that far behind, at 28.14%.
Now keep in mind, that manufacturing sales slumped in 2020, during the start of the pandemic and low oil prices, down 2.75% from 2019. In fact, manufacturing sales slumped in 2019 (-2.51%) and 2018 (-4.64%).
When we account for the loss in manufacturing sales in 2020, we see that sales increased only 26.68% between December 2019 and November 2021, and that averages out to an annual increase of only 13.34% in 2020 and 2021.
Even though manufacturing sales are indeed higher, comparing them to numbers during the start of the pandemic artificially inflates them.
Claim 5: Exports are also at an all-time high. Up 49% from 2020, the highest YTD growth in 20 years.
The first part is correct, exports are at an all-time high. December 2021 saw the total value of all merchandise exports hit $14.194 billion. That’s the highest it’s ever been. Or at least since January 1997, which is when the dataset starts.
For the entire year, Alberta exported $138.09 billion worth of goods. That also is the highest value of merchandise ever exported from Alberta in a single year. The previous high was $121.58 billion, set in 2014.
Now, their “up 49% from 2020” is slightly misleading. That’s referring to January through November 2021, compared to the same period in 2020. When you compare the two totals—$123.897 billion and $83.195 billion, respectively—it is a 48.92% increase.
So, they are accurate, but it’s not including December’s numbers. The value of all merchandise exports for the entire year of 2021 came in at $138.09 billion, which I pointed out above. In 2020, the 12-month total was $91.998 billion. That’s actually a 50.1% increase.
Keep in mind, however, that 2020 actually saw a 21.5% decrease in total merchandise export value, and that followed on the heels of a 0.38% decrease in 2019.
If we compare 2021’s export numbers to 2019, to avoid the bias of the effects of the pandemic-driven recession on last year’s growth, we see an increase of only 17.82% over the last 2 years. That averages out to an annual increase of just 8.91% in 2020 and 2021.
The value of total merchandise exports increased by 26.67% in 2017 and 17.08% in 2018, an average of 21.87% per year. Had exports continued to average at 21.87% over the last 3 years—instead of 9.4%—exports would’ve been at $212.983 billion last year.
Claim 6: Venture capital investment is at an all-time high ($480 million from Jan–Sept) surpassing 2020’s record-breaking year.
Unfortunately, I can’t provide more context for this claim. It’s based on numbers published in a government media release last month, and I couldn’t find the raw data it’s apparently based on. Although Doug Schweitzer—Alberta’s minister of jobs, economy, and innovation— tweeted this yesterday:
It has slightly more detail, but it’d be great to have access to the raw data.
That being said, I find it interesting that venture capitalist investment in 2020—assuming Schweitzer’s numbers are accurate—more than doubled. The UCP’s recovery plan didn’t kick in until 2021.
And in the first 9 months of that recovery plan, investment increased by only $25 million.
In 2020, venture capital investment increased by an average of $19.167 million a month. In the first 9 months of 2021, it increased at only $2.78 million a month.
Claim 7: 79,935 new businesses have been incorporated in Alberta since March 2020.
This claim is true. According to the Economic Dashboard, “the number of businesses that are incorporated in Alberta under the Business Corporations Act”, if you add up every month between March 2020 and December 2021, is 79,935.
Now, keep in mind that this number doesn’t mean a whole lot. Anyone can incorporate a business. The plumber who fixed your dishwasher and employs no one but himself. A lawyer registering a shell company for one of his clients. And a mom and pop corner store that employs just their teenaged children.
Without information on sales or workers or GDP generated or anything else, it doesn’t really tell us anything useful.
Claim 8: Tech companies in Alberta have doubled since 2018. Both big cities set tech sector investment records last year.
This is true, as well. This claim is based on the Alberta Technology Deal Flow Study 2021 published by Alberta Enterprise last spring. Technically, this data represents the number of tech businesses in Alberta leading into 2021, not how many there were at the end of 2021.
Either way, the number has doubled since 2018. In fact, it’s more than doubled. According to the study, there were 1,238 tech companies identified in 2018 and 3,083 in 2021, an increase of 149%.
By comparison, the number of tech businesses identified by Alberta Enterprise grew by only 311 between 2012 and 2018.
Interestingly, the study also reported that 1 in 3 companies employed fewer than 5 people each, half of the companies employed fewer than 10 people each, and 3 out 4 companies employed fewer than 25 people.
Finally, PwC, the company hired to compile the report, provided 3 reasons for the sudden jump in the numbers between 2018 and 2021.
- Use of different data sources
PwC used all the databases that’d been used for the 2018 study. They also used 5 new databases, as well their own proprietary data.
- Broader industry classification
The industry classification used in the 2021 study was based on the NAICS classification and includes almost every sector of the economy. The industry classification used in the 2018 study and in previous years was more focused on technology-specific industries.
- Different product categorization
Certain products and services identified as technology-based in 2021 might’ve been categorized differently in 2018 and previous years.
Or, in other words, the number of tech companies might not have actually increased by the number that the UCP government’s new website claims.
Claim 9: Alberta fully recovered the 337,000 jobs lost in spring 2020 and is up 19.1% from April 2020.
This is kind of true.
According to Statistics Canada, there were 2,273,400 people working in February 2020, the month before the Alberta government implemented pandemic restrictions for the first time.
In January 2022, there were 2,306,800 people working in Alberta. That’s an increase of 33,400, or 14.69%.
The 19.1% figure is what you get when you compare April 2020, the lowest level during the pandemic, and December 2021.
January 2021, however, is up 19.47% over April 2020.
Let’s look at some other data:
|Jan 2019||Jan 2022||Change|
Total jobs over the last 3 years have increased by only 1.47%, driven primarily by growth in part-time jobs. Full-time jobs have grown by less than half a percent since January 2019.
In that time, Alberta has seen 7,900 more people working part-time. That’s an average of 2,633 a year. Part-time jobs, however, increased by 25,500 during the same period, averaging 8,500 a year.
Alberta has seen more than 3 times as many part-time jobs created over the last 3 years than full-time jobs.
In January 2019, 81.66% of all workers in Alberta were employed full time. That number dropped to 80.82% last month.
So, while they may have recovered 337,000 jobs since the spring of 2020, I wouldn’t say that they recovered the 337,000 jobs. Some of the workers working full time that spring are now working part time.
Claim 10: Alberta is creating 90,000 more jobs with $20.7 billion in capital investment
This will be through public infrastructure projects between 2021 and 2024. They claim that these projects will lead to 50,000 direct jobs and 40,000 indirect jobs.
I’m curious how these jobs break down. I’d guess that the bulk of the direct jobs are construction related. And constructions job creation is misleading.
The way construction works is that crews are brought in on a particular project to, say, pour the foundation, run electrical wiring, or install windows. Once those crews are done at a project, they move onto another project. For the most part, however,it’s the same crew. Sure, the odd new person will join the crew, but generally, it’s the same workers.
If 10 plumbers work on a new hospital in 2022 then go work on a new courthouse in 2023, did we create 10 jobs or 20? And what if they worked on a new school in 2020? Did we create any jobs at all for those plumbers in 2021–2024, given that they were already working prior to this 3-year period?
So my question with the claim of 50,000 is how many of those are brand new jobs, putting people to work who weren’t already working? And how many of them are full-time jobs?
The same thing could be asked of the 40,000 indirect jobs. What counts as an indirect job? The servers at the restaurant where the construction workers eat? The cashier at the gas station where the construction workers fill up their trucks? And did none of those jobs exist prior to 2021? How many of them will be full-time.
There is just too little detail provided regarding these job claims.
I should point out that the 2021–2022 budget had slightly different language than “creating 90,000 more jobs”:
The total Capital Plan of $20.7 billion over three years, with a $1.7 billion increase in 2021–22, will create opportunities for private sector participation and support more than 50,000 direct and 40,000 indirect jobs through to 2024.Fiscal Plan: Protecting Lives and Livelihoods, p. 128
Notice how it says that they will support the 90,000 jobs, rather than create 90,000 jobs? There’s a huge difference between supporting 90,000 already-employed workers and putting 90,000 unemployed workers to work.
Claim 11: Alberta’s agri-food sector contributes $9.7 billion to our economy and employs 70,000 Albertans
Okay. I honestly have no idea why they even put this on the website. How is this evidence that their recovery plan is “already working”? It doesn’t give us context to how much this sector contributed to the economy in the past or how many workers it employed in the past. It’s kind of pointless, at least as far as supporting their claim that the plan is working.
So, there you have it. When it comes down to it, the Government of Alberta provided some evidence that the economy is growing, but they made it seem like it’s growing faster than it is, and they didn’t provide any evidence that this growth is directly because of their recovery plan.
It’s not looking good 3 years into the first term of the party that ran on a platform of jobs, economy, and pipeline.
4 replies on “Fact checking 11 UCP claims about Alberta’s economy”
This “cherry picking” by using pandemic-impacted 2020 numbers to artificially inflate current economic conditions is tiresome. Same goes for all the current pearl-clutching over the inflation rate, which appears high on a year-over-year basis, but largely because pandemic-impacted 2020 had very little inflation. If you go back to 2019 and divide by 2 you get an average annual inflation rate of around 3%, which is within the Bank of Canada’s target range — but no one ever bothers to provide that context.
So true, Doug.
When the NDP were in power, there was much screeching by the UCP about bankruptcies. It would be interesting to compare that data as well. If I remember correctly, if a business changes something even a little bit, it can be considered a new business as well (this is a vague memory) so the original business is shut down and the new business starts. Perhaps that was about business licenses in cities?
[…] interesting is that despite oil breaking $90 a barrel and the UCP claiming that the Alberta’s Recovery Plan is working, Alberta saw the third highest number of people on EI […]