Varcoe: Inflation now trumps economy as top issue facing Albertans, poll finds

What’s the most important issue facing the province today?

A year ago, a fragile economic recovery during the pandemic was the clear-cut choice for many Albertans.

Now, a new concern has zoomed into the pole position: inflation.

A new survey by the Alberta Chambers of Commerce, to be released Thursday, finds one in four business operators — and almost the same number of Albertans overall — list inflation as their top issue.

The economy, which led the list for both the public and business respondents a year earlier, has dropped sharply. It didn’t even crack double-digits in the new poll.

As this week’s national inflation data confirms, prices are still climbing in the country (although the pace has slowed) and consumers and business owners are paying close attention to how it’s squeezing their own finances.

“It is No. 1 for us,” said Bruce Galts, who owns and operates several companies in southern Alberta, including Galko Homes and Paul Davis Restoration of Lethbridge.

“It impacts our business because you can’t predict your cost . . . You may be doing business and losing money or not making money, and businesses can’t survive long doing that — and costs are a big factor in that.”

The online poll surveyed 564 business leaders and 800 Albertans in June and July. The results underscore how the landscape has tilted during the past 12 months, with some encouraging signs of economic optimism laced with nagging inflationary worries.

A year ago, the provincial economy was the top issue for 20 per cent of the public and 28 per cent of Alberta business operators. That’s now plunged to only eight per cent for businesses and seven per cent for Albertans overall.

The jobless rate, which remained stubbornly high across Alberta after oil prices crashed last decade, has rapidly declined as job prospects have picked up, with unemployment falling to its lowest point since early 2015.

Concerns about it have also waned. Only four per cent of the public and just one per cent of business operators cite it as the province’s most important issue.

With skyrocketing energy prices and windfall royalties filling up provincial coffers, the Alberta government’s financial picture has suddenly brightened.

Only three per cent of businesses and two per cent of the public cite the provincial deficit and debt as the most important issue facing Alberta, a sharp drop over the past year.

Instead, health care has jumped into the No. 2 spot for both the public and business operators, as long ambulance wait times and reduced hours this summer at urgent-care facilities have grabbed news headlines.

The poll found 22 per cent of the public and 12 per cent of business operators cited access to — and the quality of — Alberta’s health-care system as the most important issue in the province, up significantly in the past year.

Exporting oil and gas, and negative attitudes toward the province’s energy sector, also made the top-five list for both groups.

While the provincial economic outlook has improved over the past year with higher commodity prices and greater investment, inflation and interest rate hikes intended to cool down the economy have jumped into the public consciousness.

The poll found a whopping 93 per cent of businesses said inflation is greatly or somewhat affecting their operations, while 89 per cent of Albertans said it was affecting them directly.

Business operators cited the cost of materials going up, consumers buying less and wage increases as key ways such pressures are being felt. For Alberta consumers, almost half pointed to the rising cost of groceries and other household items as pressure points.

“With inflation, especially at this level, it has an immediate impact on consumers and businesses. And it’s one you can’t really miss,” Rob Roach, deputy chief economist at ATB Financial, said Wednesday.

“It’s happening in real time, and you are worried that it’s either going to get worse or not come down.”

Roach expects higher interest rates from the Bank of Canada will eventually cool off inflation, although it will likely take six months to a year, barring unforeseen events.

The poll also found 73 per cent of business owners say they’re concerned about the rising cost of electricity, and 69 per cent with the cost of natural gas.

And when asked about specific priorities, 63 per cent said strengthening local supply chains is important.

“Alberta businesses are under pressure. We’re talking about inflation, but there’s the HR component . . . there are supply chain issues. There are a lot of challenges to running a business,” said Alberta Chambers of Commerce CEO Shauna Feth.

“Because of Alberta and the economy we live in, there’s still a lot of positivity in terms of how we’re turning things around . . . and that’s tied directly to the (price) of oil.”

Earlier this week, Statistics Canada reported the Consumer Price Index in July increased by 7.6 per cent from a year earlier, slowing slightly from June’s inflation rate of 8.1 per cent.

In Alberta, the rate was 7.4 per cent.

For homebuilders, the fallout from red-hot inflation and higher borrowing costs is weighing on potential buyers.

“They just can’t afford to buy new homes if they’re on the edge of affording that monthly payment, so it really has slowed things down,” said Galts, who is also chair of the Alberta Chambers of Commerce.

“We will see much more of that here over the next several months as the market adjusts to higher interest rates.”

The survey also found:

  • Three-quarters of the public and business operators surveyed describe the province’s finances as being fair, good or excellent. A year earlier, the number stood at just 34 per cent for businesses and 42 per cent for the public.
  • Asked how they feel about the province’s long-term future, 59 per cent of business respondents are positive. Overall, 52 per cent of Albertans say they’re feeling positive.
  • When given two different views on oil and gas production, 76 per cent of business owners and 56 per cent of Albertans agree the province should “extract as much oil and gas as it can sell to ensure that the economic benefits are realized, even if this means it will take longer to reach carbon neutrality.”
  • The survey found 54 per cent of Albertans and 52 per cent of business respondents said diversifying the province’s economy beyond oil and gas was an important priority, a dip from levels seen a year earlier.

Chris Varcoe is a Calgary Herald columnist.

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