Category Archives: EEDC Positions

We have a Labour Shortage Problem, Not a TFW Problem

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Twice a week, I used to drive Highway #2 back and forth to Calgary, making my usual stops for McDonald’s coffee on the way down in the morning and Booster Juice on the way back. It was 2007, the economy was booming and we were at full employment. And then one day my trip home was interrupted by the following sign in a very familiar window:

“We’re sorry, but due to a lack of available staff this Booster Juice store will be closing at 3pm.”

Welcome to Alberta, circa 2007.

Fast-forward to 2014 where, having weathered the global financial storm, Alberta is back in the saddle. Full employment, rapid growth, and the same labour shortage problem that has defined the 21st century for our province, and for the Edmonton Region. Except this time around, employers in the food service industry have learned how to access the Federal Temporary Foreign Worker (TFW) Program, in order to get the labour supply they so desperately need.

Looking around today, these business leaders are clearly managing economic growth with much more grace and professionalism than they did seven years ago. That is, until last week when Federal Employment Minister Jason Kenny unexpectedly put a freeze on all new and pending TFW applications in the food service sector.

I fully understand Minister Kenny’s frustration with the arrogance and hypocrisy shown by the Canadian CEO of McDonald’s and I support the need to penalize the handful of companies that are abusers of the program. However, an industry-wide freeze has put the growth of countless small and medium-sized businesses in Edmonton at risk. These are the entrepreneurs, job creators and taxpayers of our city and country. We need Minister Kenny to help reduce this risk, and seize the unique opportunity before him.

Based on the feedback we received from restaurant, hospitality and entertainment leaders over the past three days, the political and economic conditions are primed for Minister Kenny to demonstrate the strong leadership that this issue requires. This can be done through the following approach:

• Ensure the freeze accelerates the review of the TFW program . Don’t allow naysayers to slow down the review. Where there are problems, let us fix them quickly, together, and get things back on the rails. Set a public commitment to have the review completed by a specific date, where the results will be made public and changes communicated;

• Reinforce that abusers of the TFW program will be investigated, audited and, if found guilty, harshly punished. Employers who mistreat their employees should never been given the opportunity to do so again;

• Acknowledge that unemployment is not equally distributed across the country and that the TFWs fill an important labour shortage problem in the Alberta economy which drives economic growth and prosperity for the nation;

• Leverage the discussion on the TFW program as a platform to activate underemployed areas of our country. Let’s address the critical reforms needed to programs such as Employment Insurance – reforms that will enable more inter-provincial migration and the employment of Canadians from across the country; and

• Commit to maintaining a stable policy environment in order to allow our entrepreneurs, business owners and municipal leaders to properly plan and make investments, without the ever-present risk of changing rules and regulations.

I could have spent this blog discrediting the C.D. Howe Institute’s commentary that unfairly attributes increases in unemployment with the TFW program. I could have spent this blog discrediting the Alberta Federation of Labour’s stance that our economy can prevail without an external labour supply. I could have spent this blog talking about the poor timing of this announcement in advance of the summer tourism season where temporary workers are needed most and when TFW families come to visit. And I could have spent this blog talking about our demographics and our inability to repopulate this country without programs that stimulate immigration of new taxpaying Canadians.

But I think what is more important is that Minister Kenny address the significant barriers to inter-provincial migration which get Canadians working, the realities associated with the booming Alberta economy and the challenges to Alberta’s sustainable contribution to the federal system if it does not have access to a global labour marketplace.

It is time to start unifying our nation around economic imperatives.

Minister Kenny’s leadership is needed now.

Indecent Proposal

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I had this great idea. It was 2005 and I wanted to build a multi-plex hockey rink for the City. I assembled a piece of land, structured the financing and partnered with a non-profit operator such that all profits would be cycled back into the operations to keep the cost to Edmonton Minor Hockey as low as possible. It was a beautiful model that would fix the cost of minor hockey for the next 30 years at a price lower than it cost today. Just beautiful.

All I needed was the City to consolidate their operations from adjacent single-pad arenas and guarantee a lease for the equivalent amount. I couldn’t figure out why on earth they wouldn’t support my proposal.

Looking back, I realize I was wrong. So young; so naive.

Last week, the City of Edmonton made a business decision to consolidate office space which facilitated the development of a new tower in our downtown core. They were first approached by an unsolicited proposal that demonstrated the value of consolidating space, as an enabler to a new development. Like me, for the longest time the proponent couldn’t figure out why on earth the City wouldn’t support such a logical proposal.

But the City of Edmonton did the right thing.

It took an extra six months, but the City took the time to issue an RFP (Request for Proposal) and appoint an independent fairness advisor to oversee the process. They knew making a decision, any decision, with a private firm would come with the risk of massive public scrutiny.

Much can be learned from my little story and that of the office tower. Specifically, as we enter an era where public/private partnerships become more common, the private sector needs to understand and respect that whenever public funds (no matter what size) are being used to enable a development (no matter what size), the project will require: (1) a public RFP process; (2) a fairness advisor; (3) full transparency from the private sector proponent.

The City of Edmonton did the right thing, and it is important that the business community understand that the days of full transparency are here to stay. Backroom deals will be publicly scorned. Businesses will shoulder the consequences. And political leaders will wear the judgement. Most importantly, attempts to work around the transparent process harm our reputations and slow down the pace in which novel ideas can be realized in our city.

If we learn to do it right, we will accelerate growth. If don’t, we will live with saga after saga.

EEDC’s Position on Arena

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At the risk of being too outspoken on this topic, it is my intention to provide Edmontonians with EEDC’s absolute position on the new downtown arena.  The rhetoric on this issue will escalate in the weeks ahead, so please consider this to be my statement of record.

Over the past six months, we have have had the opportunity to review the assumptions, business models and pro-formas of all parties involved.  We have worked to find common ground between parties when needed, and we have struggled to watch the negotiations between parties unfold as they have.  However, our support for this project has been unwavering, as the economic benefits are game-changing and the financial outcomes remain sound.

Specifically, EEDC’s support for the new downtown arena is based on the following fundamentals, in real dollars:

  • Involved in $400-$500 million of new construction projects in the immediate vicinity that are targeting to proceed within 18 months of the arena’s approval;
  • Aware of an additional $500-$600 million of new capital expenditures planned to proceed approximately 18 months in advance of the arena opening;
  • Pro-formas conclude an average annual tax contribution of $19.5 million per year, which supports the 30-year financing of the missing $55 million; and
  • Positive economic impact of $17-$19 million per year in hospitality (food, beverage, entertainment) expenditures associated with the physical move of the Edmonton Oilers Hockey Club to the downtown core.

Although the above fundamentals provide substantial justification for the investment, EEDC believes the following qualitative factors should also drive decision making.  This investment:

  • Unshackles our civic brand from a history of inaction and indecision on major projects, and provides confidence to the business and entrepreneurial communities that #YEG is a place where big ideas can be brought to reality;
  • Solidifies Edmonton as the regional sports, entertainment, retail and hospitality centre for the rubber tire tourism market in Northern Alberta; it allows us to create new tourism products that appeal to those within a 400km radius;
  • Stimulates a doubling of the residential density required to create a critical mass of after-hours vibrancy and safety in the downtown core;
  • Adds necessary hotel capacity to support 8-10 new conferences and major events per year, reducing the ~25,000 room nights currently lost due to lack of supply; and
  • Concludes the 25-year debate and threat of moving the Edmonton Oilers to another market, thus affirming our position as a leading professional sports city in North America.

New arenas built in isolation rarely result in positive outcomes – see examples in Ottawa and Phoenix.  However, new arenas developed in association with a comprehensive downtown development plan have produced extraordinary benefits.  Having recently assessed the impact of major projects in Brooklyn, Pittsburgh, Columbus and Minnesota, we can confidently state that the work completed by City Administration is peer-reviewed as “leading practice” and Edmonton will soon become a reference site for other major municipalities that follow.

Like many of you, I find it most disappointing that the Government of Alberta is lacking the long-term thinking needed to invest in such a critical piece of economic infrastructure.  When we consider the $55 million request in the context of their $5 billion annual capital budget, the short-sightedness and political motivation is beyond comprehension.

Recognizing the province’s absence, it is more important than ever that Edmontonians and our City Council step up and show unified leadership.  We can comfortably finance the missing $55 million at $2.5 million per year within an annual $800 million municipal capital budget, and we can confidently approve both the CLR and the arena financing needed to move forward.

We have encouraged members of City Council to take a unified position on this matter and push our great city forward.  The business community is firmly behind the project and a timely decision, and we all look forward to realizing the positive economic gains over the decade ahead.

Each reader of this blog is encouraged to do the same, as this is YOUR arena and YOUR city.  Thank you for being interested and engaged.

– Brad.