COULD TECH SAVE CALGARY’S STRUGGLING OIL ECONOMY?
It’s no secret that Calgary is going through a bit of a tough time. Layoffs, foreclosures, empty offices and panicking CEOs have made the last couple of years a bit grim for almost everyone.
With an economy tied so closely to one commodity, the boom and bust cycle of oil affects almost every other business in the city. For years, policymakers have talked about how diversification could make a difference, but until now little change has been made.
Could it be the right time for a change?
The smart money today is in technology. Whether online business startups, software development, new hardware or finding new ways to increase productivity across industries, technology has the promise of future growth in ways that other industries cannot match.
The beauty of tech firms and the technology economy is that very few are tied to geographic capital; tech companies don’t need warehouses, factories or shipping access. They need server space and human resources, both of which can be found almost anywhere.
So Calgary has an edge that a lot of cities in the US right now may not. Abundant office space and excess, highly educated human capital waiting to put their talents to good use.
Last month, Mayor of Calgary Naheed Nenshi joined executives from economic development agencies to meet with some top Silicon Valley companies to sell the benefits of relocating to Calgary, Canada. With the uncertainty occasioned by some of President Trump’s more outlandish policy plans, Canada’s, and Calgary’s, relative stability is suddenly an unforeseen selling feature.
A Little Help from Some Friends
When it comes to government, there are only a few ways to entice new business to settle in for the long haul. One oft used tool by governments in Alberta and Saskatchewan is to strip down certain corporate taxes to create a more lucrative investment environment. For years, oil companies have received the benefits of such government schemes.
Now, the government is leveraging their taxation powers to give technology and creative companies a bit of a break. By creating a favourable investment environment, government policymakers are no doubt hoping to free up investment capital for tech companies to take advantage of.
There is never a guarantee that tax credits will do their job. After all, companies have to make money in order to take advantage of tax breaks. The downturn in oil prices shows how even favourable government subsidies can do nothing if people aren’t purchasing your product.
However, there is no sign that technological investments in other cities is slowing down. Any city with a healthy tech sector is well positioned for economic growth and subsequent high cost of living. Calgary is probably smart to try grab a piece of the pie.
As I’ve written in a few other blogs, Calgary does have some pretty fierce competition for the coveted title of Silicon Valley North, including Toronto, Windsor and Vancouver.
Lower housing costs, proximity to the mountains and the available talent pool in Calgary might just tip the scales. Gone are the days of severe labour shortages caused by runaway oil industry growth. Our highly educated, young population is itching to try something new. Perhaps it’s just the right time to build something for the future.