Last month, Alberta premier Jason Kenney sent out the following tweet, highlighting that the number of active businesses in Alberta has increased for 14 months in a row.
That figure is based on a report published by Rob Roach at ATB Economics earlier this week. The information in Kenney’s tweet is technically true, but it’s leaving out some critical details that could provide important context.
Roach’s report itself is based on Statistics Canada data on business openings and closures within Canada. That data runs only until July 2021.
Let’s take a look at the data as a whole.
What we see is that while the number of active businesses has increased between May 2020 and July 2021, we’re still nowhere close to being where we have been.
There were 117,399 active businesses in Alberta in July 2021. In February 2020, just before the pandemic hit, there were 118,101. Even worse, in July 2019—when the UCP government saw the highest number of active businesses during their administration—there were 120,191.
That means we still have roughly 700 fewer active businesses in Alberta than we did at the start of the pandemic—despite 14 months of increasing numbers—and about 2,800 fewer than we did just 2 years prior.
Not only that, but every month between August 2019 and February 2019—the last month before the provincial government implemented pandemic restrictions—saw a reduction in the number of active businesses in Alberta.
Here, take a look at all the months between when the UCP were elected and the last month before the pandemic restrictions.
That “0” was the first month after the UCP government introduced the first phase of the “Job Creation Tax Cut”. The number of active businesses was already on the way down before the pandemic hit.
Now, here’s that 11-month period compared with the same period from the previous 4 years.
That’s a lot of orange!
Now, to be fair, we’re comparing 1 year of UCP data to 4 years of NDP data, so it’d make sense that there will be a lot of orange. Let’s look a bit more closely.
First let’s compare the number of negative months to the number of positive months.
|# of decreases||# of increases|
What we see here is that the UCP had 7 months of decreases or no change and 4 months of increases. The NDP, on the other hand, averaged 7.5 months of decreases and 3.5 of increases a year. So not much difference, despite 4 of those years having a 12% corporate income tax and one of them having 11%.
Now let’s look at the average change in the number of new active business:
The NDP had the largest net decrease during any of thes 5 years, but that shouldn’t be that surprising, given that a recession occurred during this period.
However, when we average out the changes, we see that the NDP saw 1,429 fewer active businesses a year. Which is less than the 1,724 fewer the UCP saw during their term, prior to the pandemic.
Same goes for percent change.
Both parties average very little growth per month in active businesses, with neither party even seeing a tenth of a percentage point in growth. And there was only one year that saw any positive growth at all, and even that was tiny.
The NDP saw an average growth rate of about -0.10%, compared to the UCP -0.13%. So, while neither party can say they did particularly well at attracting new businesses, the NDP did slightly less worse than the UCP.
Since July 2021 is the latest data Statistics Canada has available, let’s compare how the last 7 Julys have compared in the total number of active businesses.
It looks like the NDP saw a significant drop in their second year, then a smaller drop, followed by pretty stable business numbers. Stability is better than continuing to fall, but they never recovered from the losses at the beginning of their term, which happens to coincide with the 2015–2016 recession.
And then, of course, the UCP numbers aren’t spectacular either, pummelled by low oil prices and the pandemic, and then still unable to fully recover.
Let’s focus on those 14 months that Jason Kenney mentioned.
What we notice is that for the first 6 or 7 months, there was a significant increase in the number of active businesses in Alberta. In fact, between June 2020 and January 2021, the number of active businesses in the province grew at an average of 1.2% a month.
We also notice, however, that growth in active businesses has moderated quite a bit this year, with the monthly growth rate between February and July coming in at only 0.19%, with only 2 of those months coming above that number.
The average growth rate in the last half of 2020 was more than 6 times higher than the growth rate in the first half of 2021. Which will make it tougher to pass the pre-pandemic numbers, let alone the pre-Job Creation Tax Cut numbers.
Let’s look at these 14 months another way: here are the numbers of new active businesses per month.
Same thing. Significantly smaller increases this year when compared to last year.
Kenney is right about one thing: this does seem related to recovery. There was quick jump in the number of active businesses after the province lifted restrictions last May, but those numbers are starting wane as most of the closed businesses have reopened.
It’s hard to see the 14 months of increase having anything at all to do with UCP economic policy and nearly everything to do with vaccine rollout and restriction lifting.
Before you leave though, let me show you a few more graphs, comparing Alberta with the rest of the provinces.
Alberta had the 4th highest number of new active businesses (8,336) between July 2020 and July 2021, which shouldn’t be that surprising, since Alberta also has the 4th highest population.
Now, look at the change in active businesses as a percentage of 2020 numbers.
Here, Alberta slips to 5th place (7.64%), surpassed by Saskatchewan (7.72%), and BC (10.26%) jumps from 3rd to 2nd.
Now, let’s compare July 2019 and July 2021 numbers.
When comparing the number active businesses in July 2019 and July 2021, BC (2,298), Québec (1,183), and Manitoba (185) are the only provinces to have more active businesses now than they did the month the UCP brought in the Job Creation Tax Cut. Alberta has the second worst net change, at -2,792. Only Ontario is worse (-7,878).
Finally, when we look at the change in active businesses as a percentage of 2019 numbers, we see that BC (1.54%), Manitoba (0.66%), and Québec (0.61%) are once again the only provinces to show positive growth. Alberta has the third worst growth in new active businesses (-2.32%), behind Newfoundland and Labrador (-7.63%) and New Brunswick (-2.71%).
So much for Alberta being the economic engine of Canada.