On Feb. 25, the United Conservative Party (UCP) government delivered Alberta’s provincial budget for the upcoming fiscal year. The UCP has had a disastrous term up to this point. The economy and government revenues have been hit hard by low oil prices. The party has faced scandal after scandal, most recently the campaign to stop the Netflix children’s cartoon Bigfoot Family.
For these reasons and more, it is not surprising that Premier Jason Kenney’s approval ratings are among the lowest of all politicians in the country. The UCP has implemented austerity in the name of balancing the books, but at the same time they’ve taken on enormous debts. The weight of the crisis and the unpopularity of his government have forced Kenney into the corner, and into retreating somewhat from the vicious austerity they planned on carrying out. In balancing the need to please their corporate masters while fearing a movement against the government, the UCP has managed to please absolutely no one. On both ends of the political spectrum, calls are beginning to sound for Jason Kenney to step down, and those calls will only get louder.
Last year’s budget, which came just before COVID-19 swept through North America, was predicated on low taxes bringing in increased investment, spending cuts to balance the books, and an optimistic outlook on oil prices. In a matter of a few days, any optimism for the economic health of Alberta was quickly discarded. UCP finance minister Travis Toews said, “When I was actually presenting the budget, it felt like Rome was burning behind me.” The UCP seemed to have learned a valuable lesson from that experience: set expectations low, and hope to mitigate disappointment.
Kenney has spoken of a “fiscal reckoning” the province will need to face for years now. This reckoning was the mantra behind the UCP’s austerity. Although the UCP is still continuing with cuts and austerity, they have been forced to slow down their all-out attacks on public services. COVID-19 is partially responsible for this retreat, but so too is the public outrage at the UCP’s handling of the crisis while they continued cuts to social services, especially the cuts to health care in the middle of a global pandemic.
Instead of the biblical gutting of social services the Kenney government has promised, the cuts in this budget were not as deep as the UCP would have liked, and the government is now projecting to have the second-highest budget deficit in Alberta’s history, at $18.2 billion. Long gone are the days when the UCP could lecture the New Democratic Party (NDP) about “fiscal responsibility” and balanced books. The UCP has been forced to abandon any timeline to get out of deficit territory. Even UCP MLAs are getting uncomfortable with this debt load.
Despite the minor retreat of the UCP, public sector workers are facing a total of $1 billion in wage cuts in this budget. There are also layoffs expected, especially in post-secondary education where around 750 full-time jobs are on the chopping block. While slowing their war on public services, the UCP overall are not straying from their plans to cut the entire public sector by 7.7 per cent over the next 4 years.
K-12 education is also getting squeezed, although no one knows exactly how hard. The UCP have left out school funding manuals (funding breakdowns per jurisdiction), which have always been presented along with the budget, but this year aren’t expected to be released for over a month. One thing which was revealed is that the UCP plans to give $27 million less for “instruction”, the amount of funds per student that schools receive. This all comes as teachers are expected to implement a new curriculum. Additionally, while public schools will have to dip into reserves and watch their funding dwindle, private schools will see an increase of $20 million in public money.
Kenney boasted about increasing funding to health care by $877 million. But this is misleading. Previous privatizations and cuts are moving forward, which will have deadly consequences. Furthermore, per capita, $877 million is an effective cut when taking into account population growth and inflation. There will be less capacity to provide health care per person. Hospitals and staff will fill up faster and be stretched thinner in the event of an outbreak of disease, major accident, or flu season. After nearly 2,000 people in Alberta have died from COVID-19, this is inadequate to say the least. What’s more, the UCP has indicated that once the pandemic is over it will return to its policies of health-care cuts and austerity.
Nobody is satisfied with the budget. Teachers, nurses, the entire public sector, and the working class as a whole have watched their lives worsen, in large part because of the UCP and their cuts to social services and handouts to oil corporations. And on the other side, not even the bosses and the right wing are satisfied. UCP MLAs are beginning to voice their dissent against leader Jason Kenney, and credible rumours of a revolt brewing in the ranks of the UCP have now turned into a leadership review scheduled for 2022.
Who is to blame for Alberta’s woes? According to Toews, the responsibility lies with, as usual, Justin Trudeau: “The biggest obstacle to recovery may be our own national government, which has layered on regulatory requirements, created investment uncertainty, chased away the investment that maintains family-supporting jobs, and is now increasing the costs for our most vital national economic drivers.” The fact of the matter is that Trudeau has done everything in his power to lend a crutch to the capitalists, especially the oil barons, giving away hundreds of billions of dollars to corporations in wage subsidies and bailing out the Trans Mountain Pipeline. By buying Trans Mountain, the Liberal Party attempted to help all of the oil barons, by taking on the heavy costs of building the pipeline to mitigate the bottleneck that has plagued the industry. Trudeau’s finance minister at the time, Bill Morneau, also said, “One way or another we’re going to get it back into the private sector,” promising that when the pipeline became commercially viable, they would hand it back to the capitalists, effectively socializing the losses and privatizing the profits. Overall, Trudeau gave nearly $1 trillion to the bosses in 2020, compared with only $82 billion for the Canada Emergency Response Benefit (CERB) program. What the UCP is really angry at Trudeau for is that the federal government has not taken up an “Alberta First” policy and has not adopted the UCP’s oil-before-butter program as its own.
All of the subsidies in the world cannot make the capitalists invest where there are no profits to be made. That is the case in Alberta today. The days of the capital frenzy that came with high oil prices are gone, and the GDP of the province peaked in 2014. Albertan capitalism is facing a difficult future. The province’s key industry is no longer competitive on the world stage.
Early in March, it was announced that a John Deere remanufacturing plant outside of Edmonton was closing down. Some 180 workers will lose their jobs. The merger of two oil giants, Husky and Cenovus, will result in up to 2,150 layoffs. The largest company based in Alberta, Suncor, has slashed its capital budget by $1.5 billion and plans to lay off 10 to 15 per cent of its workforce. The UCP’s “job creating” corporate handouts and tax cuts failed to prevent these job losses.
Some commentators say that Alberta’s problems stem from the failure of previous governments to “diversify” the economy. The idea is that if Alberta wasn’t so reliant on the energy industry, the crisis wouldn’t be so bad. Minister of Jobs, Economy and Innovation Doug Schweitzer came out publicly in favor of diversification in an opinion piece titled: “It’s time to talk about the ‘D-word’ in Alberta”. This idea was originally pursued by the Progessive Conservatives (PC) under Alison Redford. Former premier Redford spent $3 billion in 2012 to promote research and development, with a plan to transform Alberta into the leading international centre of technology development. Since then, advanced technology has become the province’s third-largest industry and has fostered corporations like Solium Capital, based out of Calgary, which was bought by Morgan Stanley for more than $1 billion. Despite the relative success of the program, Alberta has still been hit hard by the economic crisis. If a government decides to foster a certain industry, they may get lucky and pick a winner, such as tech development. But even if they do, capitalism operates according to its own laws and tendencies. Investment is not guaranteed. Money will only flow where profits are most easily made, and no industry is immune from a recession.
On this issue, the UCP have had a change of heart since their election win. In 2019 they cancelled the Alberta Investor Tax Credit, an NDP policy which gave tech companies a 30-per-cent break on their tax bill. The next year they ended up implementing similar incentive schemes, setting aside $234 million from the budget to foster a domestic tech industry. This time around, that fund has ballooned to $362 million in public money.
Another proposed solution to government budget woes is a provincial sales tax (PST). Only a couple of years ago, it would have seemed impossible that the UCP would seriously consider the introduction of PST. In late 2019 Kenney was adamantly against a PST. And yet it’s now being seriously debated within the party. The fact that the UCP is actually talking about introducing a PST also shows that the economic reality in Alberta has forced them to retreat from their plans. Low taxes were a cornerstone of Kenney’s election campaign. Now he refuses to rule out the introduction of a PST. Late last year, Finance Minister Toews said, “The timing is the question here” in reference to a PST, as if it were an inevitability.
No political party in Alberta wants to introduce a PST. In the Ralph Klein years, the lack of a PST in Alberta became a badge of honor for the province. A majority of people in Alberta disagree that the province should implement one, and whichever party does would likely become a focus of rage and lose considerable support. Yet, the reality of the economic situation means that the state will need to make up for lost revenue, and at a certain point a PST might seem like the least politically expensive option. The UCP likely wants to delay the inevitable, hoping that the NDP will introduce it should it come to power in the future, which would allow the UCP to raise the old cry against the “tax-and-spend” NDP and protect itself from the political fallout.
Neither diversification nor a sales tax offer a way out of the crisis for Alberta’s working class. In fact, a PST would be a step backward. A flat consumption tax on goods and services hurts the poor far more than the rich, since they spend a higher ratio of their income on basic necessities. A PST would improve government revenue, at least somewhat. But in reality it would simply be another means of making the working class pay for the crisis.When the UCP came to power in 2019, they brazenly attacked their political enemies and announced plans to gut social services wholesale. Since the beginning of 2021, they’ve had to retreat in their plans for open-pit coal mining, privatizing national parks and now, significantly, balancing the budget. The enormous budget deficit is an attempt to push the question of who pays for the crisis a few years into the future. Either the workers will have to pay with cuts to health care, education and wages in order to balance the government’s chequebook, or the money will have to be taken from the bosses. The third option is credit, maintaining social services, and preventing a revolution from below by taking on budget deficits. This third option is largely unsustainable and already reaching its limits. But one thing is always guaranteed under capitalism: the bill always comes. When that day of “fiscal reckoning” arrives, the debt will still be there and payment will be expected, with interest.
Despite retreating somewhat, the UCP is determined to make the working class pay for the crisis one way or another. The Kenney government is very unpopular due to its policies of austerity and its disastrous handling of the pandemic. There is already significant opposition to the government among workers and youth, especially in the trade unions. The movement must be strengthened to stop the attacks on the public sector and the working class, to bring Kenney’s government down, and ultimately to develop a political program to make the capitalists and profiteers pay for the crisis. This is the only way to oppose the UCP, to oppose its budget, and to oppose its policies of austerity.