Media reports describe Alberta as “battered,” “running on fumes” and reeling from “a fresh wound gouged out by crashing oil prices, a global price war and fallout from coronavirus.” Premier Jason Kenney is appealing to Ottawa for a laundry list of financial assistance, claiming, “Alberta and Canada are currently in uncharted territory” and that “it’s time that Canada had Alberta’s back.”
The rapidly escalating impacts of COVID-19 and the oil price crash are real. People and communities already vulnerable to sickness, unemployment and evictions — Indigenous and racialized people, newcomers, people with disabilities, seniors — will only be made more vulnerable.
But unlike how most media outlets and politicians are framing it, this fallout in Alberta is by no means natural or inevitable. People are not innately vulnerable. Rather, vulnerability is the consequence of decades of class warfare that has plundered trillions in wealth from stolen lands, all the while stripping public services to the bone with privatization, deregulation and catastrophic cuts.
Alberta’s profound exposure to both deadly viruses and commodity price crashes is single-handedly caused by capitalism. Contrary to what Kenney is demanding from the federal government, and what Ottawa is gearing up to provide in the form of a multi-billion bailout to oil sands producers, the only long-term solution is taking wealth from rich families and corporations, and using it to collectively build a just society for all.
In 2018, Calgary alone had 1,720 millionaires, with a median income of nearly $1.5 million. The national average of millionaires that year was 44.6 millionaires per 100,000 people — Calgary had 117.9, well above the likes of Toronto (97.8) and Vancouver (76.2). Perhaps unsurprisingly, Alberta has the highest income gap in Canada, with the richest 1 per cent earning 46 times the income of the poorest 10 per cent in 2015. Much of that wealth comes from the oil and gas sector.
Indeed, the oil sands — the centrepiece of the province’s economy — have been incredibly profitable even during supposed downturns. A new report from Parkland Institute shows that the “Big Five” oil sands companies paid out $11.34 billion to shareholders in dividends and share buy-backs in 2018. To put that figure in perspective, the province’s current deficit, wielded to justify brutal cuts to public services, is currently $6.8 billion.
Oil sands royalties, the amount charged for extraction of a non-renewable resource, has been notoriously low in Alberta for years. In the mid-1990s, an industry-stacked task force recommended an incredibly generous royalty framework that means projects only have to pay a small fraction of gross revenue until all costs are recovered. Even after project costs are recovered, which can take decades, companies only pay one-quarter to one-third of net revenues.
My own research has shown the top 30 oil sands projects paid only 32 per cent of net revenue to all levels of government in royalties and taxes in 2017. Despite promising to overhaul this massive corporate subsidy, the Alberta NDP opted to keep the system in place — after a review panel of industry boosters told them to, of course.
The Parkland Institute reports that Kenney’s corporate income tax, slashing the provincial rate from 12 to 8 per cent, will reduce payments from the Big Five oil sands producers by $4.3 billion between 2019 and 2022.
These giveaways aren’t even doing their supposed job, with oil and gas company Encana relocating from Alberta to Denver and Teck cancelling its controversial Frontier oil sands mine. Automation is replacing many jobs in the sector, with production at an all-time record of more than three million barrels per day while jobs have decreased by 23 per cent. As Parkland author Ian Hussey wrote: “To put it bluntly, the mature phase of the oil sands industry will be defined by more production, less capital, and fewer jobs.”
In other words: even more profits for banks and investment firms, and even less for Alberta’s working class. Making matters worse is Kenney’s doubling down on fossil capitalism by funnelling public sector pensions into the Coastal GasLink project being rammed through Wet’suwet’en territory, musing about nationalizing the abandoned Teck Frontier lease and introducing almost certainly unconstitutional legislation to ban protest of “critical infrastructure.”
These projects are coming at an incredible, and almost entirely unaccounted for, cost in the form of environmental liabilities such as toxic tailings lakes produced by the oil sands and “orphan wells” strewn across the province. The province’s energy regulator has projected an estimated $260 billion in clean-up costs. No serious plan is in place to curtail the growth of these liabilities. Rural municipalities are currently owed $173 million by oil and gas companies in unpaid taxes, a microcosm of how this crisis may play out in the near future.
That has been the story of the oil sands, and Alberta’s economy more broadly, for decades. Rather than limit production using state-owned enterprises and high tax and royalty rates — saving the revenue or investing it in public infrastructure like housing and transit — consecutive governments have protected the wealthy from taxation and expropriation by using some of the oil revenues to pay the costs of basic government operations and letting the rest of the profits be suctioned up by parasitic investors.
As a result, when the bottom falls out from under the budget due to a pandemic or price crash, the “solution” is always vicious austerity: frozen public sector wages; rolled back minimum wage; gutted funding to healthcare and education.
Of course, capitalist governments have never needed such excuses to privatize, deregulate, break unions and slash spending on public services, but these supposed crises certainly help. It’s exactly in such moments that the left must advance a coherent transition plan that presents alternatives not only for the current crises, but to help prevent such catastrophes in the future.
The problem isn’t lack of money, it’s that wealth and power is being hoarded by rich households and corporations. Across Canada, a mere 87 families own a combined net worth of $259 billion and the top 1 per cent of income earners bring in close to half a million dollars every year.
Massively increasing the taxation or expropriation of that wealth, as well as bringing key industries under collective control, would generate huge amounts of resources to rapidly build a society anchored in strong public services, including healthcare, education, harm reduction, transit and housing. Rather than ever-increasing precarity and hopelessness, such a society would be defined by its collectively owned and operated institutions that promote well-being and pleasure.
Capitalism is again in crisis, and will continue to try to exploit and displace its contradictions. Agents of capital like Kenney are already trying to force greater concessions onto workers. But crises also present an opportunity for a radical break from the past, which is why we must commit ourselves to organizing for a socialist and decolonial future.