Will Bay Street move to Calgary?

The growth of the Western-based Canadian economy, to the detriment of the manufacturing-based economy in the East, is of course not a new story.

However, with the stable Conservative government that is very much a product of the West, sky high commodities prices and the insatiable appetite of Asian and other developing countries for Canadian resources, this shift seems to have gone into high gear. With Ontario entering an age of austerity, and Quebec hoping a long term bet on resources will make its finances more like Alberta’s, economic power is clearly shifting westwards.

Along with economic power, of course, comes political clout. And as Maclean’s recently declared, Ottawa now runs on oil. Paul Wells explains how things have changed radically in the last five years:

The extended boom in commodity prices, especially energy, has created a new cast of winners and losers in Canadian commerce. Populations have moved westward toward new opportunities. Regions with a weaker resource hand to play are paying for the shortcoming. Quebec is losing population to out-migration, yet even so, unemployment there is above the national average and climbing. And the upheaval affects politics too, strengthening both the western provinces within Confederation and the party with the strongest western base, the Conservatives, within Parliament. The Conservatives’ advantage is likely to increase.

“It really used to be that the Liberal party ruled Canada from Ottawa,” says historian Michael Bliss. “Its strength was in the belt between Montreal and Toronto and its idea factory was Queen’s University. Well, that’s pretty much gone now. The new map of Canadian politics has the Conservatives where they are and it has the new linkages stretching from Ottawa out to Calgary and Edmonton and Regina. The country has changed.”

The Globe and Mail also decries the fact that the East has not succeeded in other areas it should, like technology, like its western cousin has at the resource game:

…while we built national champions in mining and oil, we have failed tragically to create and keep a powerhouse in high technology.

And if political and economic power is moving in this direction, what about the lawyers? A common response from many in the legal field is that much of the work in a resource-based economy, at least the most lucrative for lawyers, is still about financing resource development. And that, largely, still takes place in the East, or more specifically on Bay Street in Toronto. But does this shift mean that even Bay Street will be moving West?

Ultimately, though, that question assumes we are fighting a zero sum game. Perhaps there will just be more work for both Bay Street and Calgary. Despite our regional differences, we are all in this together, and if we do it right, the whole country will benefit from this global interest in our resources.

As Marzena Czarnecka recently put it in a feature we ran in Lexpert that asked whether Canada’s strength was in the resource or financial services sector:

…despite [their] glaring complement, the two sectors don’t necessarily view themselves as partners. Not necessarily competitors, of course — but two different sectors. At worst, occasionally dismissive, contemptuous of the other; at best, not sufficiently aware of their interdependence and integration. But to score big in 2012 and beyond – to really capitalize on what the crisis offers – they need to recognize, flout and use this interdependence. Canada’s financial services sector and capital markets owe their strength to the global desirability of Canada’s natural resources and the export of Canada’s intellectual expertise in natural resources. The continued attraction of this nation as the jurisdiction of choice for natural resource deals and financings, meanwhile, owes its success to the stability and regularity of the financial sector.

Tim Wilbur

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