One feature of psychological
illness is this: “if only everyone else were different, I could be the person I
have always wanted to be”. When I was in practice as psychologist (many years
ago), I heard this implicitly all the time. The situation these people were in
was hopeless, but not serious – we could change their situation by changing how
people thought about themselves and others.
Many in Alberta have
this illness, except its focused on our economy and politics.
The fantasy is this:
oil and gas could be “back” as the engine of the Alberta economy at the level
it was when oil was over $100 a barrel and jobs were plentiful and jobs would
be back at the level they once were. We have lost over 100,000 jobs (with more
losses to come) and oil is trading at an average of $43.10 throughout August 2019.
What is getting in
the way, the story goes, is the lack of
pipeline capacity, environmental and climate change preoccupations, immigration,
and transfer payments intended to ensure all Canadians share in the wealth of
the nation.
Oil and Gas
The “blame” for the
fact that oil and gas sector is experiencing a severe recession and that the
key pipelines are not yet built is placed on the Alberta NDP government and the
Federal Liberal government plus climate change activists (allegedly “funded” by
foreign money). Also to blame are Quebec (recipients of significant transfer
payments) and BC who oppose new pipelines and foreign funded organizations
whose preoccupation is ending the use of fossil fuels. Also involved is Saudi Arabian oil, which
Canada has been importing since the 1970’s – oil that is cheaper than Alberta
oil.
The non “sense” here
is complicated but important.
Oil prices reflect
global market conditions and the fact that most oil producers are seen to
produce oil that can easily get to market. Alberta’s major oil is either mined
(bitumen mining) or produced through a steam assisted gravity process. While a
lot of work has gone into “greening” this oil sands product (CO2 intensity is
down as are the volumes of water needed to produce it), there are still a lot
of environmental issues associated with its production. These are being
systematically worked on, but they are still issues.
As companies like
TOTAL, Shell and BP exit the oil sands sector to pursue a greener energy strategy
and as investors look at the future and switch their investments to green
energy and less problematic oil, then the oil sands have experienced a
reduction in foreign funded direct investment. Indeed, we have gone from an oil
sands sector dominated by foreign ownership to one which stronger Canadian
ownership, funded by foreign backed debt.
What is important to
understand here is that big players like Conoco-Phillips and others exited
Alberta not because of the NDP or Liberal governments – having worked with them
they take a 50 – 75 year view of the markets and return on capital – but
because their strategic priorities shifted. They saw shifts in global market
conditions and decided that return on capital here was less attractive than
elsewhere. Welcome to the real world of investment and corporate decision
making. They are not loyal to place, but to shareholders.
Also, the investment
landscape changed. A significant group of investors have decided, following the
Paris Climate Change Accord, not to invest in fossil fuels new sites and reduce
their investment in fossil fuel old sites. Some $6 trillion in fossil fuel
investment has been “switched” over the last five years with major investors
de-carbonizing their portfolios. What these investors are also looking at are
models which suggests that demand for fossil fuels could drop by as much as 40%
by 2050 as electric cars and other technologies become more widely affordable
and available. Many jurisdictions are banning the sale of fossil-fuel cars by
2030.
What oil and gas
companies are doing is investing in smart technologies which dramatically
improve productivity with less labour. In Texas, for example, 231,500 jobs were
lost when the 2008-9 recession hit and oil prices collapsed, profits are back
but only 50,000 people were hired. This is what we will see in Alberta –
increased productivity and profitability with fewer people employed. The
forecast is that 17,000 direct jobs will return in Alberta but production will
rise by 800,000 b/day. Jobless capitalism.
Climate Change
Green energy – wind,
solar, nuclear, hydrogen – is gaining ground. More people work in this sector
than in oil and gas (conventional and unconventional) in Canada and investments
in this sector globally is growing. Wind energy is now the lowest cost source
of new electricity in Canada and capacity is growing quickly. Even in Alberta, wind
energy will account for 750 MGW by 2030 and investments in green energy in
Alberta are also substantial.
Energy companies –
the large players which employ the most people – are pushing for climate change
policies and environmental regulations so as to create the social license to
sell which they need for international markets. Oil companies were key to
Alberta’s carbon levy, now scrapped by the UCP government and were key to the Federal
Governments carbon tax strategy. Economists see carbon levies as a significant ingredient
in public policies aiming to reduce CO2 emissions. The Alberta emissions regulations still apply
($30 barrel), but for how long.
Part of the concern
is that the Trans Mountain Pipeline, now owned by the Federal Government
(because the private sector was about to walk away from building it) will never
get built because the Liberals, it is said, will back away so as to curry
favour with the NDP. First, the Conservative party had years to build this
pipeline and didn’t. The Trudeau government approved it TWICE, but had the
first decision upturned by the courts due to flawed public consultations which
took place in part under the Harper Government (and under Harper Government regulations
and law) and in part under Trudeau. Trudeau improved the legislation, re did
the consultation and approved the pipeline a second time and it is now being built. Any challenge to this
would secure a majority in the House of Commons (PC’s + Trudeau Liberals).
Bill C-48
Another concern is
that the Trudeau Government passed legislation relating to tanker activity off
the BC coast (Bill C-48). The legislation stops tankers carrying more than 12,500
metric tonnes of crude or persistent oil products from stopping, loading or
unloading north of Port Hardy. It does permit tanker loading in the Port of
Vancouver but not at Port Rupert or Kitimat. Despite claims that this will spook
foreign investors and profoundly impact oil tanker movement, the ban puts into
law a voluntary agreement which has been in place since 1971. This is worth
repeating. There has been NO loading, unloading or stopping of oil tankers in
this area for over forty years.
(This law also
prohibits the offshore exploration for oil and gas in this region – something that
has been in place since 1972).
Bill C-69
Another
controversial bill introduced by Trudeau is the “pipeline killer” bill – C-69.
Actually called the
Impact Assessment Act (it is now law), the legislation sought to clean up the
process for environmental impact assessment of new infrastcruture projects,
which include pipelines. The argument is that it will be tougher to secure
approval for new projects and therefore investors will not even bother to put
their money on the table. A part of the reason for this is the requirement for
impact assessments to now include the likely impact on climate as well as the
water table, soils and air.
This is another piece
of nonsense. The Act puts back into force many of the regulations and legal
requirements that were in place in 2012 which Stephen Harper repealed. The Act
also requires enhanced consultation – a way of reducing the amount of
litigation about the consultation process seen as a result of Harper’s changes
to the law. Lawyers suggest that the changes introduced in C-69 are minor and
represent a return to “normal” for this kind of legislation around the world.
Many specialists also think C-69 will increase certainty rather than uncertainty
– a great many investments were made in oil and gas pre the 2012 changes made
by Harper when the legislation in place closely resembled C-69.
Transfer Payments
Then there is the
issue of equalization payments – moneys paid from the Federal Governments
general revenues to ensure all Canadians have relatively equal access to
services and support and a decent standard of living. The argument of the Wexiteers
is that Alberta subsidizes provinces like Quebec who then oppose the economic
requests of Alberta – e.g. a pipeline. In 2019-20 Quebec will receive $13
billion in equalization payments, some $11 billion of which “comes” (sic) from
Alberta. The increase in Quebec’s payments came as a direct result of Stephen
Harper’s decision to change the basis on which these payments are made (Jason
Kenney was a cabinet Minister who signed off in these changes, which he now
seems to oppose). Kenney has promised a referendum on equalization for Alberta
in 2021 – largely a piece of theatre, since the idea that seven of ten
provinces would agree to remove the equalization from the constitution are
zero.
This issue is complicated.
There are three transfer programs – health, social transfer and equalization.
The first two are per capita funds - $X/person. 75% of all transfer funds are
based on population. Only the equilization payments are based on equity estimates
– what would it take to ensure equity of service for all Canadians. The formula itself asks what a
province’s revenue would be if all its tax rates equalled the national average.
Alberta would raise $12,327 per person, more than any other province, followed
by B.C. at $11,052. Quebec is far behind, at $8,123, and Prince Edward Island
lags even further, at $6,648, according to Finance Canada calculations.
Equalization tops up provinces below the national average, which is why a
province as populous as Quebec receives payments.
Albertan’s pay a lot more into the Federal government because
they earn more. Per capita GDP in Alberta is around $77,500 as compared to a
national average of $58,000 – Alberta is amongst the richest places on the
planet. We also spend more per person, so the Federal government collects more
sales taxes ($400 per person) than anywhere else and collects more income taxes
($2,500 more). It is not because we live in Alberta – we earn more, are worth
more and spend more.
Immigration
Immigrants strengthen an economy by both working in it and creating
enterprises. Indeed, it is the case that a great deal of Canada’s GDP growth is
as a direct result of immigration. Yet there are many in Alberta who see
immigrants as “job takers” (where do they think we all come from – those who
are not indigenous people’s)? This is a component of some of the more extreme “Alberta
nationalists” who also oppose same sex marriage, gender equality, abortion and
women’s rights and transgender rights.
Alberta’s New
Policy Group – The Wexiteers
It seems Alberta has
a growing group of people that sees the past as so wonderful that we must
return to it as quickly as possible. These individuals – those behind the
Western Canada separation movement (Wexit) – are also against big government
and against a variety of social policies. Their basic propositions are:
Economic Liberty: We will achieve an overall personal
income tax rate of 15%-19% by:
- Abolishing all special interest
spending.
- Removing non-value added government
services.
- Abolishing Federal Income Tax and GST.
- Delivering essential government services
only.
- End public investment in unreliable
energy technology, such as wind and solar.
- Robust surface and subsurface land owner
and property rights.
We will ensure that
Alberta remains friendly, open, and attractive to businesses by:
- Reducing corporate taxes to 7%, while
maintaining current royalty formula.
- Abolishing speculative and non-value
added industrial regulations.
- Ensure that regulations imposed directly
and objectively relate to employee safety; and prevention and reclamation
of any air, soil, and water pollution.
- Offer further incentives for maintaining
a 100% Alberta resident work-force.
- Offer further incentives for the
relocation of manufacturing operations to Alberta.
- Offer further incentives for the
development of shale and nuclear technology.
- Taking punitive measures against
jurisdictions blocking Alberta’s economic progress.
We can see these
positions as “red neck” conservatives – low tax, low spend government, limited
regulation yet creating incentives to “pick winners”. Yet their social policies
suggest that these minimum tax levels have to go a long way:
- Ensure mandatory and available
addictions and mental health treatment for Alberta’s homeless and other
at-risk populations.
- Protect Seniors through a stable and
portable Alberta Pension Plan; Explore solutions to lower cost of living
and support in-home care; Choice in healthcare.
- Invest in communities through subsidy of
dental care, non-generic prescriptions, youth sport, conditional student
loan forgiveness, and qualified higher education via resource royalty
revenue.
- Alleviate courtroom backlogs and
prioritize serious criminal cases through de-regulating divorce and
matrimonial property disputes. Removing judicial prejudice against men in
family court.
- Promote immigration in accordance with
economic and social need.
- Impose severe penalties for murder,
terrorism, sexual assault, and drug trafficking.
- Assist Alberta First Nations in
compensation claims against the Federal Government and institutional
partners for genocide and other abuses.
- Protecting Albertans from discriminatory
on-line censorship.
- Ensuring that publicly funded schools
teach the importance of Alberta’s energy industry, while protecting the
rights of parents in matters regarding sexuality or religion.
- Outlawing groups whose primary objective
or effect is racial agitation, or social chaos.
This is not a costed
platform, but is an expensive one with health privatization, subsidies and new
costs for government who will have much lower levels of revenue.
The policy platform
also continues to rely on royalty revenues to fund the operations of government
(highlighted above). This has long been seen as a problem (oil and gas have
always been cyclical revenue sources) but this “platform” seeks to perpetuate
this.
Alberta’s
Dystopia
So this is where we
are. A growing group of “alienated” Albertan’s are promoting the idea of Wexit
based on no serious analysis, no serious thinking about consequences and a lot
of poor understanding of some key issues. They have bought into some rhetoric
about Alberta being a victim and a lot of “gut”, evidence free thinking.
What Alberta needs
is less rhetoric and more analysis; less policy based evidence and more
evidence based policy; less buying of bullshit and more understanding that most
problems are complex and wicked and do not have simple solutions.
I am not optimistic.
2 comments:
Having read this work, I can summarize it thus. Harper is to blame for everything, Trudeau is wonderful, Albertans are idiots, fossil fuels are bad, equalization is dandy and only you know what your talking about. It must be great to be so erudite and worldly, I'm sure unemployed Westerners will surely approve.
Peter
Thank you Stephen, this is a great breakdown of a reactionary movement. People are feeling alienated from our federal government. This breakdown explains to me why the decisions made by the federal government were not necessarily an intended slight to Albertans. I hope that our government (federal and provincial) would take the time and resources to communicate this clearly to us.
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