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Alberta Diary

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David Climenhaga, author of the Alberta Diary blog, is a journalist, author, journalism teacher, poet and trade union communicator who has worked in senior writing and editing positions with the Toronto Globe and Mail and the Calgary Herald. His 1995 book, A Poke in the Public Eye, explores the relationships among Canadian journalists, public relations people and politicians. He left journalism after the strike at the Calgary Herald in 1999 and 2000 to work for the trade union movement. Alberta Diary focuses on Alberta politics and social issues.

Looking back in perplexity: Where did Alberta's money go again?

| February 28, 2013
Kevin Taft

There aren't many surprises in Alberta -- at least if you've been paying attention.

However, apparently paying attention is something you can't expect either the government or the media to do.

Consider the news in the Edmonton Journal earlier this week that "Experts have warned of 'Bitumen Bubble' for years."

Well, yeah… 

This just in, reported the Journal: "…oil industry players have been warning about the phenomenon for more than a decade." (Oil industry players, by the way, means big shots and their trusted flunkies, not the guy playing the piano in a house of ill repute. Just in case you wondered.)

Indeed, the Journal's reporter noted, "a review of historical markets shows the gap between what Alberta oil sells for and the benchmark price for West Texas Intermediate has repeatedly hit $35 in the past two years."

Well, it shouldn't surprise us, I suppose, that Premier Alison Redford was surprised by the fact petroleum prices, known for their volatility, are volatile. There’s a long tradition of governments being surprised by the obvious -- and this is not just true of Progressive Conservative governments, and it's not just true in Alberta. But apparently that helps.

Which brings us to another related surprise. Don Braid, the Calgary Herald's political columnist, who can usually be counted on to write a pretty good column, could be found shaking his head in astonishment recently about Redford's astonishing claim that there's almost no money any more because of the Bitumen Bubble.

"You have to wonder about a government that can pull off the remarkable stunt of going broke while the province it runs keeps getting richer," Braid observed.

Well, actually, you don't. You just have to listen to what former Alberta Liberal leader Kevin Taft, the best premier Alberta never had, had to say about this long, long ago. 

As we said in this space back in January 2012, "Sooner or later, all conversations about the Alberta economy in the modern era come down to one key question: Where the hell did all the money go?" Indeed, where does it continue to go?

Or to put that another way, if Alberta’s so rich -- almost double the GDP of the rest of Canada in recent years -- how come it feels so poor? (And you only need to drive the potholed Third World roads of Edmonton to know how poor it feels!)

Taft, a former University of Alberta professor and director of the U of A's Parkland Institute, answered this question, actually. It's just that no one in the government or the mainstream media seems to have been paying attention.

So if we're so rich, Dr. Taft, how come we're so poor? Illuminate our fuzzification!

Last year working with researchers Mel McMillan and Junaid Jahangir, Taft wrote a book called Follow the Money, Where is Alberta's Wealth Going? 

Relying heavily on Statistics Canada's CANSIM (Canadian Socioeconomic) and Financial Management System databases, Taft made a case that has not been effectively challenged by the government's spokespeople, its apologists among the legions of far-right "think tanks" that serve as the Greek chorus for Alberta's perpetual state of scarcity and crisis amid fantastic wealth, or far-right entities like the Wildrose Party that demand ever more vigorous attacks on public services.

So let's review the places Taft was able to establish pretty convincingly are not getting our money:

- It's not going to government spending. For while government spending in Alberta seems to be perpetually managed incompetently by generations of Tories, who gyrate between throwing money at problems to massive and disruptive cutbacks, over the long term our government spends close to the Canadian average.

- It's not going to public services. "As a society, Alberta spends a steadily shrinking portion of its increasing prosperity on public services," Taft showed in his book.

- It's not going to education. Comparing five-year averages to smooth out individual years' ups and downs, spending on K-12 education went up 2 per cent, total, over 20 years.

- It's not going to health care. When you adjust for the size of the provincial economy, spending on health care puts Alberta last in the country. No matter how you measure it, "health care spending in Alberta and Canada is on a gradual long-term upward trend that is well within reason." Over the long-term, smoothed out with five-year averages, health care spending in Alberta has been rising at about 1.2 per cent a year.

- It's not going to housing and social services.

- It's not going into savings. You can tell from a glance at one of Taft's many useful charts that, as he puts it, "Alberta's natural resource treasure wasn't going into the Heritage Fund," or any other savings pool.

And most of it is not going to personal incomes. Over the past 21 years, average personal incomes in Alberta rose about 35 per cent, accounting for inflation.

So where is it going? It's going to corporate profits, that's where. 

And the greatest corporate profits are in the oilpatch, naturally. 

In fact, so much of our money is going into corporate profit, Taft shows, that we're actually selling our collective property at a loss to pad the corporate bottom line!

"Profits in Alberta have grown at rates simply unknown in other jurisdictions, often well beyond double the rates in other provinces and the United States," he wrote. "There is no such largesse for public services, and the government is drawing down public savings rather than building them, doing nothing to prepare for the future.

"The transfer of public wealth to private shareholders is blistering, and our own government, rather than fighting like an owner, or even thinking like an owner, is just happy to find investors who want to cash in." (Those investors, Taft noted as an aside -- well before this became a national scandal -- are frequently state-owned companies from such places as China, Abu Dhabi and Korea.)

How blistering? Well, corporate profits were up 317 per cent in the same period health care spending rose 28 per cent, incomes went up 35 per cent and education spending increased 2 per cent!

One question Taft said he couldn't answer from the data he worked with is where all the money goes once it flows into these bloated corporate profits. But you and I don't need a book to tell us the answer to that one: Most of it leaves the country for places where it does nothing for Canadians.

No wonder, when you think about it, that corporate special interests and their paid representatives in Canada are so aggressive in defending their "right" to rapidly export even more of our resources via pipeline to wherever -- the environment, the rights of Canadians, and due process be damned! 

Of course, Taft's conclusions were not reported very enthusiastically in the media, either here in Alberta or anywhere else in this country.

I guess that's why the facts have taken the Calgary Herald and the government of Alberta by surprise.

Follow the Money was published by Detselig Enterprises of Calgary and costs $12.95, and it's also available as an e-book.

This post also appears on David Climenhaga's blog, Alberta Diary.

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