Albertans will return to the polls on Monday, Oct. 18 to vote on a number of things, including municipal elections, plebiscites in some cities, Senate elections and two referendum questions—one on daylight savings time, and the other, of course, on the Canadian federal government’s equalization payment program.
While the most divisive issue may in fact turn out to be the tyranny of the clock and the question of daylight savings time, the most important political questions are the Senate elections and the referendum on equalization payments. These questions put the limitations of bourgeois democracy and the weakness of Canadian Confederation in the spotlight, and cannot be ignored by socialists.
There is one major problem with Kenney’s referendum on equalization: it proposes changes to the Canadian Constitution which cannot unilaterally be made by a single province. Hence, many see Kenney’s referendum as largely symbolic… or even pointless. From being a move designed to galvanize support behind the UCP (with Kenney’s popularity plummeting to a mere 22 per cent approval, and strong approval falling to six per cent) the whole thing threatens to blow up in his face. This is something socialists should support.
While Kenney understands the limitations of the referendum, he has argued that a strong vote in support of removing constitutional commitments to equalization payments would give his government a strong mandate to negotiate a “fair deal” for Alberta with the federal government. While this may suit the interests of the capitalists and oil barons based in Alberta, it does little to help working class Albertans, which is why the working class should reject Kenney’s agenda.
With support for Kenney plummeting, even many in and around the UCP believe that Kenney’s lack of popularity threatens their preferred outcome in the referendum—that is, the end of the equalization payment system, or at least the end of Alberta having to pay into it. This in turn has made the vote not so much a referendum on equalization payments and Alberta’s place in Confederation, but on Kenney’s government itself. The working class must oppose the Kenney government, and see his humiliation in this referendum as part of the struggle to overthrow the UCP government.
But how should socialists and the labour movement approach these elections and referendums? Kenney is using genuine sentiments of Western alienation in Alberta to push his right-wing agenda. While it is true that the world economic crisis has hurt Alberta’s economy, and Canada’s decentralized federalism does not help, Kenney and the UCP offer no solution to the problems.
The only response from working people to Kenny’s referendums must be to reject the agenda of Kenney and the UCP—not simply to boycott the referendum but to actively spoil ballots and reject Kenney’s attempts at political manipulation. A humiliating loss for Kenney will put more pressure on him to resign and put political momentum into the hands of a movement to force the UCP out of government.
In a very general sense, the Senate election and referendum on equalization payments is an expression of Western alienation. Western alienation is in fact a very complex phenomenon, which has deep historical roots, going all the way back to how the Prairie provinces joined Confederation.
The Prairie provinces joined Confederation as colonies of Canada. Upon joining Confederation the provinces of Alberta, Saskatchewan and Manitoba were not given rights equal to those of the other provinces that were already part of Confederation. The other provinces had ownership rights to their land and natural resources. Though Manitoba joined Confederation in 1870, and Alberta and Saskatchewan in 1905, ownership of the lands and natural resources of those provinces was held by the federal government. The entire idea behind this was that the Prairie provinces owed the federal government and the other provinces for the costs of colonizing the Prairies and the expansion of the railroad. These provinces wouldn’t gain land and resource rights until 1930, but even since then have at times seen significant encroachments by the federal government into the provincial jurisdiction of natural resource rights.
It is important to understand that there are effectively two different Western alienations. On the one hand there is the Western alienation of the ruling class, which is quite different from the Western alienation of the working class.
The Western alienation of the working class is a reflection of the weakness of Canadian Confederation, the political and economic dominance of the more populated provinces of Ontario and Quebec, and the distance between Ottawa and the Western provinces.
For many workers and farmers in the West, Ottawa is remote and far away, and the federal government is a distant force whose only role is to impose taxes and red tape. Federal taxes are paid, yet for many, the federal government does not play much of a role in their lives. Most services are provided by the provinces, and thus, the federal government only seems to exist to be a tax burden. There is of course a national consciousness in Canada, but regional and provincial ties remain very strong, especially in the West, and often supersede national ties.
A phrase one often hears in the West at federal election time is that “the election is decided before the polls close in Ontario and Quebec.” What is meant by this is that however the majority of Westerners vote, it doesn’t really matter because the majority of votes in Ontario and Quebec will fundamentally decide the outcome of the election.
To a certain extent this is true. Given that 60 per cent of the population of the country lives in Ontario and Quebec, the votes in these provinces are decisive in federal elections. It’s not that the vote of people in the Western provinces doesn’t matter—the Western provinces can often swing a close election one way or another—but given the structure of Canadian Confederation and the way federal elections are held, this has been an issue for voters in the Western provinces for decades going all the way back to the Co-operative Commonwealth Federation (CCF). The sentiment of Western alienation also stems from the National Energy Program (NEP) and the hatred for Trudeau Sr. in Alberta, the rise of the Reform Party, and the current dominance of the Conservatives in the West.
For the working class and farmers in the Prairies, the general sentiment of Western alienation in many respects comes down to the fact that people in the West feel left out of the national political process. This in itself reflects the weakness of Canadian Confederation and the limitations of bourgeois democracy.
For the capitalists and the oil barons in Alberta, Western alienation is something quite different. It is of course rooted in the same political factors (colonial history, distance from Ottawa, dominance of Ontario and Quebec), but for the bosses it really comes down to a question of profits and taxation.
Equalization payments have long been an issue in Canadian politics. But the division between the “have” and “have-not” provinces really became an important issue after the economic crisis of the 1970s. In Alberta in particular it became an issue with the imposition of the NEP in the 1980s, which saw the federal government impose a series of price controls and taxes on oil products coming from Alberta.
From the perspective of the capitalists and oil barons in Alberta, the NEP exposed the perceived continuing colonial relationship between Ottawa and the province. Alberta had won its rights to ownership of provincial lands and natural resources, but with the NEP the federal government barged in and reasserted control over petroleum resources. From the perspective of the oil barons, Alberta’s oil industry was exploited and suffered a loss of profits for the benefit of the manufacturing-based capitalists in the “East” (Ontario and Quebec).
For the oil barons in Alberta, the NEP meant a massive loss of profits. This is what enraged them more than anything else, and what led them to resent the economic dominance of Ontario and Quebec. Taxes and duty controls under the NEP discouraged exports and imposed low domestic prices, which meant that the Alberta oil barons were unable to sell their oil at world market prices. They were forced to sell on the domestic market at a steep discount. This effectively meant a redistribution of wealth from the West, mainly Alberta, to the other provinces, especially Ontario and Quebec. The historic memory of the NEP is why the name “Trudeau” is still a dirty word to this very day in Alberta.
This feeling of resentment, which is shared by workers in Alberta, was expressed in the phrase, “Let the Eastern bastards freeze in the dark!” For the oil barons, this phrase meant that they would rather not sell their oil at discounted prices to other provinces if they could not get world market prices and the resulting profits. They would rather that people in Ontario and Quebec freeze to death in the winter than take a hit to their own profits. For working people, it was an angry rejection of the NEP and the price controls that ultimately led to unemployment and a lowering of wages.
This struggle between provincial wings of the ruling class explains in part the reason for this sentiment of Western alienation among working-class people in the West. The lack of a left-wing voice that speaks to the interests of working-class people has meant that over the decades many working-class people in the West, for example oilpatch workers in Alberta or forestry workers in B.C., began to identify their interests with those of the bosses and the corporations. “What’s good for the business is good for us” became the general sentiment, because it seemed this was the best way to provide jobs and stability (it wasn’t, as the current economic crisis and high unemployment prove). This unfortunately tied the sentiments of many workers to those of the bosses, and a clear class-struggle perspective was lost for many workers.
This helps to explain why class anger and feelings of Western alienation have shifted from being expressed through the left, for example with the CCF and the NDP, to more recently being channeled into parties like the Reform Party and now the Conservative Party (or to a lesser extent the People’s Party). There is no left-wing party that can channel the anger or express in militant, class-struggle terms the legitimate complaints of working people in the West. So, seeing their interests tied to those of the bosses of the dominant industries, people have turned towards the political parties of the bosses as well.
The ruling class in Alberta and their representatives in the UCP now see equalization payments the same way the NEP was viewed: they see wealth being transferred from “their resources” to Ottawa. For the capitalists in Alberta, Western alienation really means a struggle for profits and economic dominance between different provincial wings of the national ruling class (primarily natural resource extraction in the West versus manufacturing and finance in Ontario and Quebec).
The Conservatives in Alberta, the dominant political force for decades, have long complained about the Senate. In terms of bourgeois democracy, they may even have a point or two here: some regions are over-represented, others are under-represented, and the ruling political party (whether Liberals or Conservatives) always stacks the Senate with members of its own party for partisan reasons, etc. These complaints from Alberta about the Senate underline the fact that even from the perspective of bourgeois democracy, the Senate is a fundamentally undemocratic institution, a relic from Canada’s colonial past.
To expose these problems with the Senate and push for Senate reform, not to mention to further their own agenda, the Conservatives in Alberta have organized Senate elections going back decades. In fact, the 2021 Senate elections in Alberta will be the fifth since 1989. Senators are not elected, they are appointed, and the federal government is under no obligation to appoint senators elected in Alberta. Conservative Prime Ministers such as Brian Mulroney and Stephen Harper have in fact appointed elected Senate nominees from Alberta to the Senate, but Liberal prime ministers never have.
But for socialists, whether these Senate nominees from Alberta ever get appointed is not the point. For socialists, the Senate is a fundamentally undemocratic institution. Like the monarchy, it should be abolished as a barrier to genuine democracy. The goal of our struggle is not Senate reform, not to reform bourgeois democracy, but socialism and workers’ democracy.
While there are several “joke” candidates who could represent a protest vote, socialists should spoil their ballots on this question. We do not and cannot endorse a reactionary institution like the Senate, and cannot endorse it by trying to reform it, and certainly not according to the agenda of Kenney and the UCP.
Opposition to equalization payments has been pushed by the right wing in Alberta for decades—from the likes of Preston Manning and the Reform Party through to the famous “firewall letter” by Stephen Harper. As a “have” province, Alberta has paid more into the equalization transfer system than it has received. Alberta only received payments under the scheme in 1964, and in every other year has been a “have” province, meaning it pays into the system and does not receive payments.
The opposition to equalization payments by the UCP is rooted in propaganda, misconceptions, falsehoods and outright lies peddled by the right wing. The Alberta right wing presents equalization payments as if the federal government were stealing money directly out of the pockets of hard-working Albertans to pay for the extravagant social services of the lazy workers in the rest of the country.
The reality is that Alberta doesn’t directly pay for social services in other provinces, nor is money taken directly from the pockets of Albertans to pay for these services. The other reality is that the social services in other provinces, such as subsidized daycare in Quebec, are not all that extravagant and are chronically underfunded. From our perspective, they are not extravagant enough.
The right wing in Alberta complains loudly about the billions of dollars the province has paid into the equalization system over the decades without receiving “anything in return”. They complain about Quebec’s subsidized daycare system being paid for by Albertans, and so on. The UCP and Jason Kenney argue that provinces that oppose oil pipeline development should lose access to equalization payments and bluntly say, “If you want to benefit from our oil and gas wealth [via equalization payments], stop blocking oil and gas pipelines.” Danielle Smith, the right-wing fool and former leader of the Wildrose Party, argues that people in Saskatchewan subsidize heated pools in Quebec. This is nothing but propaganda designed to bind the working class of the Prairies to the interests of the bosses and the right wing.
Going back many decades, Alberta’s conservative politicians have long stoked the flames of Western alienation to galvanize support for their own agenda. Sticking it to Ottawa is a popular pastime in Alberta, and in the absence of a left-wing voice has proven to be a successful method of political manipulation by the right wing. Kenney did precisely this by promising the referendum on equalization on his path to provincial power in 2019.
But the situation has changed drastically since then. Kenney is not a separatist. But with the global economic crisis and drastic decrease in oil prices, sentiments of Western alienation have transformed into a full desire for separation or independence among a certain layer of the population in the Western provinces, especially Alberta. Indeed, at certain times in the last several years, support for separation and independence from Canada has been higher in Alberta than in Quebec.
Opposition to the equalization payments from the UCP and Kenney is really just another attempt to galvanize support for their right-wing agenda, and to claw back support they have lost to the separatist right wing in the form of the Wildrose Independence Party. But it should be remembered that the current formula for equalization payments was introduced under the Harper government, in which Kenney was a prominent cabinet minister.
In reality, equalization payments are based on the average tax income potential of the provinces. Provinces that are above the national average are “have” provinces and those that are below are “have-not” provinces. Trevor Tombe, an economist at the University of Calgary, described the equalization payment system in this way in a recent CBC article:
“Equalization is a federal program that transfers federal funds to provinces with below-average capacities to raise revenues. Provinces with stronger economies, and with high income households and businesses, raise more revenue for any given tax rate than provinces with lower incomes.”
In the same article he explains that a province’s fiscal capacity is determined by how much revenue a province could generate if all provinces had identical tax rates, adding that:
“This captures a province’s ‘ability’ to raise revenue, and is almost entirely due to a province’s underlying economic strength. Provinces with strong economies (like Alberta, B.C. and Ontario) can more easily raise revenues than provinces with weaker economies (like [the] Maritimes or Quebec).”
In another article, Tombe explains that:
“In a nutshell, [equalization] basically means the federal government provides some additional support to governments of poorer provinces to ensure that comparable public services to all Canadians can be delivered from coast to coast. This is calculated by asking what a government’s ability to raise revenue is. So we ask ‘If you had normal tax rates, if you had average tax rates, how many dollars would that raise for the provincial government?’ And any province who would raise a below average amount is topped up by the federal government to the national average levels so that everything is roughly comparable for those that have below average abilities to raise revenue.”
When asked whether Alberta gets the short end of the stick, he explains:
“Well the short answer is no, in the sense that equalization is a program to help lower-income provinces raise revenue to deliver public services. Alberta is, most of the time, really lucky to have a really strong ability to raise revenue. Our economy outperforms others, our average incomes are higher, and so the taxes here tend to raise a lot more than taxes elsewhere and so we don’t qualify.”
Tombe added that, even in a recession and during periods with significant unemployment, which Alberta has recently experienced, the province still does much better than other provinces.
“The recession that we went through in 2015 and 2016, it’s really hard to overstate how big that was. Our economy contracted by nearly 20 per cent in terms of the amount of income that’s generated here, and the recovery afterward has been disappointingly slow even prior to COVID hitting. Now the reason why Alberta didn’t qualify for payments during those challenging years is because, despite the recession, Alberta’s economy still outperformed every other one in Canada. We fell from the top spot to the top spot but the gap between us and the rest was smaller. Now what matters for the formula is just if you are below average. And so despite the large recession that we went through, Alberta’s economy did remain above the national average and so we never qualified even after the recession.”
Despite what Kenney and the UCP say, the Alberta government doesn’t directly make any payments to any other provinces under the equalization payment regime. In this sense, the government of Alberta is not paying for daycare or heated pools in Quebec. The money for equalization payments comes directly from federal tax revenue. The money collected and transferred for equalization is money that would have been collected by the federal government anyway in the form of taxes. In this sense, it doesn’t matter what the federal government spent that money in, as it would not have remained in Alberta in any case.
The referendum question on equalization asks: “Should Section 36(2) of the Constitution Act, 1982 — Parliament and the Government of Canada’s commitment to the principle of making equalization payments — be removed from the Constitution?” But the money used for equalization would be collected by the federal government anyway. So does the UCP and the Alberta right wing only object to that money being used for equalization? Hardly. What Kenney and the UCP are really saying is that they do not want this tax money going to the federal government at all. They are opposed to this money, amounting to billions of dollars every year, being “drained” from their own coffers in the form of taxes to the federal government. What they are really objecting to is that from their perspective, the expenses of Confederation outweigh the benefits.
The reliance of the ruling class and government of Alberta on oil production pulls them ever more in the direction of the world economy, rather than towards Ottawa. Most provinces have stronger ties with the U.S. economy than they do to the other provinces, and this is all the more so the case in Alberta. Most of the oil produced in Alberta is exported, and upwards of 98 per cent of oil exports go to the United States.
The U.S. becoming the largest petroleum producer on the planet has put pressure on the Alberta oil barons, who have lost significant access to the U.S. economy and pipeline system. For decades the oil barons didn’t care about developing pipeline infrastructure in Canada or supplying cheap domestic oil to the other provinces. But faced with a loss of market share and tumbling oil prices, they suddenly are very interested in finding a market for their oil. In fact, they are so desperate, they want to impose pipeline infrastructure on the other provinces. This is the root of the struggle for economic dominance within the country, and the Alberta oil barons want to impose their economic will on the other regions.
But from the perspective of the other provinces, this doesn’t make much sense, nor does it follow the logic of the market. Alberta oil is expensive to produce and refine, and would require massive investments from the other provinces in the form of pipelines, upgrader facilities, and refineries. From their perspective, Alberta oil comes with a lot of additional expenses, which they would be expected to cover (in all likelihood along with the federal government). Why would the capitalists in the other provinces do this when they can import cheap oil from the U.S. and Middle East that is easier and cheaper to refine and doesn’t come with massive additional expenses? In addition to the monetary costs, there is always a risk that expanding fossil fuel infrastructure would be politically expensive. After the environmental movement surged and waged fierce battles over Coastal GasLink, or the Dakota Access Pipeline, new high-profile pipeline projects would seem to be a serious liability to provincial governments. Such proposals are already unpopular in Quebec, for example.
The UCP and the right wing rail against social services and programs in other provinces that they delusionally believe they pay for. Subsidized daycare in Quebec is a frequent target. Frothing at the mouth they tell the workers of Alberta: “See! We pay for subsidized daycare in Quebec. You don’t have any such program here because we pay for it there!” But never is it suggested by the oil barons or the UCP that Alberta should have its own subsidized daycare program. In fact, the UCP are among the two provincial governments who have not reached agreements with the feds over $10-per-day child care, which would secure funding from the federal government.
Rather, the argument from the UCP is that Quebec should not be allowed to have a subsidized daycare system, especially at their expense. This is yet another attempt to manipulate the working class and bind them to the interests of the oil barons and ruling class. The argument from the workers should not be that Quebecers should not have a daycare system. Workers should be fighting to defend subsidized daycare in Quebec, and fighting for a fully subsidized daycare system in Alberta too.
Desperate and angry, the oil barons and the government of Alberta see billions of dollars drain away from the province directly in the form of federal taxation and indirectly in the form of equalization payments. They don’t want to pay these taxes to the federal government, and want this money for themselves. From the perspective of the Alberta capitalists, Confederation is increasingly a drain and becoming an expense they don’t really want to pay for anymore. At the end of the day, what this dispute over equalization comes down to is the weakness of Canadian Confederation, the pull of the world market, and the fact that the Alberta bourgeoisie doesn’t want to pay its taxes to Ottawa.
But make no mistake, if this tax and equalization money were to remain in Alberta, i.e. in the hands of the oil barons and the provincial government, especially under the UCP, it would never be used to develop social programs in Alberta. It would be used to line the pockets of the oil barons, and austerity that guts social programs would remain the order of the day.
The working class has nothing to gain by supporting Kenney’s agenda here on equalization payments. It cannot fall into the trap of supporting the Alberta ruling class in its fight over profits and taxes with the ruling class in other regions. Socialists should therefore refuse to play UCP’s game, refuse the agenda of the oil barons, and spoil their ballot on the equalization referendum question.
Hypocrisy of the UCP
This is where the hypocrisy of Kenney and the UCP becomes plain to see. They don’t want to pay taxes to Ottawa and don’t want to contribute to equalization, but have no problem taking federal money when needed.
It has been shown that Albertans received more COVID-19 financial support from the federal government than people in any other province. Alberta drew the most support per capita for business from the federal government, including through the Canada Emergency Wage Subsidy (CEWS) ($17.5 billion) and the Canada Emergency Business Account (CEBA) loan forgiveness program ($1.9 billion). Support to individuals was the second biggest category in the province, through programs like the Canada Emergency Response Benefit (CERB), at $8.8 billion, the Canada Recovery Benefit (CRB), at $3.5 billion, and enhancements to employment insurance benefits, at $1.3 billion.
This is money the UCP would never have provided or paid, but if someone else is willing to pay—in this case the federal government—they have no problem with it. It was also revealed that Alberta has the largest amount of unallocated COVID-19 funds, worth $1.8 billion. This is money that could have helped people, which is precisely why the UCP left it unused.
But when money from the federal government is on the table that would help the oil barons, it is taken with no questions asked. Last year, the federal government subsidized the fossil fuel industry to the tune of $18 billion, with the vast majority of those funds helping out the oil barons in Alberta. While the UCP rail against the Trudeau Liberals for not caring about the oil industry, the reality is that the federal government has given plenty of handouts to oil giants. When compared internationally, Canada ranked second in the G20 countries for total public subsidies to oil and gas between 2016 and 2018, again with most of that money going to oil barons in Alberta. Only China, a country with a population 38 times larger, provided more funds. On a per capita basis, Canada gave out more than double the amount of public dollars per head to the oil industry than any other country.
Socialism and equalization
The fact of the matter too is that most capitalist countries have some sort of equalization payment system. For example, Australia, Belgium, France, Germany, Switzerland, and the U.K. all have equalization payment systems in an attempt to provide some sort of equality of services in their various regions. The United States does not have a specific equalization payment system for the states, but the federal government does directly fund various infrastructure and service projects. Equalization payment systems are a way for the bourgeoisie to prevent gross regional disparities that could lead to their countries coming apart at the seams. Equalization payments are an attempt by the bourgeoisie to keep their capitalist countries together.
For socialists, there is no point of principle here. We are neither in favour of nor opposed to the federal government’s equalization payment system. There is undoubtedly this or that problem with equalization. There are inequalities, some provinces pay more than others, others receive more, some provinces are perpetually “haves” and others are perpetually “have nots”. But these are not the real problems with equalization. The real problem is the capitalist system itself, which can never provide any genuine equality in any sense. Thus, it is not a question of this or that reform to equalization, but the smashing of capitalism and the establishment of a genuine system of equality, i.e. socialism, which would of course mean a significant redistribution of wealth and which could genuinely provide equality of services in the various regions.
Weakness of Confederation
The growing regional disparities in Canada, both economic and political, are a general reflection of the growing crisis of capitalism and the process of polarization unfolding around the world. The world market acts as a centrifugal force on the Canadian provinces. The provinces, with different economic bases, are pulled in different directions. As the crisis of world capitalism grows, so too do these centrifugal forces, as the ruling class based in the provincial economies seeks a way out of the crisis and seeks new markets or to maintain access to traditional markets. The reality is that there remains very little by way of centripetal forces to hold everything together. Rather than being a pole of attraction, Ottawa is increasingly seen as a barrier and a drain on resources.
Compared to most capitalist countries, Canadian Confederation is very weak. The provincial dynamic often outweighs the national dynamic, leading to a situation where provincial politics often outweighs national politics. In fact, the dominance of provincial politics often hinders national politics, especially when it comes to working-class politics in the form of unions, strikes and political parties.
Canada did not have a historic bourgeois revolution to bind the country together. Rather, various disparate and small colonies were cobbled together to suit the needs of the British Empire and colonial capitalists.
There was no great economic development that integrated the regions and provinces into a national whole, such as the continental expansion and eventual world dominance of the American bourgeoisie. The Canadian bourgeoisie has always had deep regional divisions, with the provincial economies being pulled in different directions on the world market. In some ways, the provincial economies in Canada are more integrated with the U.S. economy than they are with each other.
This does not mean that Canada is not a country. There is a national ruling class and working class, and a national consciousness. But the economic, political and class relations that bind the nation are weak. Take the trade war that erupted between the Alberta and B.C. governments a few years ago. Aside from the scandalous fact that it was two NDP governments that presided over this trade war, it should be pointed out that such a thing could not have occurred in most countries around the world. In fact, such a thing could likely not occur even in the European Union, which isn’t a country.
A big part of the rise of capitalism historically, after all, was that it smashed local trade barriers and parochialism to establish a uniform national market with internal free trade. This is something the Canadian bourgeoisie has yet to achieve fully. Provincial barriers to trade still exist in the form of duties and taxes, but also in the form of differences in certifications, licensing, etc.
And as the world crisis of capitalism continues to deepen, these ties will become even more strained. Regional disparities will continue to grow as the centrifugal forces acting on the provinces pull them apart in different directions.
The working class doesn’t have a horse in this race, in the regional infighting between the various provincial capitalist classes. It is not a question of national unity, or maintaining Confederation. We are in favour of class unity, the unity of the working class across the country. We are in favour of smashing Confederation, and establishing relations on the basis of workers’ democracy in the form of a workers’ republic.