Some much better ways to use Klein's $1.4B giveaway
We could banish poverty, and give children top quality daycare. Now that's a legacy
October 10, 2005
Giving out $400 prosperity cheques to each resident is a foolish squandering of Alberta's heritage.
Higher royalties are not like winning the lottery. They are supposed to be paid by petroleum corporations to the provincial government for using up Alberta's natural capital -- the energy heritage that belongs to every Albertan.
For each dollar's worth of non-renewable resource used up, the corporations should pay the owners, that is the public, one dollar as a money equivalency.
Since royalties are payments for depleting Alberta's natural heritage, the funds should be invested for the long-run benefit of future generations.
Far from being a windfall, the Klein government is giving away Alberta's heritage, by charging way too little in royalties compared to Norway or Alaska, for instance. Charging only a one per cent royalty rate on oilsands production, until all capital costs are paid down, is giving huge subsidies to corporate-welfare bums like Exxon.
It's not Eastern Canadians who are grabbing Alberta's oil and gas wealth, it's the Houston-based transnationals.
Rather than fritter away some of the people's royalties on individual cheques, the provincial government should 'make poverty history' in Alberta.
Before the Leduc discovery in 1947, Alberta was a poor province. Yet, in 1940, the Aberhart government pledged in the speech from the throne: "We are determined to provide food, clothing and shelter for the people to the limit of our
financial ability, and we will continue our unrelenting fight for monetary reform and social security with the determination to relieve unemployment and banish poverty from Alberta. No person should be allowed to lose his farm or home."
Premier Aberhart promised to bring about greater equality by limiting the greed of the rich. No one should be "allowed to have an income ... greater than he himself and his loved ones can possibly enjoy, to the privation of his fellow citizens." If at the end of the Dirty Thirties, Alberta's government could try to wipe out poverty, why can we not realize that dream today, when we are so much more able to?
Could we help to wipe out poverty today by using the $1.4 billion dollars more productively? Yes, but first we have to change our thinking about what makes for a strong economy and community.
The proponents of the so called "Alberta Advantage" argue that to attract investment and make Alberta more competitive, we need low taxes, oil royalty holidays, a low minimum wage, low public expenditures and low welfare payments. They assume a trade-off between economic efficiency and generous, universal public services. If you have extensive public services and anti-poverty policies, you can't have a vigorous economy, they say.
But are they right?
What would be the reaction if I recommended that Alberta adopt:
- The right to free day care.
- Free dental care for children.
- Grants to most university students covering tuition, subsidized meals and housing.
- Extended home care and parental leaves.
- Real job retraining programs for the unemployed.
- A legal guarantee that all who are unable to meet their day to day necessities are entitled to the necessary basic income and care.
- Five weeks paid vacation, with two weeks extra holiday pay for all workers.
I would be laughed out of court as hopelessly out of touch. Alberta couldn't afford these things. And if we did adopt them, it would make Alberta less competitive, slothful and drive up taxes too much. Right? Wrong.
Last year, the World Economic Forum ranked countries for competitiveness.
Which country came in first place -- the U.S. or another country which follows the "Alberta Advantage" prescription? No. Finland was ranked first and provides all the things listed above.
Finland did those things without having any oil or natural gas revenues. How much easier then it would be for Alberta, with no government debt and lots of resource royalties, to do all those things.
The other Nordic countries -- Norway, Sweden and Denmark, all with similarly generous public services, hold three of the top six positions in the WEF's competitiveness ratings. The U.S. was second; Canada,15th. (There was no separate rating for Alberta.) So much for a trade off between competitiveness and social equity.
Now, to get back to banishing poverty in Alberta, the wages of the working poor need to rise substantially.
If Alberta raised the minimum wage to $10 per hour, everyone who works full time could live above the poverty line.
To enable single parents to work for a living and not have child care costs eat up their earnings, the government could put that $1.4 billion into an endowment fund to finance child care for generations. If such a fund earned five per cent per annum, a conservative estimate, $70 million per year would be generated to pay for high quality child care.
At good wages, at least 1,500 child care workers could be hired to look after 9,000 to 10,000 children in public, not-for-profit centres, which charged $5 per day. Many single parents could work, get off assistance, and rest assured that their children were getting high quality, early childhood education.
Now that would be some present to bequeath to current and future generations. And to help realize Aberhart's pledge to banish poverty from Alberta.