Jason Kenney’s budget proves right-wing austerity economics has nothing to offer
Jason Kenney and the UCP government’s claims about the state of Alberta’s finances are demonstrably false. While Kenney claims that public sector compensation in Alberta doesn’t track with the rest of the country, regional differences in wages, inflation and the cost of living easily debunk this claim. Alberta’s public sector workers make less than their private-sector counterparts, and they generally track with the Canadian average. Furthermore, Alberta’s financial situation is the most enviable in Canada, enjoying the lowest debt-to-GDP ratio in the country. While public revenues do need to be increased to make up for an over-reliance on non-renewable resource revenues, Alberta is not in a crisis.
More generally, the consequences of this austerity budget – cutting operational expenditures over four years, totalling a functional 20% cut when including population growth and inflation – risk actually causing a downturn in the economy, especially when the private sector is largely uninterested and unwilling to increase investment. The Alberta Federation of Labour has argued that these cuts will result in a 4.8% drop in GDP and the loss of just under 114,000 jobs. Jason Kenney claims that corporate tax cuts will “reignite the Alberta economy,” but Husky Energy, after enjoying a $233 million windfall from Kenney’s corporate tax reduction, proceeded to lay off hundreds in their Calgary offices.
Any policy that credibly sought economic growth would engage in large-scale public spending to build up infrastructure that could attract new rounds of investment, contribute to diversification efforts. It would seek an increase in aggregate demand— the power of consumers with money in their pockets — by legislating increases in wages and decommodifying aspects of public life. Such a program would likely require increasing taxes on wealthy individuals and corporations. A government that took the threat of climate change and fossil-fuel divestment seriously would implement these changes rapidly.
It’s clear that Jason Kenney’s government is not interested in economic growth, economic transition, or the realities of climate change. With the rhetorical flourishes and ideological claims set aside, what is it that Jason Kenney truly wants to accomplish with this austerity regime?
A budget for the rich
While completely disinterested in growing the economy in an aggregate or distributed sense, Jason Kenney is very interested in maintaining and entrenching the class power of existing capitalists. To put it very simply, these policies are geared to ensure that the ways in which capital accumulation currently occurs— the ways capitalist make their returns now— stand on improved and more powerful footing, and any threats to these methods of accumulation severely weakened.
Alberta’s top oilsands companies have been immensely profitable during the economic downturn, earning healthy compensation for their executives. This profitability continues into 2019, but is occurring alongside the sector shedding jobs that are unlikely to return. The National Energy Board projects bitumen production to grow well into 2040, which will jeopardize Canada’s climate commitments. As thanks for their treatment of the Albertan workforce, Jason Kenney rewarded corporations with a $4.5 billion tax break, lowering Alberta’s corporate tax rate from 12% to 8% over the next four years. Kenney’s stated goal is to make Alberta, already the lowest-taxed jurisdiction in Canada, one of the lowest-taxed jurisdictions in North America.
It is evident that this entrenches the power of fossil-fuel capital in Alberta, but it also transforms the state into a redistributive mechanism: one that takes from and dispossesses working people, and redistributes those assets to the very highest income earners. It should also be noted that resource extraction in Alberta is capital intensive and dependent on continued support from Canada’s largest banks. While Jason Kenney is keen to stir up regional resentment, he is ultimately doing what is good for Bay Street.
Kenney’s war against political opponents
Weakening, targeting, and threatening opposition is also a key part of staving off threats to capital accumulation. One such threat involves those who question the legitimacy of continued fossil-fuel extraction in an age of acute climate crisis. This is evident in the calculated moves Kenney’s government has engaged in to intimidate environmental groups. In July 2019, Alberta launched a public inquiry “into the anti-Alberta campaigns that are supported by foreign organizations,” appointing a forensic accountant as Commissioner to lead the inquiry. The inquiry’s mandate implies that identified organizations that receive grants from any level of government, or that have charitable status, stand to have their eligibility for such grants or charitable status revoked. Much of this new green McCarthyism is motivated by conspiracy theories propagated by Vivian Krause about foreign-funded environmental foundations and activists, though many of her claims have been thoroughly debunked.
Another threat to Alberta’s regime of capital accumulation involves labour. A low-wage and compliant workforce is also integral to Kenney’s plan, and recent changes reflect this. The 2019 budget will eliminate 2,100 public sector jobs, and the government is seeking public-sector wage rollbacks of two to five per cent from tens of thousands of workers. The ban on replacement workers in the public sector (also known as a ban on scabs) has been reversed. Kenney’s government eliminated card-check union certification and reverted to the previous outdated secret ballot certification. Kenney’s government also introduced a new $13-an-hour youth minimum wage, which is lower than the current $15-an-hour minimum wage.
It is likely that these changes are the initial demoralizing steps in a series of moves aimed to severely blunt the ability of labour to organize and resist. In 2018, the United Conservative Party convention debated a proposal to introduce American-style right-to-work legislation in Alberta, effectively allowing workers in unionized workplaces to opt-out of union membership and dues. The 2019 UCP election platform includes a commitment to “protect workers from being forced to fund political parties and causes without explicit opt-in approval.” It is probable that this will result in legislation that restricts the ability of organized labour to engage in political issues beyond strictly defined bargaining matters.
Doubling down on a discredited austerity agenda
Austerity has been discredited as a growth strategy everywhere it has been implemented: even the IMF issued a mea culpa for its role in pushing austerity. It is effective, however, in redirecting blame— in making the issue one of “overpaid workers” and “bloated budgets,” rather than a failure to engage in economic planning and invest in thorough diversification efforts. The hampering of the ability of the state to engage in active interventionist measures through a commitment to “fiscal discipline” means the state is off-limits to further democratic pressures. Cuts to services and an increase in unemployment allow employers to lower wage costs.
Concerningly, these attacks on workers and the public sector are occurring while Kenney makes use of a tried-and-true tactic of blaming any and all problems on the federal government, stoking regional resentment and anger. This effectively displaces anger that should be felt locally and regionally. While this strategy has long been used by conservatives in Alberta, it is of particular concern in the present moment because regional discontent is being channeled into far-right xenophobic and conspiracy-minded nonsense, which our media outlets are only too happy to cover.