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Alberta's leaders should take some blame for not coping better with current slump

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Alberta Premier Jason Kenney. Image: Government of Alberta/Flickr

Canadians in Eastern Canada sympathize with their counterparts in Alberta who are suffering from that province's declining economic conditions. It's troubling to have so many of our fellow Canadians so adversely affected by unemployment, insecurity, and even bankruptcy.

It is difficult, however, to share their tendency to put all the blame for their woes on the federal government and anti-pipeline protesters.

Most of the delay in the completion of the Trans Mountain pipeline, for example, can be attributed to well-founded legal and Indigenous barriers, as well as the global collapse of fossil fuel prices. The previous Conservative government was just as much hampered by these obstructions as was the subsequent Liberal regime.

Alberta's current malaise could more justifiably be blamed on previous provincial conservative governments. They could not have averted the sharp drop in oil revenue and the ensuing economic slump, but they could have ensured that the citizens of Alberta remained financially and socially secure while withstanding the crisis. Here's how.

A tale of two petro-states

Both Alberta and Norway established sovereign wealth funds to collect revenue from the development of their massive oil and gas resources. Although their populations are similar -- 5.3 million Norwegians to Alberta's 4.3 million -- their methods of deploying these funds couldn't have been more radically different.

Created in 1976 by Premier Peter Lougheed, the Alberta Heritage Savings Trust Fund chose a free-market approach with an emphasis on helping the oil and gas companies maximize their profits. The provincial tax imposed on the companies rarely exceeded 12 per cent.

In sharp contrast, under Norway's sovereign wealth fund, launched in 1990, the fossil fuel industry is controlled by the government. The taxes imposed on the oil and gas companies total 78 per cent. (Yet, somehow, they all still make ample profits.)

Norway's fund recently soared to the colossal sum of CAD$1.22 trillion – that's CAD$235,000 for every man, woman and child in the country. It's by far the largest such fund in the world.

Alberta's fund, although launched much sooner, is valued at CAD$18.1 billion, just CAD$4,209 per person in the province.

Norway, of course, unlike Alberta and the rest of Canada, has long been a socialist democracy in which sustaining the welfare of its citizens prevails despite the lobbying of large corporations.

Even before the oil boom, Norwegians benefited from complete public-provided health care, from first-rate child care, from education extending through the university level, and from generous public pensions.

Norway also has large and effective unions. They negotiate good wages and working conditions for their members, and serve as a useful social and economic buffer against corporate power.

In such a progressive country, it was never in doubt that the government would control development of the offshore oil bonanza. It would also claim the largest share of its revenue for the improvement of public services and the maintenance of national prosperity far into the future.

Coddling corporations

In Alberta, that public-oriented approach was never even a remote possibility. Nearly always one of Canada's most conservative provinces -- despite the recent NDP interlude -- its political leaders have been loyal disciples of the dominant capitalist hierarchy. For them, abandoning free enterprise and switching to any form of socialism would be unthinkable.

Hence their ongoing deeply ingrained devotion to capitalist orthodoxy. For them, it is normal to allow the big petroleum companies to extract and sell Alberta's oil in any way they choose.

Normal, too, to tax them at rates only one-seventh the amount levied on them by Norway.

This meek subservience to the petro-firms, allowing them to seize by far the largest financial share of oil sands development, did not seriously infringe on the well-being of Alberta's families.

Not until the deep global plunge of oil prices.

Before that catastrophic descent, Albertans thrived. They enjoyed one of the highest living standards in Canada, as did the many thousands of other Canadians who flocked there to share in the oil extraction munificence.

But Alberta, unfortunately, had no substantial "rainy day" savings fund to cushion the shock of this precipitous financial crisis.

Norway, on the other hand, although it was similarly affected by the oil price drop, was not financially impaired in the slightest. By simply skimming the required millions of dollars from the billions in interest generated by its stupendous oil fund, it could easily maintain its citizens' comfortable lifestyle.

Alberta could have been better prepared

It is important, however, to realize that the social and economic downfall in Alberta need not have been as severe as it has become. Even without converting to a socialist system, its heritage fund could and should have been increased far beyond the relatively low amount attained.

The provincial government should have kept contributing to the fund on a regular basis instead of letting 15 or 20 years go by without making any contributions at all. It could also have doubled or even tripled its tax on the oil companies without straying into socialist territory.

Had the fund been properly managed, it would today be able to provide the province with billions in emergency cash -- more than enough to make Premier Jason Kenny's deep cuts in social programs completely unnecessary.

In short, the people of Alberta should not be piling all the liability for their current malaise on the federal government and environmentalists. Their own political leaders -- and they themselves to some extent -- should at least shoulder some of the blame.

Ed Finn grew up in Corner Brook, Newfoundland, where he worked as a printer's apprentice, reporter, columnist and editor of that city's daily newspaper, the Western Star. His career as a journalist included 14 years as a labour relations columnist for the Toronto Star. He was part of the world of politics between 1959 and 1962, serving as the first provincial leader of the NDP in Newfoundland. He worked closely with Tommy Douglas for some years and helped defend and promote medicare legislation in Saskatchewan.

Image: Government of Alberta/Flickr

Editor's note: A line was added before the last paragraph to note that better management of Alberta's heritage fund may have changed the decision to make cuts to the province's social programs.

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