The Alberta Economic Boom
Alberta is experiencing an unprecedented boom.
A September 2006 article in the Canadian Economic Observer states:
"Alberta is in the midst of the strongest period of economic growth ever
recorded by any province in Canada's history. Its total income (GDP) rose 43
percent between 2002 and 2005, and shows no signs of slowing down in 2006.
Alberta's 12.7 percent average annual increase since 2002 compares favourably with China's 14.8 percent, the fastest growing
among the world's large economies."
The parallels between this oil boom in Alberta
and others in the province, particularly in the 1970's and 1980s, as well as
with the mining booms in other regions of Canada over the decades, are so
striking that even the Canadian bourgeoisie is holding its breath waiting for
the bust. The very nature of the growth in Alberta is cause for uncertainty. In
comparing economic growth between China and Alberta, the Canadian Economic Observer points out: "China's was mostly volume, while
Alberta's was three-quarters driven by higher export prices." In other
words, as the price of oil goes, so goes the economy of Alberta.
The attitude of the Canadian bourgeoisie to
this boom is the same as it has been to all others, that is to "make hay
while the sun shines", to take
advantage of the opportunity, while it
is still there, to make maximum profits. Corporate profits in Alberta more than
doubled from $23.5 billion in 2002 to $53.1 billion last year, directly
accounting for over half of all income growth in the province. Most of this
increase reflects the soaring price of oil and gas exports. Alberta accounted
for 27 percent of all corporate profits in Canada last year, nearly double its
share of the national Gross Domestic Product (GDP) in 2002.
Federal and provincial tax breaks as well as low
provincial royalty fees are contributing to the high level of profits. It is
estimated that the federal government gives $1.4 billion annually in tax breaks
to the booming oil industry. Canada's Finance Minister Jim Flaherty defends
special tax treatment for the resource sector because of its importance as a source of investment and
jobs.
While profits have skyrocketted,
income has also risen steadily over the last three years. Since 2002, incomes have
increased 27 percent (or nearly 10 percent a year), by far the biggest increase
in Canada. However, this is not a measure of wage gains by the working class.
Canada's system of national accounts defines income as the wages, salaries and
supplementary labour income of all individuals. This
means the salaries and benefits of corporate executives are lumped together
with the wages of workers to determine "labour
income". Nevertheless, the growth in income did not come close to matching the
growth in corporate profits.
Side by side with every boom goes a labour shortage and intense exploitation of the working
class. The current situation in Alberta is no different. According to the Canadian
Economic Observer Alberta's current labour market
is "the tightest in North America". The bourgeoisie is addressing the
labour shortages by extending the length of the work
day and work week, by getting more residents of Alberta to participate in the
workforce, by luring workers from high unemployment provinces like Newfoundland
and Labrador and by importing temporary foreign workers from low wage countries
like Mexico.
It has been acknowledged by politicians,
business leaders and the news media that the current Alberta boom is not all
rosy for the working class. However, what is not conceded is that the
capitalist system is the source of the problem, that economic growth is
possible without capitalist exploitation and that there is an alternative.
The news media have carried many stories
exposing the terrible working and living conditions of temporary foreign
workers, as well as the plight of the workers from Newfoundland and Labrador and
of long-time residents of Alberta. The Canadian Press recently carried a
story entitled "Calgary a Boom Town for Homelessness", which reported
on a survey done by the city in May 2006.
It found 3,436 homeless people, that
is a 32 per cent increase since 2004. One of the executive directors of a
shelter interviewed for the story said, "It's not primarily the addict or
the person who doesn't want to work. It's children. It's moms and dads and
25-year-olds."
The vast majority of her clients are the
working poor, people unable to find affordable housing in a city where builders
cannot keep up with the demand for luxury homes. She predicts that the problem
is likely to get worse. "We're
getting calls from people who are going to be homeless by the end of the month
because their leases have come up for renewal and they can't afford the [rent] increases."
About half of the homeless families that she sees in her shelter are from
outside the province, lured by the hope of prosperity promised by the so-called
“Alberta advantage”.
A Calgary city councillor
noted that thousands of low-income Calgary families are teetering on the edge
now and admits that a social disaster is not far off. "Some 60,000 Calgary
households struggle to make the rent," he said. "As prices and rents
go up, there are more and more people vulnerable to losing their shelter."
Tenants in some parts of the city have received notice that their rent will
triple in the coming months. Home prices in Calgary have jumped more than 50
per cent in the last year as people pour into the city hoping to take advantage
of the red-hot economy. In turn, this has pushed up the cost of rental properties.
The price of an average two-storey house in the city jumped by almost 55 per
cent, compared to a year earlier, to $397,867, according to a report on house
prices from Royal LePage Real Estate Services. The
average detached bungalow in the city rose 50.4 per cent to $371,200.