Budgeting for the oil bust in Saskatchewan and Alberta

The resource price bust is already a few years old but it’s still hitting parts of Canada hard. Two guests talk about the impact of the downturn on fiscal policy in the Canadian prairies and what this augers for the bigger question of a transformation of the economy away from fossil fuels. First I speak with Charles Smith, associate professor of political science at the University of Saskatchewan. He is the co-author, with Andrew Stevens, of a great analysis of the Saskatchewan budget, titled “Building the “Saskatchewan Advantage” : Saskatchewan’s 2017 Austerity Budget” over at the Socialist Project Bullet. Next, I speak with Ian Hussey, research manager at the Parkland Institute, a social democratic thinktank in Alberta. He contrasts the Alberta NDP’s more stimulative approach to public finance; however, there remain many questions about the scale of the shift and the need for real climate action.

As always, remember to subscribe to get new episodes as they appear, rate the show on iTunes and donate to help keep this going. Thanks!

Read More

Why Alberta shouldn’t look to Norway, and why that’s a reason to Leap

One of the clearest memories I have from my only trip to Norway is the repeated failures at hitching a ride. What appeared to be an unbroken string of brand new Audi’s and BMW’s whizzed by my friend and I, dirty and sweaty after a few days hiking and camping in the mountains. “Where am I that the comforts of our rich assholes are the rights of common citizens?”, I remember thinking.

You’ve probably seen at least one article saying that Alberta should be more like Norway. I don’t want to rehash that debate. But I think we’ve gone about it the wrong way and seeing why can tell us a lot about today’s sparring over the Leap Manifesto.

Comparing Alberta unfavourably to Norway for squandering its oil wealth has been a familiar trope of media and progressive organizations, especially since the oil price crash (here’s just the CBCToronto Star and Globe and Mail). The comparison has become so ubiquitous that it has also spawned a cottage industry of counterarguments from the right too. In short, Norway has been putting away the money it gets from oil in a sovereign wealth fund since 1990. The fund is now the world’s largest and worth over $1 trillion. Alberta’s fund, although older and actually the inspiration for Norway’s, is a paltry $15 billion. (Norway and Alberta have similar populations.)

The funny thing, however, is that Norway’s gigantic fund doesn’t pay for much of what the government does. Taxes do that. Take a look at the numbers. Public revenues in Norway at all levels of government are equal to over half of GDP (nearly 55% in 2014). Meanwhile, federal, provincial and local government revenues in Alberta make up somewhere around 30% of provincial GDP. That’s a massive difference. Alberta tax rates are lower: on individuals, on corporations and on consumption. In addition, the Norwegian government not only owns a majority share in its largest oil company, Statoil, but also taxes oil profits at a much higher rate. A special tax on “excess profits” takes the top marginal corporate rate on oil corporations to 78%. (more…)

Read More

Nope, Alberta still needs to raise the minimum wage

Last night, Andrew Coyne published a column in which he champions introducing a minimum income over raising the minimum wage as a radical policy suggestion for Alberta’s new NDP government. Coyne couches the column in his typical pseudo-contrarianism. Here he is supposedly advocating socialism…gasp! In reality, however, Coyne gets it backwards: a minimum income in Alberta today would almost certainly be a dangerous neoliberal measure. It’s raising the minimum wage that can help open more space for progressive politics.

First, the basics. The $15 minimum wage was a key promise of the NDP campaign and increasingly being adopted across North America. A minimum income is a theoretical idea that’s never really been implemented and would essentially guarantee every citizen some basic level of cash income. As Coyne notes, it but remains mildly popular across the political spectrum; it was recently floated as a proposal by Calgary mayor Naheed Nenshi.

Coyne argues for the superiority of a minimum income as being solely focused on poverty reduction and redistribution, at the same time criticizing the minimum wage as too interventionist. As usual on the right, Coyne couches his opposition to hiking the minimum wage with an appeal to Economics 101: if the price of labour (the wage) goes up, the quantity demanded (employment) will go down. Simple: don’t mess with the market! (more…)

Read More

With NDP win, what’s next for Alberta?

This episode focuses on what else but the recent Alberta provincial election that saw the social democratic NDP sweep into power after 44 consecutive years of Conservative rule. To gain some perspective on this rather remarkable result in Canada’s oil and gas heartland and see what lies ahead for Alberta, I speak with an NDP campaign insider as well as a long-time analyst of Alberta’s political economy.

My first guest, Adrienne King, was Rachel Notley’s Chief of Staff during the campaign and was just announced as the new premier’s Deputy Chief of Staff. She’s worked for the Alberta NDP since before the 2012 election and offer her point of view on the future from within the NDP. My second guest is Ricardo Acuna. Ricardo is the Executive Director of the Parkland Institute, Alberta’s major political and economic research institute. We spoke about the economic situation in Alberta, the role of the oil industry as well as the challenges facing the new government.

2015-05-06T02-38-34.233Z--1280x720

Read More

Calling the business bluff in Alberta

The votes had barely been counted in Alberta when stories purporting to herald capital flight, particularly from the oil sands, were already appearing in venues like the Financial Post. As if on cue, the TSX fell 2%,the day after the Alberta election. What are we to make of this? Is Notley’s Alberta in the position of Rae’s Ontario 25 years ago, already being undermined?

An assessment of the NDP’s victory in Alberta grounded in reality has to account for the fact that the place of the oil industry in the province is, for the moment, being left largely unchallenged. This is no value judgment: support for the industry is the default position of most Albertans, not just elites. Given the economic importance of the oil industry and relative lack of economic diversification combined with the absence of a mass movement pushing against oil extraction and dependency, this should not be surprising.

The Alberta NDP’s program seeks to redistribute the gains from a resource economy largely left untouched. This general tendency is moderated by commitments to greater consultation with First Nations and an end to active lobbying for the Keystone XL and Northern Gateway pipelines. The latter, however, is a practical decision based on the small likelihood of these being built. All the while, for example, oil by rail continues to gather pace. The flip side of greater spending on social welfare are policies to recapture more of the proceeds of the oil boom while leaving its fundamentals intact: moderate tax increases and a planned royalty review.

For now, it seems the warnings of capital flight are thus a first salvo with a blank round. The dire words from parts of the business press and business elites are mostly bluster. Many business figures are actually taking a conciliatory tone; even the infamous “five CEOs” have taken it back. Fear-mongering is mixed with courting favour. (more…)

Read More