Rachel Notley is not your average Alberta premier, but she faces a most Albertan dilemma.
Predecessor governments have either failed in attempts to diversify the province's economy, or paid lip service to the idea of leaning less on the oil patch to bankroll public services, pay for health care and keep government operating.
Ms. Notley and her New Democrats have pledged to finally get serious about it.
The problem is, for Alberta to become less dependent on energy, the provincial government could do with many more barrels of oil revenue to fuel the massive effort. Her government's first budget, one headlined with a $6.1-billion deficit, shows that that's one luxury she doesn't have.
Even before the NDP swept to power in May, former Progressive Conservative premier Jim Prentice lectured Albertans about getting off the oil-royalty roller coaster. After more than a year-long downturn, it's looking like the coaster is stuck near the bottom of the track.
Diversification indeed seems like the promised land right now. Ms. Notley is being forced to partly fund her government's priorities with oil expected to average $50 (U.S.) a barrel in the current fiscal year, down from more than $80 last year and $99 the year before. On Tuesday, U.S. benchmark crude settled at $43.20 a barrel.
The government projects that its energy revenue will sink to $2.7-billion (Canadian) this fiscal year from $8.9-billion last year. The energy revenue is just 16 per cent of the government's total take, just over half of what it was a few years ago.
So, yes, the economy could use some serious diversifying. Paying for it in the absence of an oil bonanza or imposition of a sales tax will take lots of creative thinking.
In its budget, the government confirmed that it plans to borrow an unprecedented sum to fund major capital projects, and also operating needs, once its contingency fund – a kitty used to pay for deficits – runs out after the end of this fiscal year.
But it is also legislating a new limit on debt of 15 per cent of gross domestic product, to protect its coveted triple-A credit rating. That restricts its breathing room.
Finance Minister Joe Ceci has a few ideas for funding diversification efforts; some look a lot more interventionist in style than PC governments of old might have tried.
One of the starkest examples is directing the province's investment agencies – which until now have been kept at arm's length from their political masters – to spread some of their financial might to neglected areas of the private sector.
Mr. Ceci said on Tuesday that Alberta Investment Management Co., the public-sector pension-fund manager, and ATB Financial, the provincially owned bank, would be handed that role.
"We're giving them, essentially, licence to get out there and lend money and to invest money in small and medium-size business, and venture-capital arrangements," Mr. Ceci told reporters. "We want them to look for Alberta businesses that will help Alberta companies grow in this climate."
Such actions open the government up to criticism for gambling public money on the future success of often untried businesses. Past attempts by Alberta governments of seeking non-energy riches in meat packing, cellular phones and waste processing have had disastrous results.
Mr. Ceci gave no guarantees that such investments will pay off, only that the policy shackles are being loosened, and he and his political colleagues will not demand that the agencies target any companies or sectors.
Government officials suggest Alberta could support growth in industries for which the province already has experienced some success, such as agriculture and environmental services. Certainly alternative energy, such as wind and solar technology, seems a natural, given that the NDP also seeks to cut greenhouse-gas emissions, but only if the market supports such things.
This month, the Premier appointed a new advisory panel – the latest of many – to come up with ideas for kicking the addiction to oil or at least cutting down. After all, the province still has the third-largest oil deposits in the world, and among the world's most sophisticated work force to develop them, which guarantees energy will remain a crucial part of the economy.
Still, the board, chaired by Joseph Doucet, dean of the University of Alberta's business school, and including such leaders as Suncor Energy chief executive officer Steve Williams and Nancy Southern, president of Atco Ltd., has its work cut out for it as it determines what to branch into and how to pay for it.
The board's biggest challenge, and Ms. Notley's, too, will be getting off the oil without using oil revenue to help kick them the habit.
Jeffrey Jones