Friday, March 20, 2020

Let Us Not Bailout Airlines and Energy Companies - Focus on People

The Premier of Alberta is concerned about the price of oil and gas since it affects both Albertan’s and the Government’s ability to fund operations. He is asking Ottawa to “bailout” oil and gas, despite: (a) significant subsidies which the industry receives from Ottawa – app. $3.3 billion a year; (b) subsidies from Alberta of app. $1.3 billion a year in royalty forgiveness; (c) having one the lowest royalty rates in the world; and (d) having given $4.7 billion in tax giveaway’s from the Alberta budget to profitable companies, including oil and gas.

In addition, oil companies were bailed out by the Federal government when it agreed to purchase a pipeline under construction so as to ensure Alberta oil could get to tidewater. The Government initially spent $4.5 billion buying the pipelines and are now on the hook for construction – app. another $5 billion or more. Oil and gas have also largely walked away from their legal obligation for well restoration once a well has reached its end-of-life or is abandoned. There are over 3,400 of these abandoned wells in Alberta which will cost some $30 billion or more to clean up and the available funds to do so are just $227 million.

In 2019 some of the larger oil and gas companies had a terrific year. CNLR, for example, achieved record production totaling 1,098,957 BOE/d, delivering 2% production growth over 2018 levels in a curtailed market environment. Net earnings were $5.416 billion. In 2020 the company planned to spend $2.4 billion on share buy-backs – a common theme in the industry. At the same time, CNLR hired fewer people to drive its performance as it is now, and has been for some time, an early adopter of key innovative technologies aimed at increasing production with fewer people.

We should not bail them out. They can use their asset base to borrow funds at the most competitive interest rates seen in a generation.  We also should not bail out airlines or cruise ship companies for the same reason.

What we should do instead is pay citizens a guaranteed income for the next 12-18 months (all citizens) so that we can all cope with the challenges of mortgages, rents, food costs (which will rise significantly). Oil company executives and shareholders can sort themselves out.

As for the Government of Alberta, they should heed the suggestion: “never let a good crisis go to waste”. Introduce a sales tax now (exempting food and medicine) and scale it to replace oil and gas royalty revenues used for operations. In addition, rethink the royalty regime to extract more from oil and gas so as to strengthen the Heritage fund and strengthen the orphaned well funds. This may look counter-intuitive at a time when oil prices are so low, but it is a time to decide what is important for all Albertans not just a few.

The Alberta government should abandon its budget so shoddily rushed through the legislature and start to focus on creating the next Alberta around policies of equity, compassion, and service. Bold new thinking not old recycled thinking from Ayn Rand. Rather than focusing on the oil and gas economy, Alberta’s strategy (like that in New Zealand) should focus on the wellbeing of all of its citizens. It is time for a wellbeing budget.

Thursday, February 20, 2020

An Open Letter to Premier Kenney, Premier of Alberta


Dear Premier Kenney:

I acknowledge that, in your understanding, Alberta’s economy is challenged and that action is  needed by government to do three things:

·      Stimulate economic growth through investment in productive enterprises that create wealth.
·      Ensure that government expenditure both meets social and health needs of citizens in effective and efficient ways.
·      Secure Alberta’s infrastructure so that Alberta is a great place to live, work and play.

Your diagnosis of what the issues are, however, seems to me to flawed. The McKinnon panel pointed to the need to do two things: (a) to manage spending in such a way as to deliver outcomes better aligned with the best in other jurisdictions at a lower unit cost than at present; and (b) to increase revenues. You always give emphasis to the first of these, but neglect the second completely. The McKinnon team said this:

”steps need to be taken to increase stable sources of revenue and decrease the reliance on the volatile non-renewable resource revenues” (page 16)

This statement is clear and explicit. Yet your own actions have been to reduce Government revenues through lowering tax rates on profitable corporations and cancelling the levy on CO2. In addition, you have made the fiscal situation worse by unnecessary spending – for example, allocating $30 million a year for four years to the Canadian Energy Centre.

You also appear to ignore the mounting evidence that tax breaks for profitable corporations and reducing taxes on wealthy individuals – so called “trickle down” economics – is generally seen as a failure.  This is evidenced by a variety of research studies and through the work of the IMF. There is no current evidence that this strategy is working in Alberta. Indeed, the evidence seems to point in the other direction.

You also ignore the significant wage differences between Alberta public and private sector employees versus wages of those in similar positions in other provinces. GDP per capita in Alberta, as you well know, is much higher than any other province – indeed, it is amongst the highest in the world.

Your relentless focus has and remains on the reduction of the deficit within the lifetime of the present government. You seem to see deficits as bad, no matter how they come about and ignore the role of government to support the needs of its people, including through the use of debt instruments.

The 2019-2020 deficit looks to be around $8 billion – app. 2.4% of GDP. The primary reason for this is that we have a growing population and have a very low revenue level in comparison to other provinces. Our revenues are just 13.9% of GDP in comparison to others whose numbers are higher – 19% in BC, 22% in Manitoba and 18% in Ontario. Your argument is that our spending on government services are far too high and need to be reduced – yet the evidence shows that Alberta’s spending is the lowest in Canada at just 15.7% of GDP. You always refer to government spending per capita as the key indicator - $12,915 which is certainly higher than that in some other jurisdictions, but so too are wages in Alberta in both the private and public sector.

We can always be more efficient and a focus on controlling spending growth is not a bad thing, but cutting spending on health and education which you are clearly doing (despite denials) is damaging services.

The more serious concern you continually express is with the level of debt. Alberta’s debt. Current net debt is $36 billion – app. 10.2% of GDP. This is amongst the lowest level of net debt for any jurisdiction anywhere in the world. It is sustainable, if revenues for the government increase and effective management of spending is maintained. Reducing it is not always desirable – debt is a useful instrument which all organizations use. Some of the most successful companies in the world get there by the smart use of debt instruments. This you well know.

What is worrying me is that your current strategy does not seem to doing what you indicated it would do. 69,000 jobs have been lost since your government took office and there are no compelling indicators of turnaround in the economy. Indeed, some of the actions taken by government look to me to be creating recessionary conditions – reducing public spending and head-count in the public service, reducing services and increases the costs of public services through privatization are all likely to worsen the situation.

In short, Alberta needs a better economic strategy that the one you are pursuing. It also needs to focus on the revenue challenge – a sales tax is the elegant solution. While I accept that effectiveness and efficiency in public services is a key requirement of your government (as it should be for all governments), what I do not see is coherence in a strategy for ensuring that the very real needs of people for health, education, social services and eldercare are to be met in the short and medium term. 

Your Ministers will put the final touches to the Provincial budget in the next few days. I must share with you that my concern is that, given your current strategy is not working, your Ministers will conclude that the strategy needs to be reinforced and doubled-down upon rather than changed.

The first rule of holes is clear. When what you are doing gets you deeper into the hole, stop doing what you are doing and change. It is time for you to recognize that the bold, brash strategy you have been pursuing is not working and to change.

With good wishes

Stephen Murgatroyd, PhD

Tuesday, February 04, 2020

Kenney's Economic Non Sense


Jason Kenney has made an arbitrary decision that will impact the lives of every Albertan. He wants a balanced budget by 2022. It will not happen and he knows it.
But make no mistake: it is arbitrary.

As I mentioned in an earlier post, Alberta’s net debt is one of the lowest is the developed world at just 11.8%.  ($43.7 billion). It is rising – it rose by over $7 billion since Kenney took over, but it is still modest by any standard – Ontario is over 40% and Canada is 30.5%. Given that Alberta, as measured by GDP per capita, is one the wealthiest places on the planet, context matters. Net debt as a % of GDP is higher for every G7 than it is for Alberta (Japan, for example, is 153% and the UK is 80.8%).

There are two primary reasons for the level of debt: we spend more than we take in revenues; and (b) we do not seek the kind of revenue we could, given the state of corporate and individual finances. We have both a spending challenge – efficiency, effectiveness and spending growth – and a revenue challenge.

Kenney’s basic economic strategy is to stimulate the economy to create economic growth and job growth. He is doing this by focusing significant corporate tax give-aways ($4.7 billion) to already profitable firms and by lowering both corporate taxes and eliminating the carbon tax (except for large emitters). This is unlikely to work for a number of reasons: (a) a variety of studies show that investment and hiring decisions are based on a larger range of factors than the tax regime – education, health, infrastructure, innovation eco-system and competitive environment are bigger factors; (b) recent evaluations of trickle-down economics by both the IMF and a range of researchers who have looked at the US Trump tax give away have concluded that they had no impact on employment or investment.  While it is early in the Kenney autocracy, job losses are growing in Alberta and have been since Kenney became Premier. Alberta has higher levels of unemployment than other higher taxed jurisdictions in Canada.

Having given away significant revenue opportunities and increased the debt by $7 billion, Kenney has also foregone other options: (a) a sales tax where each 1% of such a tax would yield $1.6 billion and 8% would produce $12.8 billion in annual revenues – enough for Alberta’s needs when added to existing revenues; and (b) raising oil and gas royalties – currently industry keeps 96c of every $1 in revenue which is close to being the lowest rate of oil and gas royalty rates anywhere in the world, we could increase this significantly and still enable significant levels of profitability for most projects (some projects would close, but they exist only because they are in effect subsidized). Indeed, if we were to do both of these things which are in the public interest then we would have a balanced budget by 2022.

But we need to look at another feature: unfunded liabilities. One in particular is glaring – the costs of cleaning up the 3,406 orphaned wells is currently estimated at over $30 billion while assets available for this work are just $227 million. This, according to the Auditor General, is an unfunded liability. It could in fact be much higher, especially when other oil and gas clean-up problems are added into the pile – as much as $260 billion. Whether we look at this optimistically or pessimistically, it cannot be pushed under the carpet and action is needed.

So, what to do. Three suggestions: (a) stop the nonsense of trying to balance the budget by 2022 and develop a responsible fiscal plan; (b) manage expenditures while still meeting the needs of Albertan’s – debt is not a bad thing; and (c) increase revenues through taxation and royalty changes.

Sunday, February 02, 2020

Standing Together for Our Schools - The Challenges for Public Education in Alberta



Setting the Stage

Alberta has one of the best education systems in the world and is the leading jurisdiction in Canada. The key reason for this: outstanding teachers who partner with others in their communities to deliver quality, authentic education every day to students, despite the growing complexities of their classrooms and having a very outdated curriculum. Alberta has created and sustained a cadre of highly professional and competent teachers who collaborate, engage in professional learning and focus on meeting the needs of those in front of them.

It is surprising, therefore, that these teachers and this education system is under attack. It is under attack from the government that funds it and from ideologists who seek to impose identity politics into the classroom.

This is not unusual. This is also happening elsewhere in Canada and around the world. It is a standard point of the neo-liberal agenda that education, especially quality education, undermines the nature of identity politics and the neo-liberal agenda since it equips citizens with the skills of critical thinking, community engagement and evidence-based evaluation – all of which are problematic for this agenda.

What is School For?

The key challenge we need to focus on is not the details of the current government of Alberta agenda – standardized testing, cutting funds, reducing the professional autonomy of teachers, privatizing education, all of which are components of their strategy. But rather, we need to begin with building a coalition of understanding of what education is for.

The government’s view, captured nicely in their recent stage-management of the curriculum review, is that education is an instrument of the economy – it is about being “work-ready” and therefore is about the knowledge and skills students need for the labour force.  This needs to be challenged.

Without doubt, the knowledge and skills needed for successful entry into the labour force (the qualification component of the education system) is important. The difficulty comes in trying to determine what the knowledge and skills actually are. A student beginning Grade 1 in September 2020 at the age of 5 will leave school in 2033 or later (especially if they go onto to college, university or apprenticeship). Who knows what skills an AI enabled world will require. Employees are already making clear that the key skills they are seeking are design skills (creativity, imagination, problem-finding and solving), social skills, critical thinking and compassion. The second challenge with this thinking is to balance technical skills (e.g. in science, technology, math, engineering – the so-called STEM) skills with those of the arts and design.

But education is about more than this. It is about enabling a young person to develop and sustain “a passion for leading their own life and leading it well”. This was at the heart of the Delors report for UNESCO in 1998 in which he highlighted the purpose of education in terms of learning to be, learning to live together, learning to know and learning to do. Our government seems only interested in our students when they are learning to do.

It is worth noting here that some 1.5 million school students experience mental health issues for which they are not receiving appropriate supports and that some 6% of students are receiving professional treatment for mental health (especially anxiety disorders) issues. Young people are amongst the most likely to commit suicide in Canada – suicide being the second leading cause of death between those aged between 10 and 24. The school has a role in these numbers. Across the world some 46% of students identify their school as a major source of anxiety and stress – in Canada this number is closer to 65%. Students need really need to know who they are how to live their best life – it’s a key purpose of such a central institution in the life of young people and the community in which they live.

So far we have two purposes of school – qualification and self-development. But there is a third, something our government is not too keen on: enabling citizenship so as to support a true democracy and enable social justice.

A democracy depends on the ability of its citizens to get past tribal politics and identity politics and to be able to understand and question ideas, policy, practices and behaviour on the basis of critical thinking, evidence and an ability to anticipate consequences. For example, a successful graduate of our school system should be able to explore these kinds of questions: (a) is a tax give away to already profitable corporations really a way to stimulate economic growth and create employment? ; (b) given that climate change is happening, what policies would best help Alberta adjust to the impacts it will have and mitigate negative consequences of climate change over time?; (c) what can be done to ensure social justice for indigenous peoples?; and (d) what steps need to be taken to ensure that women and girls are both safe and able to secure their rightful place in all areas of Alberta’s civil society?

Some would say that these questions are what students explore in social studies. But they each require cross-curricula knowledge and, more significantly, an ability to engage in critical thinking, evaluate complex data and understand the short, medium and long-term consequences of an action. In short, they require what the OECD refers to as levels 4 or 5 literacy. Our challenge is that many in our society, including graduates of our colleges and universities operate at levels 1 and 2 of the OECD five point literacy scale. We need to do better, but this is the work: helping our students to become engaged citizens.

The first challenge, then, is to champion a view of what education is for – all the rest is relevant, but without this focus we will not secure any kind of advancement.

The Other Challenges

The government of Alberta takes for granted that we all agree on the instrumental purpose of education: to serve the capitalist economy. We don’t. Indeed, few educators and certainly few policy makers have ever held this view. Even the OECD, which is now captured by large corporations, takes a broader view of the purpose of schooling in its view of Education 2030 and its learning compass.

But the government of Alberta appear to have other plans which will challenge the way in which we think about schools, their purpose and the work that takes place within them. These include, but are not limited to:

1.    Lower ingthe costs of education to bring it into line with that in other jurisdictions in Canada. The UCP say that we spend more per capita than any other Province in Canada. This is not true. In 2015/16 we spent $13,340 per student – Saskatchewan spend much more at $15,314 and Manitoba also spent more at $14,986. We also had the lowest rate of growth in per capita spending between 2006-7 and 2015/16 of any jurisdiction (21.6%) other than BC (20.2%).  If we then account for inflation, our cost growth was by far the lowest in Canada (8.1%) and was sitting around the average in the country at $13,430 (sitting 5th in the Provincial “league” table). Indeed, we sit at the around the average of BC, Ontario, Saskatchewan combined.
2.    Increase class size. This is already happening and will continue. Class size, in the neo-liberal world, is not a factor in learning outcomes. We know this will happen, since the government has already stopped formally collecting the data that will demonstrate that it is.
3.    Increase classroom complexity by removing supports for students with special needs. Educational Assistants, so vital to the work of any school, as seen as a cost not as an essential service. Given a choice between laying-off teachers and an EA, school boards will lay off the EA. The consequence is that it makes nonsense of the whole idea of inclusion (included into what?) and makes teaching an exceptionally challenging job. This alone will increase teacher turnover, lead to more days lost to teacher illness (mental wellbeing will be a growing challenge).
4.    Remove Principals from the Alberta Teachers’ Association (ATA) and make them chief executives of their school. This is the official policy of the UCP as a political party and fits with the governments understanding of new public management. You cannot be both a manager with a role of control and demanding performance and a member of the same union of those whose compliance your require. The notion of professional autonomy and professional engagement is alien.
5.    Break the Alberta Teachers’ Association into a union and remove their professional responsibilities to a new body more directly in the control of Government. The ATA is also ready struggling financially and is finding it difficult to respond to the abundance of actions the government are taking. They also feel excluded as an “education partner”. This government has about as much interested in partnership as it has in space travel or Giant Panda’s. They see the ATA as a union and encourages them to “get over themselves” with all this talk of being a profession. They are questioning the professional role, using a review of disciplinary decisions as wedge to get at this issue.
6.    Reduce or abolish school boards. This has happened in a number of Canadian Provinces and, given the focus on red-tape reduction, choice and austerity it is inevitable that, as the government’s strategy for growing the economy falters, this will occur. The more command and control that can be exercised from the Ministry, the better the system will be is the view – despite the established evidence that professional autonomy is a driver of high performing systems.
7.    Increasing standardized testing. One of the first actions of the Government was to require that all students in Grade 3 complete the student learning assessment (SLA) – it became compulsory. Now they want to introduce “standardized formative assessment” (sic) for grades 1-6 (and will no doubt extend this so that each grade has some sort of reported standardized test each year). They also want to revisit the weighting of the Diploma exam. “If you’re not keeping score, you are just practicing not playing” will be their mantra. The fact that most of these kinds of tests are actually measuring something else – social status and poverty – will be ignored.
8.    Use the teaching standards, leadership standards and superintendent standards as policing tools.  These standards were introduced to help focus the profession on continuous improvement and professional development. But in other jurisdictions they have, over time, become the basis for teacher and leader evaluations and performance-based pay. When combined with test data (see point 7 above).
9.    Introduce the School Choice Act. This will be the backdoor to the voucher scheme which is now UCP policy. By allowing funds to follow the child – whether these are home school, public schooled, private schooled or Catholic schooled – the funds will be the same. This will further reduce the funds available per capita, as more money will be used on tracking and more home study will occur as some parents find that the vouchers for their three or four children represent an attractive proposition. This will also lead to more private providers.
10. Increase the number of Charter Schools and Private Providers. So as to meet the growing demand from within the UCP “family” they will remove the cap on the number of private and charter schools in Alberta, currently set at 15 (we have 13 at this time). There will be an incentive to open such schools if the School Choice Act ensures that the funding for a student is the same no matter where they receive their education. There is also a suggestion that the constraint with respect to being a not-for-profit corporation will be removed For profit schools will be on the agenda.


These ten items have been on the conservative  radar for some time, especially during the tenure of former Minster Jeff Johnson, who is still in the background lurking among the UCP policy makers.

Some suggest that the really radical thing for the UCP government to do would be to follow the English system – abolish School Boards, have each school report directly to the Ministry with each of them being Charter Schools (or Academies), subject to Ministerial review and inspection. A single collective agreement, with school variations. However, given what is happening with industrial action in other jurisdictions it is doubtful that any neo-liberal Canadian Provincial government would go this far. This would also massively increase Government spending  and thus would be a difficult sell.

The underlying idea of the UCP government for education, as it is in health, is to so destabilize the system so as to make the case for privatization. This is already happening in health care in Alberta and will soon find its way into education. Budget 2020/21 and the School Choice Act will send all of the signals needed. Evidence of poor performance – a nonsense given our standing in the world – will be used to say that more needs to be done and that competition is needed to bring innovation and performance improvement despite the evidence that such developments lower performance and increase costs.

What’s To Be Done?

Teachers, parents and students together with school trustees need to form a coalition to promote these things:

1.    An understanding of the purpose of school as being more that work-ready skills. This is essential – if we focus on the ten actions the government is likely to take without this then we will be engaged in the “divide and rule” game the government wants us all to play. Rally people around the work of the profession in A Great School for All – a comprehensive statement of intent about the future of education. This was cocreated by teachers, students and some of the leading educational thinkers in the world.
2.    To champion the profession as a advocate for students and community in partnership with the coalition – build the base of support for the purpose of education, for the work that teachers do and for the engagement of the school and community.
3.    To ready the profession and its allies for action to protect education – industrial action if need be. The profession is not ready (many teachers have never known anything other than the kind of regime they now experience) – the last serious action in Alberta was 2001.
4.    To tell great stories about the success of our activities – students do remarkable things all of the time and we need to shout their success and the role that parents, teachers and the community had in that success.
5.    To not let the government play divide and rule. The profession and the coalition needs to focus and stay united on why schools and the profession matters. Trustees are not the enemy here – they have a legal requirement to balance the books at the end of each fiscal year and are subject to so much regulation and control by the Ministry and the Minister that their scope for action is very limited. Yet, in my experience, trustees want to support their schools, their students, their teachers and their community. Yes, they are “employers” but their freedom as such as constrained.
6.    To create posts to use on social media not just to complain and challenge, but to celebrate and champion great work. The more we can show just how good we are the better. For example, the recent curriculum review (sic) mentioned that only Quebec was better at Math than Alberta. Yet it wasn’t. Quebec only submitted completed PISA surveys from private schools – the Ministry staff were on strike and did not submit any public school surveys. So we are not comparing like with like. I would suggest Alberta is #1 in Canada in Math.
7.    To document the experience and impact of government decisions – collect the evidence. The ATA has been doing this (successfully) on class size and the impact this has. Keep at it. Especially focus on complexity, inclusion and learning impacts as well as mental health of students and teachers.
8.    To engage whole communities in understanding what is at stake here – the future of Alberta.

These are not easy things – teachers already work long days and, contrary to what some believe, do not have the summer off – many engage in professional learning and all have to prepare and do the things needed to make teaching work when schools are back in session. But these eight things (and others) are key to championing public education, maintaining our standing as a great education system and to support the profession.

Conclusion

These are challenging times. At such time there is an opportunity to show just how capable we are of knowing what is best for our community, our children and our schools. We need to act together and partner with parents, students and trustees to champion one of the great education systems in the world.