Rivers: The Empire Strikes Back - Alberta facing a different federal government

By Ray Rivers

October 28th, 2021



Jason Kenny asked Albertans whether they think Canada’s regional equalization program should continue to exist.   He did this through a divisive referendum no less sneaky than Quebec’s René Lévesque had crafted when he mislabelled his plan for independence ‘sovereignty association’.

Kenny admitted the referendum was purely a political ploy, since even after the public responded as he had wanted them to (62%), Alberta has no authority to change the equalization program.  Equalization is entrenched in Canada’s constitution and administered by the federal government.

Jason Kenny: Will he be the Premier come the next election?

Of course this is all partisan theatrics. Mr. Kenny had been an influential senior minister in the Harper government.  Why didn’t he lobby his party leader for change when he was actually in a position to do so.?  And Kenny is alone, no other province shares his zeal to remove this pan-national program that has helped to glue the country together for more than half a decade.

Kenny complains that Albertans pay 15 billion dollars a year more in income and other taxes to the federal government than the province receives back from the feds.  Of that amount Kenny tells us that $3 billion gets allocated towards the 20 billion dollar equalization fund, which the federal government administers based on the program’s eligibility criterion.

But Mr. Kenny has somehow forgotten that Ottawa has been subsidizing the fossil fuel industry for over forty years, most of it centered in Alberta, and much of it to expand oil sands operations.  Some of the subsidies are direct payments for technology and infrastructure.  Some are tax credits, wage subsidies and write offs of one form or another.  And some are required to clean up the mess, the myriad of environmental legacies of orphan wells and tailing ponds.

The feds dole out somewhere between 3 and 18 billion dollars, depending on who you ask.  So by any measure Alberta has been doing pretty well from that pig trough they like to call federal government.  Kenny may not be receiving equalization payments, because as the wealthiest jurisdiction in the country Alberta is not eligible, but Alberta’s corporate interests have certainly been well fed by Ottawa.

That has to change if Canada is to meet its bold greenhouse gas (GHG) reduction targets of 40-45% by 2030 and net zero by 2050.  Coal, oil and gas have to be phased out and shut down for any of that to happen, since those are the major sources of GHG in the country.  And make no mistake Canada, being one of the worst global polluters has committed to this.

So, having recently renewed his mandate with an almost majority of seat in Parliament the PM has decided on action ahead of rhetoric.    Former Quebec Greenpeace activist, Steven Gilbeault, who had once been arrested for scaling the CN Tower, is Canada’s newest Environment Minister.  And the first order of business at the upcoming COP 26 Climate Change conference will be to announce that Canada will eliminate all subsidies to the fossil fuel sector by 2023, actually 2 years ahead of most other nations.

Steven Gilbeault, the man on the right is now the Minister of the Environment

This is not the first time we’ve seen that kind of promise.  Mr. Trudeau said he’d do that back when he ran in 2015…. but he didn’t.  In fact he ended up buying an oil pipeline for Alberta instead.  And it’s not just the Liberals who can’t seen to cut the cash flow, because Mr. Harper also promised to end the subsidies way back in 2009… but he didn’t either.

Shutting off the subsidy taps sounds easy but it’s really pretty complicated.  For one thing there is the regional political situation.  Still Canadians have clearly demonstrated over the last two elections that they want to see action on climate change.  And even voting Albertans and the petroleum sector are coming to that position.

Oil and gas contributes less than 10% to the country’s GDP.  But that sector is a critical source of income and employment for at least four provinces.  And most of us still drive gasoline powered cars and rely on fossil fuelled transportation for our goods and services.  So phasing out will require substantial adjustment and retraining.

And not everyone agrees on the definition of a subsidy.  In 2019 the Prime Minister requested his then-finance minister Bill Morneau to prepare a list of Canada’s fossil fuel financial supports.  By March 2021 that report was still “a work in progress”.  But they know where the low hanging subsidy fruit lies.

Subsidies, serve to lower the price of a commodity, since governments pick up some of the costs of production.  That is the exact opposite of what the national carbon tax is all about.  Why would we charge consumers more at the pump, for gasoline, and then help the oil companies reduce their costs and thus prices?   The last federal budget projected $18 billion spending over the next 5 years on climate actions.  Yet we gave the oil and gas sector as much as $18 B last year in subsidies.

The Prime Minister bought the pipeline to show the people of Alberta that he cared.

Mr. Trudeau purchased the Trans Mountain pipeline against his better judgement to show Alberta some love.  But he got no thanks in return.  By appointing long time climate activist Steven Gilbeault as Canada’s new environment minister, he is sending Mr. Kenny a message.  No more Mr. Nice Guy.  The Empire is striking back – Canada will be turning off its carbon rich taps, starting with the money that feeds the fossil fuel industry.

As for the troublesome Mr. Kenny, the most unpopular premier in Canada, one can only hope the voters in Alberta look long and hard at just what an asset he is for them and the province’s longer term economic health.  It is time to embrace the future.

Ray Rivers, a Gazette Contributing Editor,  writes regularly applying his more than 25 years as a federal bureaucrat to his thinking.  Rivers was once a candidate for provincial office in Burlington.  He was the founder of the Burlington citizen committee on sustainability at a time when climate warming was a hotly debated subject.   Ray has a post graduate degree in economics that he earned at the University of Ottawa.  Tweet @rayzrivers



Trudeau’s – the Alberta Memo –  Alberta’s Claim –   $18 Billion Subsidy

Canada’s Carbon Tax –  Environment Minister

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2 comments to Rivers: The Empire Strikes Back – Alberta facing a different federal government

  • I know it’s completely naive, but wouldn’t it be nice if people did things because they were morally correct and also in this case necessary for the survival of our planet regardless of the money they would cost.

  • Fred

    Alberta always has its hand out asking others to pay. Until Alberta implements a provincial sales tax, the rest of Canada should have zero sympathy for these folks. Besides, in ten years when their oil becomes worthless, they will welcome equalization when they are broke