Alberta’s late-February budget assumed oil worth $58 US per barrel, but as of writing the price has sunk to $5.43 US. As oil and gas prices nosedive, Alberta Premier Jason Kenney should rethink his giant all-in gamble on oil to solve the province’s problems. Every signal so far, however, suggests Kenney will double down on his agenda, using this crisis to push harder for the same policies: making Albertans pay while stuffing ever more public subsidies into the pockets of wealthy corporations.
Despite stating that “all options are on the table,” Kenney ruled out further revenue sources for the province. Instead, he proposed subsidies for abandoned oil well reclamation, and tax breaks for carbon capture and storage projects — public subsidies for soaking up industry’s environmental liabilities.
Kenney made a point to emphasize that planned public sector cuts will continue. Adjusting for inflation, Alberta’s government is planning a 9 per cent cut to public sector compensation over three years. Following up on the elimination of 16,000 positions, 1,436 more positions will be axed. Wage rollbacks are being sought from nurses and physician pay has been cut.
While the government claims health care and education funding levels are being maintained, this doesn’t account for inflation and population growth, meaning a steady erosion in these services, and a functional cut of 20 per cent over four years, will take place. Schools are expected to raise $121 million of their own funds, apparently through vending machine sales. Social housing is being cut. Faced with an aging population, Seniors Services funding is getting cut. The Alberta Child Benefit that reduced Alberta’s child poverty by half from 2015 to 2017 will be completely eliminated. Despite Kenney talking about support for Alberta’s trades, the Southern Alberta Institute of Technology will be eliminating 230 positions, and the Northern Alberta Institute of Technology will eliminate up to 240 positions.
Most alarming is Kenney’s announcement of an emergency economic panel chaired by none other than University of Calgary economist Jack Mintz, whose opinion formed the basis for the corporate tax giveaway that is supposedly going to attract investment and create 55,000 jobs.
Mintz, who has argued for Albertan separation and against ethnic diversity, sits on the Board of Directors for Imperial Oil — Exxon’s Canadian subsidiary — and owns more than $1.5 million in stock in the company. Coincidentally, Imperial Oil received $662 million from the same corporate tax break Mintz engineered. Mintz has been urging Canadian politicians to imitate United States President Donald Trump’s tax policy for several years, and was famously called out for being a mouthpiece for Imperial Oil in Alberta’s 2015 election.
Imperial Oil doesn’t have a great track record when it comes to acting in the public interest. Naked self-interest should disqualify Mintz, but his advice will now figure prominently in shaping a response to Alberta’s crisis. We can expect any recommendations from Mintz’s emergency panel to continue throwing public subsidies and tax breaks at Alberta’s ailing fossil fuel industry.
Mintz’s corporate tax giveaway, by the way, has so far been a complete failure: tens of thousands of jobs have been lost in Alberta, even while the Canadian average saw employment numbers go up. While Canada added 34,500 jobs in January, nearly 19,000 jobs were lost in Alberta. The NDP calculates a total of 50,000 jobs lost since Kenney took office. Further losses loom on the horizon due to the oil price crash.
While major institutional investors pull out of, and cancel plans in, Alberta’s oil sands, musing aloud about the likelihood of stranded assets, Kenney floats the idea of a publicly traded corporation to further invest in oil and gas, adding another stream of cash from the public to subsidize the industry.
One small glimmer of hope is the mention of increased capital spending for infrastructure projects. The key question here is what infrastructure, and for whom? Over the last year, major projects in Edmonton and Calgary have been cancelled and put at risk by Alberta’s United Conservative Party. By “infrastructure,” Kenney may simply mean “pipelines.”
Faced with an industry potentially in its death throes, Kenney appears single-minded in propping it up. Canada’s fossil fuel subsidies already amount to $1,650 per Canadian, but hat in hand, Kenney will approach Ottawa asking for any number of tax breaks, loans and cash infusions to continue to keep it alive, while Albertans will make do with less.
Most chilling of all is that Kenney’s paranoid style aims to crack down mercilessly on any expression of dissent. Responding to the successful and righteous blockades in support of the Wet’suwet’en, Kenney is proposing a draconian bill that dictates sweeping penalties for anyone who gathers on loosely-defined “critical infrastructure.” Roads, railways, pipelines, oil refineries, telecommunications facilities, dams, bridges and associated construction sites are all included, and the definition of “critical infrastructure” can be expanded at will. The bill calls for penalties of $10,000 for a first offense and up to $25,000 for subsequent offenses, along with possible prison time of up to six months.
Kenney has called protestors and blockaders “urban-green-left zealots” and has attempted to blame them for Alberta’s economic woes. This may be a distraction; the reasoning behind this law may have more to do with a looming confrontation with Alberta’s workers, as pickets have a tendency of getting set up on or near roads.
As the price of oil sinks, Alberta’s deficits grow and revenues are redirected to corporations instead of the public purse, Kenney may argue we need to do more of the same, but harder. Another round of austerity may be called for, this time more brutal than before.
While Alberta is sold off around them, Albertans need to stand up and demand a plan for economic transition. Nostalgia for the past won’t get us anywhere — we urgently need to plan for a decarbonized future.