Alberta Premier's Latest Economic Plan

Massive Transfer of Public Funds to the Wealthiest Investors

Demonstration outside the UCP policy convention, Calgary, November 30, 2019, opposed
Kenny government's neo-liberal cuts to social programs.

On June 29, Alberta Premier Jason Kenney announced the components of his latest "economic recovery plan." This was supposedly based on the findings of the premier's Economic Recovery Council, composed of various corporate hacks, including former Prime Minister Stephen Harper. There is nothing new in the plan; it is the same old neo-liberal nonsense that the United Conservative Party and similar governments all over the world have peddled for decades. In essence, it is "trickle down" economics, the idea that increasing the profits of the corporations will somehow result in more wealth making its way down to ordinary working people. This has long been exposed as a complete lie, yet the Kenneys of this world continue to promote it as the solution to our economic ills.

Certainly, there is a need for a comprehensive economic plan in Alberta but this latest mish-mash proposed by Kenney just will not do. It is just one more pay-the-rich scheme which will further damage the economy rather than start to rebuild it. It has nothing to do with consulting the people of Alberta or involving them in important decision-making and everything to do with adding to the profits of the private foreign corporations that control Alberta's economy and Kenney's government. The fact that the plan is the same old, same old is indicated by its two main and tired components, corporate tax cuts and infrastructure spending.

The corporate tax cuts component of Kenney's recovery plan is a further cut from 10 per cent to 8 per cent. This follows Kenney's initial cut from 12 per cent to 10 per cent. Note that under Conservative Ralph Klein the rate was 15.5 per cent or almost twice what Kenney has now set it at! Further, Kenney seems to be the only person left in the world still peddling the myth that corporate tax cuts attract investment and create jobs. In contrast, the general consensus among financial experts is that corporate tax cuts make corporations richer by increasing the huge amount of cash they sit on. Also, make no mistake, the energy corporations still have plenty of cash. For example, Imperial Oil reports it had a cash balance of $1.4 billion at the end of the first quarter of 2020 and, in its own words, "strong liquidity."

Experience shows that corporations will use the money they save by the tax cut, not to create jobs, but mainly to buy back their own stock, greatly enriching the shareholders, including upper management who often have large holdings. For example, in January 2019, Murray Edwards, CEO and founder of oilsands giant CNRL, held almost 22 million shares of the company, currently worth about half-a-billion dollars. Shareholder enrichment is what occurred in the U.S. after Trump's 2017 tax cut. CNN reported on August 22, 2019: "The 2017 corporate tax cut left U.S. businesses flush with cash. S&P 500 companies responded by rewarding shareholders with record amounts of buybacks in 2018, with each quarter setting an all-time high." Instead of enriching workers corporate tax cuts will only further enrich the owners of capital.

It is also well-known that many corporations already pay little or no tax anyway through such tax-dodging strategies as shifting profits to foreign subsidiaries, accelerating depreciation, and giving stock options to employees. As well, the corporations take advantage of every "legal" loophole in the tax laws to use strategies such as sheltering their money in offshore accounts, as revealed by the "Panama Papers" in 2016. According to Revenue Canada, in 2014 (latest available figures), Canadian companies managed to avoid paying up to $11.4 billion worth of taxes they should have paid in that single tax year. And when all else fails, a corporation can simply declare bankruptcy and walk away from all its financial responsibilities, for example, stiffing landowners and leaving orphan wells in a mess.

As for the infrastructure component of Kenney's latest scheme, he boasts that this year Alberta will spend $10 billion on such projects, supposedly creating 32,000 to 50,000 jobs. No evidence is given for this jobs claim and no mention is made of the thousands of jobs the Kenney government has already destroyed, nor of the fact that jobs constructing infrastructure are temporary. There is also no mention of the fact that what infrastructure spending really entails is the financial oligarchy lending money to governments and then profiting from the government projects and payouts many times over. Much of the economic activity is arranged through government contracts to global cartels, often in the form of public-private partnership (P3) agreements where public governments take the risk and private foreign corporations reap the profits.

Edmonton's $1.8 billion Light Rapid Transit Valley Line SE is a prime example of such a P3. In 2016, TransEd Partners was selected to design, build and operate the Valley Line SE. The private partners in TransEd are Bechtel (U.S.), EllisDon (Ontario), Bombardier (Quebec), Fengate Capital Management (Ontario), Arup Canada (London, England) and IBI Group (Ontario). Bechtel, the lead contractor, is a huge enterprise, notorious for its close involvement with the U.S. government, particularly the Department of Defense and the CIA. Its executives Casper Weinberger and George Schultz served as Secretary of Defense and Secretary of State respectively under former President Ronald Reagan. Bechtel co-founder John McCone headed the CIA from 1961-65 at the height of the Cold War.

Nowhere, however, does Kenney explain where that $10 billion for the infrastructure projects will come from, certainly not out of his back pocket. As has been previously pointed out, it is borrowed from the financial oligarchy and then a portion is put toward financing infrastructure projects. This becomes the seed money to begin construction. Private construction cartels are financed by the money the government borrows, which includes allowance for a healthy profit. Everything is guaranteed by the government including the exorbitant prices the private construction cartels charge to complete the projects. Once built, the big private enterprises are the main users of the infrastructure, e.g., roads, bridges, electricity, for which they are charged lower concocted "industrial rates."

Albertans are "directed and browbeaten not to object to this direction for the economy, as it 'provides jobs and the infrastructure.' ... But a new direction is exactly what is needed to bring the economy under the control of the people who do the work and prevent recurring crises and solve other social and natural problems. A new direction for the economy would prohibit government borrowing from private institutions. A new direction would construct, maintain and manage public infrastructure using permanent public construction enterprises. It would ensure that the value from the infrastructure is fully realized by the public and private enterprises that use and consume the value and that this value would be poured back into the economy and not be taken out by the rich to some tax haven or other faraway place."[1] 


1. See "Public Infrastructure Spending Programs to Pay the Rich and Sustain Class Privilege and Control," by K.C. Adams, TML Weekly, June 27, 2020.

This article was published in

Volume 50 Number 27 - July 25, 2020

Article Link:
Alberta Premier's Latest Economic Plan: Massive Transfer of Public Funds to the Wealthiest Investors - Dougal MacDonald


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