Recession and Recovery

After the National Energy Program (NEP), a federal government program to control the price of oil and taxes, was removed in 1985 as a part of the Western Accord, international oil prices continued to fall bringing with it a major impact on Alberta's economy.

In 1985, Peter Lougheed resigned and Don Getty won the leadership of the Alberta Progressive Conservative Party, becoming Premier shortly before Alberta's resource revenues declined again. His government was forced to cut department budgets, while still running a deficit. Getty attempted to diversify the province's economy in part by offering forestry companies favourable terms to expand or build large pulp and paper mills in northern Alberta. The construction of the Three Rivers Dam on the Oldman River also created employment, if only temporarily.

Unemployment rates did not improve and businesses closed as Alberta plunged into another recession in 1986. The situation began to improve in June 1987 as international prices for oil increased to $20 per barrel. But businesses were still cautious and typically only hired part-time employees and contract workers, which caused the end of the recession to be called a "jobless" recovery. By 1988, the situation showed signs of improvement as the unemployment rate dropped and housing starts increased. Between 1989 and 1992, however, there was another Alberta recession with a two percent drop in growth.

Getty's popularity slipped further following an inquiry into the province's mishandling of the failed financial services corporation, Principal Group. He was also embroiled in controversy over private investments and patronage appointments he made, and resigned in 1992.

In 1992, Ralph Klein won the leadership of the Alberta Progressive Conservative Party and became Premier. Klein responded to public concerns about the provincial deficit and debt and eliminated the provincial deficit by 1997 with massive government spending cuts. In 2004, the provincial government announced the elimination of the province's debt, as oil prices continued to increase and provide significant revenues for the provincial government.

This marked a period of increased government spending. Departments that had received substantial government funding cuts, such as Education, were now given more money. By Alberta's Centennial year in 2005, it had a strong diversified economy that included natural resource development, agriculture, tourism, manufacturing, and high technology sectors.

	In 1979, with world oil prices surging, the Progressive Conservative government under Premier Peter Lougheed was swept back into power as it used oil revenues to build municipal and industrial infrastructure across the province.  By the early 1980's, however, the effects of the National Energy Program and declining oil prices discouraged new oil development and lead to a province-wide recession. Hear more of the story in this episode of CKUA's Heritage Trails! [Listen]

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Alberta and the National Energy Program

Recession and Recovery

Debt and Deficit Repayment

The Alberta Advantage

Celebrating the Centennial