Alberta’s so-called energy diversification plan

Last week the Energy Diversification Advisory Committee (EDAC) released its report and recommendations to the Alberta government.

In hearing the term “energy diversification” one might be inclined to think it refers to bolstering renewable energy generation. It doesn’t.

Alberta’s so-called energy diversification plan actually means deepening our economy’s and government’s ties to oil and gas production through the financial and political support of partial upgrading of oil sands and petrochemical manufacturing. The Pembina Institute published a good blog last week questioning the wisdom of encouraging increased production of bitumen in the era of the Paris Agreement.

At the EDAC press conference, premier Notley pledged the government’s general support of the advisory committee’s recommendations, as well as $1 billion in public funds for loans and “grants” (subsidies) to incentivize private investment in the downstream industry. From a public accountability perspective, one of the stunning things about the EDAC press release and press conference is that while the government announced $1 billion in spending, it didn’t say where the money is coming from.

Given that the province doesn’t raise enough revenue through corporate taxes, personal income taxes, and resource royalties to pay for our core public services, one is left to wonder if the government is borrowing additional money to subsidize the oil and gas industry, if some of the funds are coming from the carbon tax paid by large industrial emitters, or if the money is coming from other public revenue sources that would otherwise be used to pay for public services. Details on the source(s) of the funds will presumably be in the upcoming provincial budget for 2018-19, which will be tabled on March 22.

The spring sitting of the legislature—which starts tomorrow—will likely include debate on new legislation intended to facilitate the growth of downstream oil and gas facilities in the province. Tomorrow is also International Women’s Day, and women's issues have been one of the Notley government’s key priorities during its first term.

To her government's credit, there has been significant progress made in this area over the past three years. Notley appointed the second gender-balanced cabinet in Canadian history and created the province's first Ministry of Status of Women. Her government has also passed legislation to remove barriers impeding survivors of sexual and domestic violence from leaving abusive relationships. One of the NDP’s flagship policies is the move to increase the provincial minimum wage to $15 an hour, which is putting a dent in Alberta’s large gender income gap due to the fact that 60% of low-wage workers are women.

Since it doesn’t seem wise to further subsidize the oil sands industry at a time when other Canadian provinces and countries around the world are working hard to reduce their greenhouse gas emissions, on the eve of IWD it is worth considering how public funds could instead have been better spent improving public services and gender equality in the province.

Alternative government spending options and their gender implications

We are approaching the end of a fiscal year in which unions representing Alberta’s nurses, teachers, and health care professionals negotiated new contracts with the province. The average weekly earnings of Albertans increased by an estimated 1% in 2017, but the government put a concerted effort into negotiating a temporary wage freeze for many of the province’s unionized front-line health care and education workers. In the last year, nurses, teachers and health care professionals have all negotiated contracts which include a two-year wage freeze. This is significant because front-line workers are mostly women, and their incomes will decline by almost 3% over the two years because of inflation.

Alberta’s gender pay gap is the largest in Canada, but the gap is much smaller between men and women working in the public sector. Law professor Kathleen Lahey explained in her Parkland Institute report on pay equity legislation that "the higher-paying jobs in the resource sector are almost completely dominated by men, while the lower paid jobs in the service industry and care sectors still remain predominantly female." The Notley government’s decision to further subsidize the oil sands industry, instead of negotiating a modest 1% wage increase for public sector workers, will make the gender pay gap in our province even worse.

According to Alberta’s 2017 budget, the total public sector wage bill is $26.1 billion. This means it would cost the province approximately $261 million to give every public sector worker a 1% pay increase, a far cry from the $1 billion announced last week in response to the EDAC report.

Last year, Emma Jackson and I analyzed the connection between Alberta’s resource economy and the gender pay gap, concluding that the Notley government "seems hardly committed to redirecting the province’s course of [oil-dependent] economic development." Notley’s decision last week to direct $1 billion toward the oil industry does little for women workers since jobs in construction, partial upgrading, and petrochemical manufacturing are mostly held by men.

The high cost of childcare is one of the many reasons women are disadvantaged in Alberta’s labour force compared to men. The government of Alberta budgeted $321 million for childcare in 2017-18. Instead of directing $1 billion in loans and subsidies to the downstream oil and gas industry, the Notley government could have quadrupled its childcare commitment with an additional $963 million. Even if this injection of public funds into childcare couldn’t be maintained beyond a one-year commitment, many parents would be happy with even temporary funding to help with the high cost of childcare. Parents of young children in Alberta pay among the highest childcare fees in the country, and the vast majority of childcare workers are women making modest wages.

In sum, the Notley government’s decision to further subsidize the oil and gas industry will help create more high-paying jobs in male-dominated sectors, and will widen the gender pay gap.

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Photo credit: Kurt Bauschardt under a Creative Commons licence.