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November 7, 2014 - No. 92


The Incoherence of an Economy
Based on a Single Raw Resource

The Incoherence of an Economy Based on a Single Raw Resource
- Dougal MacDonald

The Boom, Gloom and Doom of a Single Resource Economy
Premier and Appointed Ministers Win Seats in By-Elections

British Columbia
Controversy Grows in Cariboo-Prince George Federal By-Election Nominations
- Peter Ewart
Provincial Government Continues Cuts to Public Education - Charles Boylan
Interview with Post-Secondary Teachers' Union President


The Incoherence of an Economy Based on a
Single Raw Resource

Premier Jim Prentice's provincial government is again ramping up the "fiscal austerity" spin. Recent declarations claim that the fate of Albertans is determined by a single and supposedly uncontrollable factor, the selling price of a barrel of oil. At present, the global oil price is about $83 a barrel, down approximately 30 per cent from a relatively stable price of $110 a barrel for the last four years.

Capital-centred analysts state that the low world price is due to "weaker demand coupled with surging U.S. production." U.S. oil production levels are at their highest in almost 30 years. Currently, U.S. production is about 8.8 million barrels a day, about a million barrels higher than this time last year, according to the latest government data. The U.S. surge is mainly due to increased extraction of oil and gas from shale formations using controversial hydraulic fracturing (fracking) methods.

Alberta's oil price predicament is said to reflect the mysterious workings of the "free market," which magically sets the price of oil beyond the power of anyone's influence. In fact, the world price of oil is set in part by three mercantile exchanges: the New York Mercantile Exchange, the International Petroleum Exchange in London, and the Singapore International Monetary Exchange. These exchanges are central financial institutions where the rich trade "futures contracts," i.e., contracts to buy specific quantities of a commodity in the future, such as oil, at a specified price with delivery set at a specific time.

The prices quoted for transactions on these three exchanges are the basis for the price paid for various commodities like oil throughout the world. The speculators involved in these exchanges produce nothing of value but try to get rich by accurately forecasting the rise and fall of prices, which their own speculations influence. Most of the financial institutions and wealthy individuals trading on futures exchanges do not intend to actually take delivery of the commodities they are trading.

In a broad way, the members of the Organization of the Petroleum Exporting Countries (OPEC) have been able to influence prices by controlling the amount of oil on the market. However, OPEC has been under attack since its inception by the aggressive U.S. imperialist politics to defend and expand its empire through military, economic and other means. The U.S.-led wars against Iraq -- first to recapture Kuwait for the U.S. and then to destroy the Saddam Hussein regime, the U.S.-led war to overthrow the regime in Libya, the U.S.-led economic blockade of Iran and its constant drone bombing of Yemen, Pakistan and other countries in West Asia have severely weakened OPEC and its capacity to control the marketing of oil.

Venezuelan President Nicolás Maduro directly accused the U.S. of creating the recent slump in global oil prices. President Maduro said the U.S. is flooding the global market with cheaper shale oil to bring down prices and ultimately impact Russia and other oil-producing nations. "The U.S. and its allies [the Gulf States, especially Saudi Arabia and Kuwait] want to affect oil prices to harm Russia, which produces around 10 million barrels per day, and that is the vital income of their economy," said President Maduro.

Irrational Dependence on a Single Resource

Building an entire economy and fashioning a government budget based on the monopoly-controlled fluctuating price of a single non-renewable resource is irrational, yet this has been the case in Alberta for decades. The Conservative governments that have ruled Alberta since 1972 have paid lip service to "economic diversification" but little has been done on that front except the attempt to so-called diversify by building pipelines to ship more raw oil to more customers, mainly in Asia.

The main reason for the continued dependence on the single resource is that the real rulers of Alberta are the energy monopolies, both foreign-owned and home-grown. The Prentice government is their champion and will do everything possible to ensure that no matter what the price of oil may be; above all else, the energy monopolies will be paid. Meanwhile, funding for social programs and workers' wages, benefits, and pensions will be slashed to pass the burden of the crisis of "low oil prices" onto the working people.

One thing is certain in all this. The incoherence of basing the entire provincial economy on a single raw resource and planning provincial budgets based on oil prices set by monopoly-controlled foreign exchanges and U.S. imperialism signals the urgent necessity for a new direction for Alberta's economy.

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The Boom, Gloom and Doom of a
Single Resource Economy

The Alberta Conservative spin doctors' dire warnings of gloom and doom began in September 2013, when the price of Alberta crude was low compared to world crude, the so-called "bitumen bubble." Former Alberta Finance Minister Doug Horner stated in his party's first quarter fiscal update on September 1, 2013, "Unless commodity prices [Alberta crude oil prices] improve, it could mean a provincial deficit of $2.3-$3 billion."

This was all smoke and mirrors because the financial pages revealed that oil monopolies with downstream refining operations were actually making big profits from the low price of Alberta crude by feeding it to their refineries, then selling the refined oil at the high world crude price.

Premier Jim Prentice took up a refrain similar to Horner's about the current world price of oil in an October 13 interview with the Globe and Mail: "Prices that are at current levels have significant implications for our province ... This means it's a time for caution and prudence in terms of public expenditures ... We have to be careful laying on costs, including regulatory costs, on our industry because we need to remain competitive."

Prentice makes it clear that the upshot of lower oil prices will be decreased investments in social programs, demands for concessions from workers, and more handouts to the already heavily-subsidized private petroleum monopolies that he champions.

As is well known, the Alberta economy for decades has been based on the petroleum industry and is structured so that the energy monopolies can make big scores through government-subsidized extraction and shipping of raw petroleum resources, mainly from the oil sands but also through conventional drilling. In the breakdown of budget revenues provided by the provincial government, the largest single source had long been "non-renewable resource revenue" or royalties mainly from oil. This changed in the March 2013 budget when personal taxes exceeded royalties. The amount of revenue from the oil monopolies in 2013 was about $4 billion dollars less than the amount taken in 2012 due to manipulation of the fraudulent "bitumen bubble." It then increased in the March 2014 budget a mere six per cent from the 2013 amount, remaining well below the 2012 level.

Exposing its real aims, the provincial government and the energy monopolies it represents are now spreading the idea that oil revenues are too volatile to be a source of funding for social programs at all. The province must look elsewhere for such funding, i.e., in the pockets of the working people who produce all the value in the economy through their work.

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Premier and Appointed Ministers Win Seats
in By-Elections

By-elections took place in Alberta on October 27 to win seats in the Legislature for Premier Jim Prentice, Minister of Health Stephen Mandel and Minister of Education Gordon Dirks as well as fill a seat vacated by MLA Len Webber who resigned one day after he was nominated as the federal Conservative candidate for Calgary Confederation. The PCs won all four ridings -- Calgary Foothills, Edmonton-Whitemud, Calgary-Elbow and Calgary-West, respectively. Voter turnout was: Calgary Foothills -- 36.17 per cent; Edmonton-Whitemud -- 39.57 per cent, Calgary-Elbow -- 37.09 per cent; and Calgary-West -- 35.67 per cent. The PCs hold 61 of 87 seats, Wildrose has 17 seats, the Liberals have five seats and the New Democrats have four seats. Votes received by all the candidates are posted on the Elections Alberta website.

On the surface it looks like a sweep since the PCs managed to come out on top in all four ridings. But a closer look shows that despite the fact that these ridings were Tory strongholds, the PCs lost ground in a big way.

In the 2012 provincial elections, the PCs received more than 50 per cent of the vote in 17 of the 58 seats they won. Three of the four ridings in contention in the by-elections, Edmonton-Whitemud, Calgary Elbow and Calgary Foothills, were amongst those where more than 50 per cent of votes cast went to the PCs in 2012. In the fourth riding, Calgary-West, the PC candidate received 49.9 per cent of the vote in 2012.

Edmonton Whitemud was the safest Tory riding in the province in 2012, with 60.7 per cent of all votes cast going to the Tories. This was reduced in the October 27 by-election to 42 per cent, a drop of 18.7 per cent. Calgary Elbow had the second highest number of votes for the Tories in 2012, with 58 per cent of all votes cast. This dropped to 33 per cent in the by-election, a 25 per cent decline.

Another significant development is that Wildrose failed to win the second place it held in both ridings in the 2012 elections. In the Edmonton-Whitemud by-election, both the NDP and Liberal candidates were health care professionals who spoke out forcefully against privatization and wrecking of the public health system. The NDP came in second, displacing Wildrose, and the Liberals third, with Wildrose relegated to fourth place. In Calgary Elbow, the Alberta Party came second, displacing Wildrose. This demolishes the fiction that the only way to block Wildrose is to vote Tory, and the only way to defeat the Tories is to vote Wildrose.

The PCs had a narrow win of only 300 votes in Calgary West, with the Wildrose coming second. The Tories' percentage of votes cast dropped from 49.4 per cent to 44 per cent. Only in Calgary-Foothills, where Premier Jim Prentice was the candidate did the Tory vote increase, going up to 58 per cent from 53.7 per cent in 2012.

The PC vote, excluding Prentice's riding, dropped from 56 per cent to 39 per cent when the votes cast are added together across the three ridings. With Prentice's riding included, there is still a 12 per cent drop in the Tory vote. This can hardly be called a great victory and sweep for the Tories, and certainly not a mandate for austerity.

The aim of the ruling circles in speaking about the election results is to promote passivity on the basis that the Tory stranglehold cannot be broken and the working people should just accept it, rather than go all out to achieve the results which favour them. The PCs had massive resources at their disposal as the representatives of the banks, energy monopolies and other global corporate giants. They had the monopoly media which too kept "good news" from the Prentice government coming day after day. But even so, they lost ground.

The Prentice government has no mandate for its neo-liberal austerity agenda, about which it refuses to speak openly. But Prentice will now aggressively take up his mission to eliminate resistance to his nation-wrecking agenda and annexation of Alberta and Canada into the United States of North American Monopolies.

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British Columbia

Controversy Grows in Cariboo-Prince George
Federal By-Election Nominations

The nomination process for the Conservative Party of Canada candidacy in Cariboo-Prince George is caught up in a controversy that grows day by day. The MP for the riding, Dick Harris, has held the seat for more than 20 years and it is considered to be one of the safest Conservative seats in British Columbia. As many have expected, Dick Harris is retiring and will not run in the federal election next year. And thus the drama has unfolded -- just who in the party will replace him?

Last year, supporters of Prince George Mayor Shari Green took over the local riding association in a way that alarmed a number of longstanding members. Green, who is just finishing her term as mayor, is deeply unpopular with many in the city as a result of her policies as mayor. She is also not popular with many local Conservative Party voters.

Nonetheless, she and her supporters now control key positions in the riding association, and on November 5, Green publicly announced her intention to run for the Conservative Party nomination in Cariboo-Prince George.

Since Green and her supporters took control of the riding association, some interesting things have happened. One of the candidates planning to run for the nomination, Todd Doherty, suddenly departed from his fundraising position at the upcoming Canada Winter Games in Prince George, despite achieving almost 100 per cent of the Games' fundraising goal. The City of Prince George is a major partner and host city for the Winter Games.

In addition, the riding association has called a snap nomination meeting scheduled for December 15. This will essentially take another candidate, T.J. Grewal, out of the race because his renewed membership was one week short of the qualification time requirements.

All of these incidents bring into glaring light the fly in the ointment of the party-dominated nomination process for the federal Parliament. Because this is considered to be a "safe" Conservative Party seat, the eventual MP for the riding may well be decided, not by the 75,000 eligible voters in the riding, but by a few hundred party members. As T.J. Grewal has candidly admitted to the PG Citizen, "Nomination is the election."

Even worse, it could be argued that a handful of the directors of the riding association, through control of the nomination date, party lists, and the approval of memberships, will be the ones ultimately deciding who gets the nomination and, as a result, the "safe" seat in Parliament. Is it any wonder that an ugly atmosphere is developing?

In any case, 75,000 voters get left out in the cold. And this is not a problem confined to Conservative Party of Canada nominations. It also applies, in one degree or another, to other federal parties such as the NDP and Liberals. Whatever the particular rules these parties have, the problem remains -- the party controls the nomination process.

The result is that more and more people in Canada are feeling disempowered these days, and -- along with the virtual dictatorial powers that the Prime Minister's Office has taken on, the sidelining of Parliament, the erosion of civil liberties, the muzzling of scientists, and so on -- a crisis in our democracy is brewing, not just at the local level, but also at the national level.

Opposition political parties, and even some Conservatives, are calling for electoral reform of one kind or another, and have their own preferred options. But the issue is not the parties' "preferred options," but rather those of the Canadian people.

Canada has an extreme party system which is getting worse every year. Indeed, we need a reform and renewal of our democracy that starts with the Canadian people and not the demands of or control by the political parties.

There are other options to consider, including taking the selection of candidates out of the hands of the political parties and putting it into the hands of the electorate. Why couldn't a non-partisan process be put in place whereby all the voters in a riding, no matter which party they support, come together to nominate four or five candidates? The eventual winner, of course, would then have first allegiance to the electorate of the riding, not a particular political party.

And other models exist. Indeed, British Columbia had a non-party election system up until the early 1900s, and there are other electoral models in Canada (e.g., Nunavut), the U.S. and elsewhere in the world.

The point is that we, the people of Canada, need to discuss democratic renewal, and we need a non-partisan process to do so. Otherwise, we are doomed to be subject to a tainted, essentially anti-democratic, electoral system, and endless controversies and fights like the one currently unfolding in the riding of Cariboo-Prince George.

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Provincial Government Continues Cuts
to Public Education

Since last summer, the Vancouver Community College (VCC) Faculty Association and the students at VCC have been campaigning to force the BC Liberal government to continue financing an important English training program at the college. The government plans to axe the program on December 17.

Over several decades, each academic year has seen some 5,700 new Canadians, many recent immigrants and others already citizens, receive English upgrading at VCC by some 150 top-level ESL teachers. The government's move to cut the funding will leave no place for the students to go for English training, and will result in the layoff of 150 excellent teaching professionals.

In defence of the program, the teachers and students argue that the Canadian government insists on high educational qualifications for new immigrants. Yet when they land, they are very frequently barred from practicing their professions such as engineering and medicine. English language deficiency is often cited as the main reason. Thus, it is common for an engineer from China, for example, to be doing janitorial work at minimum wages or a doctor from Iran to be driving a taxicab. Canadians generally consider English language upgrading an essential public service to allow new immigrants to reach their full potential for themselves, the economy and society.

The provincial cuts to be effected in mid-December will reduce the number of students in the VCC program from 5,700 to between three and four hundred. A number of national minority communities are outraged at the proposed cut to this essential service. Representatives of the Chinese, Iranian, Spanish and Vietnamese communities have taken a strong stand at various public demonstrations and meetings called to defend the ESL program.

Karen Shortt, VCC Faculty Association President, announced at a rally on September 24, that the Education Council of VCC had voted overwhelmingly to call on the VCC Board of Governors to take a strong stand in defence of the program and communicate its position to the provincial government. The Board meets on November 4, which allows it time to stand together with the faculty and students to demand the government reverse its cuts to the program planned for December 17.

In an interview with DISCUSSION on Vancouver Co-Op Radio, Karen Shortt said, "We're trying to make our voice heard as loud as possible with the government. We have an ESL Matters campaign found at www.eslmatters.ca. We hold rallies (and) ask our students to go out and talk to other people. We're doing everything we can to get the message out. I'm afraid that after December 17, if this is not stopped, it's going to be very difficult to get 40 to 50 years worth of expertise back together again."

Shortt said the wrecking of this program would be a very serious loss of something that has benefited thousands of students over many decades. If the government provided a "short term funding solution to keep us at the table and to keep these programs running into March," she said, it would provide possibilities to work out a long-term solution.

Shortt emphasized that despite Premier Clark's rhetoric about "jobs, jobs, jobs," her neo-liberal agenda of cutting government funding for public education, in particular for this very specific language training program, will actually deter thousands of new Canadian professionals and workers from acquiring the language skills necessary for crucial jobs that need to be filled.

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Interview with Post-Secondary Teachers'
Union President

Today, about 10,000 teachers in BC's post-secondary institutions are unionized into 19 faculty associations comprising the Federation of Post-Secondary Educators (FPSE). FPSE President, Cindy Oliver, told Co-Op Radio in an October 15 interview, "Our biggest challenge right now is government funding because the current government has continued to severely underfund our system over the past 12 years. Projections over the budgeting for the next two years [means] there are going to be even more cuts."

Throughout her interview, she emphasized that post-secondary education in BC is under attack by the BC Liberal government. Its neo-liberal assault is multi-sided and detrimental to many strata and regions throughout the province.

According to a government website, approximately 444,000 students are enrolled in at least one course in BC's 25 public post-secondary institutions. They take classes at some 130 campuses, satellite or learning centres in the province. The government states that since the Liberals seized power in 2001, more than 32,000 student seats and seven new public university campuses have been added and 2,500 new graduate spaces have been funded in the past five years. It says the number of doctors and nurses graduating in BC has doubled in 13 years, the indigenous student population has risen by 18 per cent from 2007/8 to 2010/11, and 33,000 apprentices are enrolled in the trades training program. What the government does not mention is that the population in BC has grown during the same period from 3,908,000 in 2001 to 4,610,000.

The government's website also does not reflect the increasing enrolment of foreign students in public post-secondary institutions, another aspect of privatization. A survey conducted in March 2006, showed 28,100 foreign students enrolled in BC public post-secondary institutions paying a total of $252,820,000 in tuition fees. That number today has sharply increased, limiting further the number of seats available for students living in BC.

The past 13 years have seen the rapid growth of private for-profit post-secondary education companies. Today, 320 privately-owned and operated training facilities in BC register 50,000 students. Many students are forced to enrol in these much more expensive private programs because of the shortage of seats in the public system.

Cindy Oliver pointed out that the government funding per student has fallen by 20 per cent, and that the smaller rural colleges in BC in particular have suffered. "A good example," she said, "is up at Northwest Community College [Prince Rupert, Terrace and Smithers] where they had severe cutbacks two years ago. There was a lot of Aboriginal programming that was lost in that process, completely unfair to that community. Northwest Community College has approximately a 50 per cent First Nations' student base. Programming that was specific to their culture has not been offered again. We've seen that over and over again in rural areas; when you start depleting those kinds of resources in the interior, you're forcing young people to leave those communities to seek either educational or employment opportunities elsewhere. That depopulates those areas. We want a vibrant British Columbia where people live and work, making a good living, in all corners of the province."

Oliver also pointed to the example of Capilano University in North Vancouver. The Board of Governors arbitrarily cut a number of programs and courses in the arts. "Capilano has been known for its creative arts. The board decided that with the funding cuts from government, that they couldn't sustain some of that programming," she said. The faculty association together with students and community members actively opposed the cuts, which negatively impacted everyone, she added.

Asked about the effect of BC government underfunding on the students, Oliver emphasized that student debt is at an all-time high: "The average student with simply an undergraduate degree, i.e. four years, is in debt to the tune of $30,000." She said tuition fees have "skyrocketed" forcing students to work up to 20 hours a week to afford tuition and other school expenses.

Oliver said privatization of post-secondary education includes offloading the institutional operating costs from government budgets to tuition fees. "The government actually contributed 70 per cent of the operating grant to the institutions [in the past] and now it's down to 30 per cent. Students have to pay higher tuition, or their parents, or through loans. The government is taking less and less responsibility for our public institutions," she said.

The attack on post-secondary funding also affects the teaching staff. Oliver said an increasing number of teachers are reduced to casual work and part-time teaching positions. She described this "precarious employment" as a world-wide phenomenon, profiting corporations. The precarious employment and private profits from education go hand in hand with governments cutting funding for public education leading to a degradation of post-secondary education.

Oliver also criticized the Minister of Post-secondary Education, Amrik Virk for publicizing a "re-engineering" of post-secondary education. Virk announced this "re-engineering" without articulating any study of pedagogy, but simply as a slogan to reduce courses in the humanities, social sciences etc and advance the agenda of building pipelines and the export of natural resources.

She said, "We have the lowest corporate tax rate across this country. [The government] has taken $4 billion out of the treasury by giving tax breaks and credits to large corporations and banks, yet they are the beneficiaries of a post-secondary system that graduates high quality graduates. For them not to put anything back into the system is really quite shocking -- not only in the form of fair taxation throughout our province, but also in the form of training taxes."

President Oliver concluded by saying corporations that profit from the use of graduates should also be made to pay for them.

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