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October 15, 2014 - No. 83

Alberta By-Elections

A New Direction for the Economy --
An Election Issue!

Alberta By-Elections
A New Direction for the Economy -- An Election Issue! - Peggy Morton
Stop Paying the Rich! Increase Funding for Social Programs!
Federation of Labour Releases Study on Upgrading and Refining
Bitumen in Alberta 

Mount Royal University Students Oppose Tuition Fee Increases
Education Is a Right -- Another Election Issue!


Alberta By-Elections 

A New Direction for the Economy -- An Election Issue!

Four by-elections will take place on October 27, in the ridings of Calgary-Elbow, Calgary-Foothills, Calgary-West and Edmonton-Whitemud. The unelected Premier Jim Prentice, Health Minister Stephen Mandel and Education Minister Gordon Dirks are all seeking a seat in the Legislature. The elections are supposed to provide legitimacy to the direct takeover of the Alberta government by the most powerful energy monopolies merged with the banks, and the government's agenda of austerity and selling out the resources, which belong to First Nations, Albertans and Canadians.

Working people can say no to the anti-worker, anti-social, anti-immigrant agenda of the rich by going all-out to defeat the PC candidates while keeping Wildrose out! The by-elections are also an opportunity for the Workers' Opposition to put forward its own independent politics and to discuss a new human-centred direction for the economy. In this way, the working class plays its leading role in setting the agenda and providing a vision for a direction that favours its interests: nation-building not nation-wrecking, a path to progress for society and humanization of the social and natural environment.

The current direction of the economy includes monopoly right to rip and ship raw resources, a low wage agenda using local and international worker traffickers, and a royalty regime to pay the rich. This direction has led to insecurity, demands for austerity and a negation of the rights that people have by virtue of being human. A new direction for the economy is required, which includes upholding the rights of Albertans, First Nations and the working class. A new direction would stop paying the rich and increase investments in social programs. It would exercise public control over decisions concerning upgrading and refining.

Albertans and Canadians should not be held hostage to narrow private monopoly interests and unbridled greed. A new direction for the economy would include a Crown corporation to foster upgrading, refining and value-added petrochemical industries and/or that the oil monopolies be required to upgrade bitumen rather than rip and ship it down the pipeline.

Albertans share a broad agreement that the current royalty regime is not serving the public interest. The energy monopolies reap profits while Albertans are told they have to accept cuts to health care, education and other social services that are theirs by right. A new direction for the economy would require replacing the current royalty regime that favours monopoly interest with a direct public claim on the value resource workers produce to serve the public interest and good.

The Prentice government openly states that its main mission is to transport oil to markets and make sure that the energy and other monopolies can enrich themselves. Meanwhile the government announces schools will no longer even have playgrounds and new communities promised schools will receive trailers instead. The government acts as though hospitals and other health care necessities for Alberta's fast growing population are extremist demands of those who refuse to accept austerity.

Workers through their hard work, skills and knowledge create the wealth that the owners of capital seize. Oil and gas and construction workers have the right to safe workplaces, wages, benefits and working conditions commensurate with the work they perform. They have a right to modern, cultured living conditions. They have a right to demand that at the very least when our resources are exploited, projects should be planned so that workers have secure livelihoods, local stable economies fueled with value from the resource industry, and communities in which to live and raise families where workers do not suffer through booms and bust.

An aspect of this planning must be to deal consciously with the price of oil. A solution to wild swings in the price of oil, which provoke a boom-and-bust cycle bringing instability and hardship, would be public control of the wholesale energy sector. In this arrangement, the government would pay the monopolies a contracted price for the oil based on an average rate of profit, and market the oil at a price that serves the public interest.

The rich are blocking all-sided and socially responsible development of our resources. They have taken direct control of the state to push their reckless expansion and pursuit of a fast buck and big score. An urgent need exists for public control over the exploitation of oil and gas and other natural resources. Public control is required to sustain and increase investments in social programs, respect the rights of First Nations, provide modern and humane living and working conditions for oil workers and their families including stable communities with a robust manufacturing sector, and enable a big effort to reverse environmental degradation.

In summary: the oil and gas cartels are making obscene profits, robbing the public treasury and benefiting from a multitude of pay-the-rich schemes, while the people are told they face no alternative to austerity. A Crown corporation established to upgrade bitumen, refine the synthetic oil and develop a vibrant petrochemical sector as the basis for manufacturing is an alternative to paying the rich and shipping raw resources. Establishing public control of wholesale trade over energy resources would ensure the viability of the industry and conscious public input on prices. Replacing the toothless royalty regime with a direct public claim on energy value would allow tremendous value to be channeled into local manufacturing, and increased investments in social programs and public services.

There is an alternative! Workers can do their own thinking based on what is in their interest. We should reject with contempt the cries of the rich and their PC and Wildrose representatives.

Let us bring forth our own independent working class nation-building project, economic direction, solutions and representatives. It can be done!

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Stop Paying the Rich!
Increase Funding for Social Programs!

How should the working people respond to the refusal of the energy monopolies to act in the public interest and the general interests of society? A study recently released by the Alberta Federation of Labour (AFL) notes that the Alberta and federal governments have paid both the energy and construction monopolies in numerous ways to increase private profit from the oil sands. The trend has been for increased subsidies and handouts to the rich. This includes direct subsidies and investment, research and development, tax incentives, royalty reductions, and handouts in the name of greenhouse gas and pollution reduction.

To this list can be added the public education of the workers they employ, including the skilled trades, technicians, engineers and others who produce the value arising from the people's energy resources, which along with health care and other social programs comprise human social transferred-value. Also important is the public material infrastructure of roads, bridges etc., the material social transferred-value, supplied with huge investments from public revenue or debt. The energy monopolies could not operate a single day without publicly supplied human and material social transferred-value for which they do not pay.

The AFL study provides examples of numerous pay-the-rich schemes or "incentives," which have handed tens of billions to the oil monopolies alone. These include the pioneering of in-situ extraction technologies by the Crown corporation Alberta Oil Sands Technology and Research Authority and other publicly-funded research and development entities.[1] Incentives, including the capital cost allowance tax incentive are estimated to deduct $2 billion a year in renounced royalties.

The one per cent generic royalty regime introduced in 1997 reduced royalty payments a further 20 to 30 per cent from the previous royalty regime. As a result, although oil sands production increased 133 per cent from 1995 to 2004, government royalties decreased by 30 per cent.

If the value generated from the transformation of the people's resources into useable products were under the control of a public authority, this value could be poured back into the responsible development of the people's resources and local economy without the necessity of private capital. The value under the people's control would also be used to exchange and properly realize the enormous human and material social transferred-value presently provided to the private energy sector free by the state. Also, added-value from energy production would be available for increased investments in social programs. The truth found in modern industrial production is that the working class does not need the monopolies to provide capital for economic and social development.

Not only do the monopolies presently seize the value created by the hard work of oil and construction workers transforming the bounty of Mother Earth, they rob the public treasury and have the state provide them needed infrastructure, educated workers and much more.

A pro-social program to Stop Paying the Rich and Increase Funding for Social Programs would divert funding into public enterprise and break the stranglehold of the oil cartels with their incessant demands for more at the expense of the well-being of the working class, people and environment. An alternative to providing more subsidies for the rich is to establish Crown corporations to extract, upgrade and refine bitumen and develop a petrochemical industry. The state could extend public control and ownership over the people's natural resources and their development and establish a public authority to control the wholesale market of energy commodities including prices.

By taking a stand that the economy must be organized to meet the people's needs and opposing the misconception that an economy that enshrines monopoly right will trickle down benefits, the working people and their organizations can put themselves in a position which brings into being new arrangements which open society's path to progress.

Note

1. Surface mining is only feasible for the shallow oil sands deposits found north of Fort McMurray. More than 80 per cent of Alberta's oil sands are too deep for mining and require "in-situ" (Latin for "in place") extraction techniques.

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Federation of Labour Releases Study on Upgrading
and Refining Bitumen in Alberta

The Alberta Federation of Labour (AFL) has released a report titled In-Province Upgrading Economics of a Greenfield Oil Sands Refinery, which provides important information to support the upgrading and refining of bitumen in Alberta.

Until recently, major surface mining projects included upgraders to upgrade bitumen to synthetic crude oil. Imperial Oil's Kearl Lake project was the first major oil sands mining operation to be built with no upgrading capacity. All indications are that no upgrading is now the preferred option for the monopolies in control of oil sands production.

In-situ extraction now comprises almost half of all oil sands production and these in-situ operations do not presently include upgraders. The Alberta government forecasts indicate that with the current direction the percentage of bitumen upgraded in Canada will drop from the current 55 per cent to just 26 per cent by 2025. It has been more than 50 years since a new oil refinery was constructed in Alberta, the study points out.

The report says the Alberta government commissioned the "Alberta Bitumen Processing Integration Study" in 2006 to develop a conceptual design for an integrated bitumen upgrading, refining and petrochemical complex in Alberta. The government has taken no action on this study and instead both the Harper and successive Alberta PC governments have declared that pipelines to export dilbit (bitumen diluted with condensate to make it flow) to the U.S. Gulf Coast and Asia are a "national imperative." This led the AFL to commission a new study with the objective of examining the economics of in-province upgrading of oil sands products and an associated petrochemical industry.

The study points out, "At present, Alberta's economy is highly dependent on mineral resource production and export, such as oil sands. The level of value-added processing is limited compared with other developed countries. Therefore the impact of the recent financial crisis on the province was much more pronounced than the rest of Canada." It argues that Canada needs to find ways to ensure that the benefits of Alberta's oil reserves are captured and not simply exported.

Don't Ship Raw Resources and Jobs Down the Pipeline!

The study commissioned by the AFL confirms the stand of Alberta workers that upgrading and refining in Alberta is in the interest of the workers and society. It is a significant creator of permanent jobs directly, as well as opening the potential for a petrochemical industry and related manufacturing in Canada.

The study states, "The added benefits of job creation, energy security and contributions to expanding other parts of the provincial economy would be significant as well, thus enhancing the potential benefits of appropriate public participation in upgrading/refining in Alberta." Upgrading and refining in Alberta also have the potential for government to claim more added-value to be used for much needed increased investments in social programs including health care and education.

The Clash of Interests Between the Working People and Owners of Capital

The authors of the study also confirm that upgrading and refining in Alberta is profitable for the energy monopolies. However, the energy monopolies go after the big score and try to seize the most added-value in the shortest possible time. In the conditions that prevailed following the 2008 financial crisis, six upgrader projects in Alberta were cancelled in favour of shipping bitumen to be upgraded and refined in the U.S. or Asia.

Narrow private interests are clashing with what favours the working people and the general interests of society. The fact that the interests of the monopolies have been taken up with such zeal and fervour by the Harper and Alberta PC governments shows the extent to which private interests have been politicized and public interests depoliticized.

Why did the monopolies make the decision to cancel six upgrader projects in Alberta? The study states, "Until recently, refining margins in North America were quite low. The international integrated companies have been scaling back downstream operations and focusing on the upstream sector. [Giving rise to the monopoly mania to build more pipelines for bitumen and rip and ship -- TML Ed. Note.] Similarly smaller mid-size companies have been focusing on consolidating existing assets through acquisitions and restructuring."

However, this may now be changing. The study argues, "The emergence of shale oil production in the U.S., beginning in 2012, created a steadily rising surplus of crude oil that under current law cannot be exported. This has caused crude prices in the U.S. to drop sharply, so much so that they are disconnected from world oil markets. In turn, there has been a surge in refining profitability."

In other words, the people of Alberta are subjected to the narrow considerations of the owners of capital to make big scores. Wild swings in the price of oil are the norm in the capitalist economy. They reflect in part the damage to the socialized economy from speculators not directly engaged in production who move capital around the globe. They buy and sell this fictitious capital that is once, twice or more removed from workers and capital involved in production and distribution. Their capital is mainly involved in derivatives (derives from something else), a fancy word for fictitious capital that speculates on the prices of almost all commodities including oil. They have the power and means to manipulate prices up or down in a manner that suits their narrow private interests but which damages the socialized economy becoming a factor for both local and international economic crises.

A new direction for the economy is needed where decision-making and control are public, not private and where the aim is the responsible development of the socialized economy, protection of Mother Earth, the well-being of the workers who produce the wealth, and to serve the general interests of society.

Note

The study reports that in 2012, there were 22,300 direct extraction jobs in Alberta's oil sands. Eighty per cent of the jobs were in mining and in-situ operations at 40 per cent each, and 20 per cent were in upgrading. If all the bitumen currently extracted were upgraded in Alberta, this would create an additional 4,600 permanent direct upgrading jobs.

In addition, the regular maintenance shutdowns and less frequent major maintenance turnarounds involve thousands of skilled workers. For example, the Shell Scotford upgrader turnaround involved 2,500 skilled tradespeople working 1.5 million hours over two months. This adds thousands more direct jobs.

The study did not investigate indirect jobs or the potential to develop Canada's manufacturing sector including the use of Canadian steel, pipe, components and equipment.

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Mount Royal University Students Oppose Tuition Fee Increases

Education Is a Right -- Another Election Issue!


Mount Royal Students rally October 9, 2014, against proposed tuition fee increases.

About 150 Mount Royal University (MRU) students in Calgary rallied at noon hour on October 9, against proposed tuition fee increases. The students converged in front of MRU's East Gate and marched around and through the campus, carrying signs and shouting slogans. Petitions were circulated and a table was set up to facilitate a mass letter writing campaign to the provincial government. The student Facebook page for the rally states: "Take a stand and show your stance on tuition increases by collectively joining your student body in a student-led protest."

Alberta post-secondary educational institutions (PSEs) are currently under a government-imposed restriction that tuition fees can only be raised to meet the cost of living increase. This was installed to force the PSEs to make internal cuts after the government's savage slashing of $147 million to the PSE operating budgets in March 2013. The fee increases proposed by MRU, and by the University of Alberta (U of A) and other PSEs, aim at making an end run around the tuition freeze by basing the increases on so-called market modifiers. The legislation allows PSEs to apply to the government for market modifiers as a one-off increase to bring tuition fees in line with other comparable institutions who charge higher fees.


October 9, 2014 rally at Mount Royal.

The MRU student Facebook page provides students with useful information, "[At MRU] programs such as business, nursing and science(s) could be subjected to an increase of $50-$400 per class. That could be up to an 80 per cent increase in your class costs per semester; these increases could be implemented as early as next semester. In case you are unaware of how expensive that is, it's almost the equivalent to how much a master's student pays per course at the University of Calgary, or possibly over $900 per course. This affects everyone, not just students in business, nursing or science. Why are students bearing the burden of under-funding?"

The proposed fee increases at University of Alberta would be even greater in dollar amounts. For example, if accepted by the government, U of A's Faculty of Law would use market modifiers to raise annual tuition to $15,995 from the current $10,121, an increase of 58 per cent. A U of A student union spokesperson points out: "These modifiers are essentially differential tuition increases. They effectively go around the regulations set in place to cap tuition. Similarly, loopholes exist in the Post Secondary Learning Act Tuition & Fees Regulation, which allow for additional fees, known as mandatory non-instructional fees, to be put in place. Combining the cost of fees and tuition, Alberta has some of the highest costs of education in the country."

Students across Canada are fighting for the reduction and eventual elimination of tuition and ancillary fees at post-secondary institutions, the elimination of differential fees, and increased funding from provincial and federal governments. Over the last 20 years, the portion of PSE operating budgets funded by the public has decreased from 81 per cent to an average of 57 per cent, while tuition fees have increased from 14 per cent of operating funding to over 35 per cent. Accounting for much of the remainder are steadily increasing research grants from private corporations, which can then dictate what research can be carried out and what personnel they require to be educated or trained.

Rising tuition and ancillary fees give rise to massive levels of student indebtedness. Students in Canada owe more than $14 billion in Canada Student Loans alone, with provincial student loans and private bank loans and credit card debt making the real figure much higher. Twelve per cent of students have loans from commercial lenders; the median amount borrowed is $6,000 per year. While universities claim that they have no alternative but to increase tuition fees, this does not solve the problem and only perpetuates an unsustainable situation. As the Canadian Federation of Students points out, "Rising tuition fees are symptomatic of government underfunding, not a cure to solve the problem. Wherever tuition fees are allowed to increase, governments simply withdraw an equal portion of public funding."

The post-secondary education system in a modern society like Canada requires that it be properly funded by governments. The fact that this basic requirement is not met creates instability for the students, teaching staff, and researchers and is detrimental to the quality of education provided and the economy. Canadians stand with students in demanding that the right to education be provided with a guarantee. Education is one of the claims people have on society by virtue of being human. The role of education is not just to provide a work force equipped with the skills required by the monopolies to attain maximum profits. It must concern itself with the level of culture and educational attainment of the society, which faces increasing complexities on both the technological and social front.

Public education must be constantly expanded and developed to fulfil its role in developing all that which makes us human. For the youth of Canada who are striving to have a bright future in which they can flourish and make their contribution to society, the right to education is indispensable. Governments must increase funding for post-secondary education so that the high level of education required by the youth and the society is not left to chance or the financial wherewithal of the individual.

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