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
• Premier and Appointed Ministers Win Seats in
• 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
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.
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
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
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
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
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
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
more customers, mainly in Asia.
The main reason for the
continued dependence on the
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
One thing is certain in all this. The incoherence of
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.
The Boom, Gloom and Doom of a
Single Resource Economy
The Alberta Conservative
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
This was all smoke and mirrors because the financial
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
Premier Jim Prentice took up a refrain similar
to Horner's about the
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
of public expenditures ... We have to be careful laying on costs,
including regulatory costs, on our industry because we need to remain
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
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.
Premier and Appointed Ministers Win Seats
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
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
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.
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
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
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
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
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
Since Green and her
supporters took control of the
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
In addition, the riding association has called a snap
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
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
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
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
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
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
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
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
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
Provincial Government Continues Cuts
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.
Interview with Post-Secondary Teachers'
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
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
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
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
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
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
fair taxation throughout our province, but also in the form of training
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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