A Government of the Few for the Few - The Government of Alberta

-->

The UCP Government of Alberta is pursuing three strategic intentions. The first is to balance the Provincial budget, by which they mean only spend the “revenues” they secure through taxation, royalties and other means. The second, linked to the first, is to better align government spending by Department with the spending levels seen for those services in other Provinces, no matter that Alberta’s economy is different and that GDP per capita and taxation levels are different. The third is, as rapidly as possible, privatize significant sections of the currently public services offered to citizens.

In pursuing these strategic intentions, the government is happy not to engage in any meaningful consultations and dialogue with those who may be impacted by these strategies or with those who have policy alternatives. They are also unwilling (some may say incapable) of looking at an evidence-base which shows that these strategies are either likely to fail or based on a poor (yet deliberate) misunderstanding of the situation Alberta faces. Finally, they expect sections of the public service to engage in industrial action – work to rule or strike – in response to their actions. Indeed, they are hoping for a full-on confrontation since this will accelerate their move to privatization and, in their view, garner support for union busting.

These three strategies come directly from the neo-liberal new public service playbook and are proven failures all over the world.

Balancing the Budget

So as to balance the budget any sensible government would do two things: (a) maximize revenues; and (b) control spending. This government dramatically reduced revenues through tax breaks and the removal of the carbon tax and is not considering increasing revenues through either a sales tax or increased royalties from natural resources licenses. The government is pursuing “trickle down” economics – something even the IMF accepts does not work. When we look at revenues, Alberta has by far the lowest government revenues of any jurisdiction in Canada at just 13.6% of GDP (BC is at 18.9%, Ontario at 17.6%).

Alberta’s net debt is currently $43.7 billion – an increase of $7.09 billion over the previous year. Our net debt to GDP ratio is projected to be 11.8% - by far the lowest in Canada by any calculation. Our net debt per capita is also low at $8,379. As a comparator, Ontario’s net debt to GDP ratio is 40.1% and net debt per capita is $24,282. We do not really have a debt problem when these numbers are compared either to other jurisdictions in Canada or to competitor jurisdictions around the world. 

The idea that we have to balance budgets is a ploy and a manufactured problem. We do need to manage spending and be efficient, but we also have to respond and meet social needs. Corporate largesse and tax breaks for the rich and already wealthy will not lead to job creation as employment numbers clearly suggest. What is needed is a revenue increase through a sales tax, an increase in oil and gas royalties and higher corporate taxes.

Aligning Spending with That Seen in Other Provinces

It is true that our spending on government programs looks to be higher than other Provinces (except Newfoundland and Labrador) at $12,915 per capita (BC spends $10,947) but then our wages for all employees in Alberta are higher. The real number to look at is progam expenditure as a percentage of GDP and here we spend less than any other Province (15.7%).

Spending needs to be reduced on non-core functions (war rooms, overseas travel to “attract investors”, task forces and advisory panels, Ministry of Red Tape Reduction for a government which is significantly increasing the red tape in health and education) with more money going to services which Albertan’s value – health care, senior care, care for those with disabilities, education and infrastructure. Alberta’s population is still growing and investments in people, support for those in need and the payment of a decent wage do more to stimulate and grow an economy than tax breaks for the already wealthy.

Privatization

So as to reduce economic risk and ensure the effective management of public expenditure, Alberta needs to halt all talk of privatization in health, education and social services. Study after study shows that privatization both increases costs, reduces efficiency and increases social risk. Further, laying off public service personnel in favour of private providers who will walk away if profits fall poses a real economic threat and risk to service quality. Sweden rapidly privatized parts of its K-12 system in the name oif school choice. Not only did quality fall (as measured by PISA and Sweden’s own testing system), the private players “gamed” the system by manipulating and inflating the performance of their schools. When profits fell, the private players walked away, leaving the Government to pick up the pieces. Similar things have happened in the US and the UK. In healthcare, privatization leads to loss of cost control, increased wait times in the public system and poorer systemwide outcomes.

A Government of the Few for the Few

In short, the Alberta government is intent on pursuing strategic intentions which have been shown as failures elsewhere in the world all on the basis of a misunderstanding of the challenges Alberta faces.  To make matters worse, the Government of Alberta is systematically disengaging from public debate or real engagement with those who disagree with their steamroller approach to public policy, as all who have tried to have authentic policy conservations with Ministers and MLA’s will attest. We don’t actually have “government by the people for the people”, we have a government of selected interest steered by the few for the few.

A Precarious Future for Public Education in Alberta

-->

So a picture is emerging of an ideologically driven government determined to change the nature of public education. Here is what they have decided to do so far (and it is less than a week since Alberta’s Budget 2019):

• Not fund enrollment growth beyond 2019-20 and not add funds to cover inflation over the course of this parliament – an 18% cut in real terms.
• Immediately cut funding for grades 1-3 by $1,300/student in urban districts
• Cut funding for teaching assistants – essential in complex classrooms, such as those found in Alberta
• Over the four year period, cut funding for public education (which can no longer be called “public”) by 2.8%
• Allocates $400 million to charter and private schools
• Plans the introduction of a Schools Choice Bill in the current sitting of the legislature
• Cut post-secondary budgets in significant ways, reducing funding by $600 million, with some institutions “hit” harder than others.
• Removes the tuition freeze and permits universities and colleges to charge up to 7% more each year – potentially a 28% rise in costs to students.
• Seeks to roll back teacher pay by between 2% and 5%
• Seeks to transfer management and control of teacher pension funds from an organization co-directed by teachers to one in which teachers have no voice – from ATRF to AIMCo.
• Abolishes the STEP program, which provided a chance for students to work in the summer in companies and non-profit organizations and replaces it with a $6 million/year Next Generation trades program intended to help 6,000 individuals.

None of these developments were negotiated or involved prior consultation. For example, school boards and the Alberta Teachers’ Association (ATA) were not consulted or advised of the cuts to grades 1-3 nor were the ATA advised or consulted over the intention to make fundamental changes to the management of their pension plan.

The rationale for these measures is to “balance the books” and to bring Alberta in line with education spending in other jurisdictions. Neither of these intentions is entirely honest. Alberta will not balance its books any sooner because of these measures than it would have done under the previous NDP government, which sought to invest in public education. We cannot bring expenditures in line with other Provinces without understanding their different revenue streams.

What is more, the budget makes assumptions about both economic growth and the price of oil which are more than questionable. It is more likely that these measures will lead to higher deficits and debt (especially when coupled with tax giveaways to profitable businesses and the reduction of revenues through the cancellation of the carbon levy). By making the revenue situation worse, the Government makes the likelihood of “fiscal balance” less likely rather than more likely.

The impact on public education will be felt in a variety of ways – quality of the learning will go down as class sizes rise, teachers will leave the profession faster than they do now and there will almost certainly be labour unrest after the arbitration / pension decisions. The removal of support for teaching assistants will worsen the already precarious position of students with special needs.

This is part of the strategy, two to three years from now, to justify a significant expansion of private education in response to “the obvious” weaknesses of public schools – hence the language of “school choice”.

This will also be a precursor to the amalgamation or abolition of school boards – something we have seen in other Provinces (and are about to see in Quebec).

Teachers are already upset about class size and conditions of practice, lack of a pay rise (they are just now learning of the ask for a 2%-5% roll back) and are furious about the attempt to shift management of their pensions to AIMCo.

If you didn’t believe public education was vulnerable before, you should now. It is under attack.

The In-Between Time - Between Old and New Forms of Capitalism

It is clear to a great many that late stage capitalism is becoming unsustainable for four big reasons.

The first is that it has led the creation of environmental unsustainability. All scientists agree that climate change is happening and that humans are a contributor to the changes in the patterns of weather and that these changes are impacting species, soils, watersheds, oceans and air. Changing what we do and how we do it, especially our use of fossil fuels, is a key response to this challenge. Investments are quickly shifting from old forms of energy to new and from old models of manufacturing to new. As the world population rises to between 9.5 and 10 billion people, our use of natural resources (especially water) will place continuing strain on the planet.

The second big reason is debt. Global debts from all sources – governments, corporations and individuals – is now in excess of $250 trillion. In addition, global unfunded pension liabilities are growing very quickly and, if unchecked, will add $400 trillion to the global debt mountain by 2050 and this from just eight countries (US, UK, Japan, Netherlands, Canada, Australia, China and India. In the US alone, unfunded pension liabilities are already $28 trillion and will rise to $137 trillion by 2050 if no action is taken. The world already has $17 trillion in negative equity bonds. The market cannot absorb the growing debt and the world will periodically experience significant recessions as the debt-cycles replace growth.

The third big reason is inequality, especially income inequality. The top 1% now own 44% of the world’s wealth, with the rich taking ever increasing share of wealth created by workers. This has many significant impacts on the world’s economy – not least of which is that wealth holders distort the political process. The richest people in the US now pay less income tax than the middle class as a result of their political lobbying. The neo-liberal adoption of “trickle-down” economics, widely shown not to work at all (even by the IMF), has been encouraged and enabled by those who benefit – the rich and the super-rich.

The fourth big reason for late stage capitalism to be “in trouble” is the emergence of technology. Technology has always disrupted economies – machinery disrupted the agrarian economy, global supply chains enabled by rapid transport systems disrupted national and regional economies, the internet has disrupted a great many sectors of the economy. But the emerging technologies such as AI, robots, 3D printing, stem-cell enabled bio-parts, augmented and virtual reality will reduce the demand for certain kinds of labour, change the relationship between labour and profitability and dramatically change the skills required to enter the labour market. As Justin Trudeau said in his 2018 speech at Davos, referring to the impact of these emerging technologies on business models, “the pace of change has never been this fast, yet will never be this slow again”.  In particular, some 30-40% of all jobs will require employees to adapt to and work with technology in ways not seen before. While some new jobs will be created, profit will no longer lead to more employment. We already see this in the energy sector where profits remain high, but employment is lowered because of the adoption of “smart” technologies.

These four factors (along with several others, such as demographics, changes in the structure of organizations, the growth of the gig economy, the growth of the intangible economy) are all changing our world quickly – too fast for a great many people. Indeed, a theme of a great deal of foresight work is that we are living in “an in-between time” – a time between our current way of working and a new way of working – a time between labour intensive capitalism and capitalism that is intangible and requires less labour. It will impact us all.

Experience of Loss of The Future

The future world will require more from those who work in terms of creativity, curiosity and commitment. It will not be a place where a great many of those with low levels of cognitive skills, low levels of literacy and a disrespect for life-long learning will do well. Indeed, much of the anger and anxiety about our society which can be seen in political discourse and social transactions relates to the inner anxiety about how “we fit” into the new world that is emerging.

We can usefully look at Kubler-Ross’s work on how people cope with death and dying as a way of understanding what is happening now.

As people lose the sense that they understand how the world works and what the near and medium term future will look like for them, their thinking and experience shifts through a number of stages:

• ·      Shock that their understanding of the world and how it works (especially for them) no longer holds true.
• ·      Denial that the world they know and understand will not return as it was.
• ·      Anger and Frustration with all, most especially those who they see as representing the different future – the one they are resisting in the hope that the “old and familiar” future will return.
• · .    Bargaining about how they can “live” in the new world while retaining some semblance of the old.
• ·      Depression when they release that the bargaining they were engaged in will not lead to what it was they had hoped for. This often leads to a return to anger and frustration and a new attempt at bargaining – this can be a repeated cycle for some time.
• ·      Decision to accept that the world has changed and that they need to move on.
• ·      Integration of the new understanding of the world into the way in which they live their lives.

It should be clear that not everyone who experiences the sense of loss of the future as they had understood it will successfully move through these stages. Many get stuck at anger and frustration or are locked into the anger-bargaining-depression cycle and repeat it many times.

One consequence of this experience are challenges around mental health and wellness. It is no surprise that, in all sectors of society and at all ages, we see a mental health pandemic. Whether it is rates of anxiety, depression, addiction or suicide – the numbers are rising as quickly as society and our economy is changing.

The In Between Time

We can see what is happening as an in-between time – a time between the old and a the new economy, between an old form of capitalism and a new form of capitalism, a time between a stable planet and an unstable one.

For individuals and families, the in-between time is full of uncertainties, risk and cost. Trying to make decisions now which will produce outcomes 2-3 years from now produces a great deal of anxiety. Is a college or university education worth the growing cost and debt and if it is, what should I study that will give me some surety about future work? Is this a good time to marry and, if it is, where is the best place for us to live and work? What about having children – given the state of the planet and the uncertainty about the future, what world will be leaving them? Shall I try for this job – if so, how long might it last?

To make this very real, look at the decision someone made four years ago to study petroleum engineering in an oil rich place like Alberta. Four years ago, companies were hit by a major downturn with a great many lay-offs. While the big companies that account for 80% of production continue to be highly profitable, they leveraged the downturn to focus on innovative technologies that enable them to produce a growing volume of oil and gas with much less labour. Now the sector in Alberta employs fewer than 20,000 people and is no longer an engine of employment, though continues to have undue influence over our economy and politics. That petroleum engineer is now most likely to find work in some other part of the world or in another sector that can use his technical and thinking skills – a sector not connected with petroleum.

The in-between time is messy, painful and difficult and, for some, can last a long time. It is a necessary phrase in a transitional economy. We all need to understand that this is happening and, more importantly, we cannot go back to the past since the future is pulling whether we like it or not.