Front Burner - The problems pile up for Alberta

Episode Date: October 16, 2020

This week, the Alberta government detailed cuts to the province’s health service, including up to 11,000 layoffs. While all of Canada’s provinces have taken an economic hit because of COVID, Alberta in particular has been clobbered. Oil and gas revenues have tanked. Liquor sales are projected to bring in more than bitumen royalties from the oil sands this fiscal year. Support for United Conservative Party Premier Jason Kenney is down, too. According to a late summer poll, he’s got the second lowest approval rating of all the premiers in the country. Today, CBC’s Carolyn Dunn in Calgary on how Alberta’s faring, and how Jason Kenney plans to bounce the province back.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hello, I'm Jamie Poisson. So all of Canada's provinces have taken an economic hit because of COVID. But Alberta? Alberta's been clobbered. Fellow Albertans, the end of the pandemic will not be the end of the economic downturn,

the likes of which we have not seen since the 1930s. Oil and gas revenues have tanked. Liquor sales are projected to bring in more than bitumen royalties for the oil sands this fiscal year. Support for Premier Jason Kenney's United Conservative Party has tanked too. According to a late summer poll, he's got the second lowest approval rating of all the premiers in the country. And the road to recovery, well, it could be a long one. This will have an enormous impact on our province's finances. You need to know that. We will face a great fiscal reckoning in the future. Today, I'm talking to my colleague Carolyn Dunn in Calgary about how Alberta's faring and how Jason Kenney plans to bounce the province back.

This is Frontburner. Carolyn, thank you so much for coming on to the podcast. It's such a pleasure. Thanks for having me. All right. So this week, we heard these big plans from the Alberta government on how they're going to make cuts to Alberta Health Services. They're laying off as many as 11,000 employees in the midst of a pandemic. And I wonder what you think this move signals about Alberta's fiscal situation at the moment. Well, I think it says very clearly that it's not great at all. Not at all. The Alberta government's last fiscal update was in August, and it showed an expected budget deficit of $24.2 billion. That's $16.8 billion higher

than we budgeted. The vast majority of the reason for that increased budget deficit is a very, very significant decline in revenue. So, you know, this UCP government that has messaged that it's trying to get its financial house in order has a terrible balance sheet at this point. Everything changed in March. Alberta encountered what I would characterize as a triple black swan event, which consisted of the pandemic driven greatest global economic contraction since the Great Depression. They were budgeting based on $58 barrel of oil. And that did not happen. There was even a point in April where oil was

trading in the negative. So revenues are way off. European debt holders and pension funds are divesting themselves of Alberta oil. And that's a bad stigma for those looking to bring investment into Alberta's resource sector. So we've got a lot of un and underemployed people that's been going on in the oil and gas industry for years, by the way, that's not new. But then you add the Coronavirus to it, the demand for oil and gas goes way down, because folks aren't traveling to work and back and, you know, offices aren't being run as they normally would. And, you know, that takes not only a giant swipe at oil and gas, but it also hits just like it has in every other Canadian province, all industries. So it's blow after blow.

And, you know, I've always said that there's this unique economy in Alberta. If you have a good job and it's solid, you're doing okay because you would typically be paid higher than the average Canadian. But if you are one of these people who has been affected by these cuts, it's quite bleak looking right now. And, you know, people are looking for answers and a light at the end of the tunnel. The job market is not what it was before. The amount of jobs that are available in my field are quite limited right now. Don't just tell us you're going to save a whole bunch of money by treating people badly and cutting their pay and making them find other jobs elsewhere. Can we talk a little bit more then about how this is affecting regular Albertans,

these people that you're talking about who don't have jobs right now? Well, I think it's the uncertainty more than anything, you know, there have been just like every other province, people are getting by on on CERB and unemployment, whatever they are the wage subsidy, but there is this uncertainty. I think there was an expectation that oil and gas was going to bounce back. And I really believe that expectation now especially when you start seeing investment not coming into the into the province as as expected or as was sort of messaged in an in the previous election campaign. To those who have lost their homes and their hope after years of economic decline and stagnation. To them, to them, we send this message.

Help is on the way and hope is on the horizon. It's just not happening. In fact, the opposite is happening. And that's quite depressing, I think, for people who don't have certainty about what their future is going to look like. Premier Kenney campaigned on jobs, economy, pipeline, and all I've seen him do since he came in is cut jobs.

You know what, I can't take this roller coaster anymore. Speaking of how this is affecting people in Alberta, I saw this really shocking statistic. According to CMHC, nearly 20% of Albertans are deferring their insured mortgage payments right now. So that's the highest deferral rate in the country, people that can't meet their monthly mortgage payments. And so these difficulties that people are facing in the country, people that can't meet their monthly mortgage payments. And so these difficulties that people are facing in the province, how are they affecting Albertans perception of their premier United Conservative leader, Jason Kenney? I understand he's seen a real dip in the polls. Yeah, he did. And you know, we first saw that he was taking it on the chin when he didn't get the corona bump like other politicians did, like Doug

Ford did, like Prime Minister Trudeau did. But he didn't get that bump, even though Alberta actually in the early stages of the coronavirus handled it like a boss, seriously. I mean, they had enough PPE to give away to other provinces. Alberta flattened the curve, and yet he didn't get a bump out of it. Why? I was wondering that. And then this poll comes out from Angus Reid that answers some of the questions. You have to keep in mind the UCP won this decisive victory a year and a half ago, 63 of 87 seats, 55% of the popular vote. And now, according to this poll a couple of weeks ago, 63 of 87 seats, 55% of the popular vote. And now, according to this poll a couple of weeks ago, which was ordered by no one, by the way, Angus Reid did it independently. They're neck and neck with the NDP as far as popular votes. And when they started digging into the numbers, they

discovered sort of two main issues. One is that they're having this protracted and really nasty contract dispute with doctors. You know, the government ripped up the master agreement with Alberta doctors a month or so before it was going to expire. And it's been public, it's been nasty. And can you think of a worse time to have a dispute months long with doctors? You need labor peace and that's not what I'm hearing right now. Quite frankly, you're never going to change your health system to make it more sustainable if the first thing you do is go to war with the people who work in the health system. And the second is exactly what you were talking about before.

The jobs that people thought would appear under UCP policies just haven't. Some of it has been COVID related, but some of it has not. And it's that cautionary tale when politicians are elected to be saviors, and to, you know, fix everything in a term, they can't possibly live up to it. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. Hi, it's Ramit Sethi here. You may have seen

my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people I speak to, 50% of them do not know their own household income? That's not a typo, 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Cups. I want to talk to you today, given everything that we've talked about. What is Jason Kenney doing to try and get the province out of this hole, though? I know just last week he made this big announcement about hydrogen and plastic.

So what's going on there? Yeah, so this is Ken Kenny's plan to diversify. We are aiming for having the top system in the western half of the North American continent for plastics recycling and reuse to help meet goals of reducing plastic waste to zero. There really is billions to be made in it. Most plastic isn't actually recycled and turned into other products, contrary to what a lot of people believe when they do their blue box stuff. It's unclear how Ottawa's plan to ban single-use plastic will affect the volume of plastic that could come into Alberta for recycling.

But the federal plan to turn plastics a toxin is really the biggest concern. And Kenny was ticked off about it. He's warning that that could take 10s of billions of dollars off the table in Alberta, and also warn off the same types of investors who have already pulled out or are considering pulling investment money out of Alberta. The second part of the plan, and I would argue the bigger part, is to diversify the economy through hydrogen production. Putting Alberta on the global hydrogen map now, as this energy source is beginning to gain prominence and promise, will be crucial for us to be at the forefront of change, future changes in energy. Now, just as a primer, hydrogen is viewed by many as the fuel of the future. You could fill up a car

or a truck, you can heat a building, and the only byproduct from it is water. It's very clean. But there's more than one way to make hydrogen. The first way is green hydrogen and that's made with renewable energy sources like wind or solar. Few if any emissions involved in that. The second way is blue hydrogen and that's where Alberta wants to head. It's made using fossil fuels in Alberta's's case, natural gas. And while the end product is still emissions free, you can still drive your car and only have water as the byproduct. It produces emissions during the making of it that would have to be captured and stored. So critics say, why don't you just go green now and, you know, build solar farms and more wind farms. You're making the shift anyway. The argument for blue hydrogen is that it will not only exploit the plentiful natural gas in Alberta,

but it would use existing infrastructure and even use the same skilled workforce. It's a uniquely Albertan approach, taking what we have in abundance and adapting it to meet the world's needs using cutting-edge technology. This is the path to diversification. And here we are again, Jamie, back at that job creation again

for those folks who are looking at the future and not seeing a great one. This might be the ticket that they're looking at. Right, the people who are out of work right now. But you have to think this blue hydrogen plan, that investors might still be wary of this. You know, why is Jason Kenney feeling so confident about this blue hydrogen plan? Is Jason Kenney feeling so confident about this blue hydrogen plan? Well, I think it is an easier sell than just sort of straight fossil fuels. There's no question than that it's cleaner.

But it is going to count on having the belief that hydrogen really will be the fuel of the future. And we don't know that yet. Right now, electric cars are taking off, and they're not hydrogen based. So it's a it's a gamble like any transition into the into the future. But, you know, I think that Premier Kenny and his government think that it's their way of showing that they do actually care about the environment, that they are seeing that the future is going, you know, to net zero emissions, and that they are on that road. There's an underlying message in in their plans to still keep their industry involved in the circle, but looking to the future. Certainly, that's the message they're trying to send.

But this investment in hydrogen and plastics, it doesn't mean he's giving up on oil and gas, though, right? Because I know that he put $1.5 billion towards the controversial Keystone XL pipeline project at the end of March. And this is seen as a way to get oil to the Gulf Coast market. $100 billion of annual exports of Canadian oil alone. That's what this pipeline is about, getting those resources to markets. This is also seen as a bit of a gamble because given the U.S. election is just a few weeks away, it really is dependent on who might win. So it's, you're absolutely right. It's a tight wire act. Kenny, before Joe Biden became the Democratic candidate and was simply the presumptive nominee, he figured that Biden was going to be much more friendly to it than President Obama had been.

Then in May, Biden pledged to cancel Trump's presidential permit. I've been against Keystone from the beginning. It is tar sands that we don't need that in fact is very, very high pollutant, number one. So the question really now is that a death blow to Keystone XL if Biden wins, or is it a simply a negotiating point? And all of the parties that have been at the table horse trading, you know, for a way to get it built or stop it from getting built? Are we just going to basically start that all over, but certainly the uncertainty of these projects and the years and years that they take to either get approved or killed is, again, a disincentive for investment, which has been making it very tough. So we've talked today about a few of the hopes and the plans to raise Alberta's revenues, hydrogen, plastics, among them.

But I know that the province has a reputation for its lower taxes. It's got no provincial sales tax. And might that be a way to help raise some revenue as well, bring in some tax revenue? bring in some tax revenue. Well, it would in in the mind of many economists, and what it would also do is stop the roller coaster of living and dying on the prices of resources that are taken from the ground. There has been a bit of a warming about it. There's more and more people who are, you know, talking about it as, look, it's time. There are people who are saying this, you know, blow from COVID might be a good cover to say, look, we have to finally just do this. Alberta not having a sales tax actually has created an Alberta tax disadvantage, not an advantage at all. If you ask individuals, do you like to pay more taxes?

People say no. But we have to, what other options? What other options do we have? How can we come out of this problem? But what you need to understand about a sales tax in Alberta is that it's not actually about numbers. It's a point of pride. actually, about numbers. It's a point of pride. It has been messaged for decades as the Alberta advantage. We don't have to pay a sales tax. Do you support a sales tax in Alberta? Not really,

no. They got enough taxes already. Do you think this province should have a sales tax? No. It wasn't paid enough as it is. It's one of the good things about living in Alberta. I mean, you look at all the other provinces and you have to pay double the tax, right? And it would be political suicide, at least in the past, for any party to introduce a sales tax. And so even though a large list of economists, pundits, you know, even people on the street say, look, it's time for a sales tax. It is really questionable whether someone like Jason Kenney, who really does want to build on the Alberta advantage and really does want to be the leader of times like those old glory days, whether he would be the person to introduce it. If a tax isn't feasible, when it comes to bringing in some revenues for Alberta,

I suppose the other option is more cuts, austerity. And these kind of attempts to cut or curb government spending is a usual playbook, especially for conservatives in usual times. His first proposed budget last year, pre-COVID, outlined all sorts of cuts. And now these are not usual times. We're in a pandemic. And so do you think this is still going to be the playbook for Kenny? Are there more cuts to come?

Will we be seeing more headlines like we did this week, 11,000 jobs lost in the health sector? Yeah, well, I mean, they're being outsourced. So those people will probably be, some of them at least, will be hired back through private companies. But absolutely, I don't see that there is any change in direction. I think the current circumstances have slowed and made them meander, but they haven't really stopped. They still ripped up the doctor's master agreement. They still made a plan for outsourcing 11,000 jobs to, you know, people who work the laundry,

kitchen, lab services in healthcare. I don't imagine it's going to stop them at all. What it will really do is perhaps change the timeline. But as any government knows, you don't want to be doing those things in a year before the election. So I'm expecting more cuts, for sure. I'd have to have a crystal ball to figure out when they're going to come. But I will bet you that they will come within the three year mark of the UCP government, so that they can spend that last year, sort of taking a victory lap in advance of an election. Okay, Carolyn Dunn, thank you so much. Thank you. All right.

So before we go today, both U.S. presidential candidates held dueling town halls Thursday night separately on different television networks. This follows Donald Trump's refusal to take part in a virtual debate that was triggered by his COVID-19 diagnosis. Both candidates were asked about the use of masks in curbing COVID infections, and here's a bit of how they each responded. We'll start with Biden. The words of a president matter. Absolutely. No matter whether they're good, bad, or indifferent, they matter. And when a president doesn't wear a mask or makes fun of folks like me when I was wearing a mask for a long time, then, you know, people say, well, it mustn't be that important. But when a president says, I think this is very important, for example,

I walked in here with this mask, but I have one of the M95 masks underneath it. I left it in my dressing room, the room I was in before I got here. And so I think it matters what we say. And we're now learning that children are getting the virus, not with as serious consequences, but we haven't, there's been no studies done yet on vaccines for children. So there's a long way to go, but we haven't there's been no studies done yet on vaccines for children so there's a long way to go but we can make progress in the meantime and save lives and last point i'll make if you if you listen to the head of the of the cdc he stood up and he said you know while we're waiting for a vaccine he held up a mask you wear this mask you'll save more lives between now and the end of the year than if we had a vaccine.

And if we had a vaccine, it's estimated by every major study done from the University of Washington to Columbia, that if, in fact, we wore masks, we could save between now and the end of the year 100,000 lives. You have on the masks, you know, you have two stories. You have a story where they want a story where they don't want. I am all for it. I don't get that because it's just all of your public health officials, your administration, they're in unison about this. They're all in unison about it. The University of Washington, which is a they have a model that your coronavirus task force relies on, says that if everyone wore a mask, you could cut expected

deaths in half. And then you have other people that disagree? Well, what does that mean? Scott Atkins, if you look at Scott, Dr. Scott, he's from great guys, Stanford, he will tell you that he disagrees with you. He's not an infectious disease expert. Oh, I don't know. Look, he's an expert. He's one of the great experts of the world. But I don't get it because you have so much power and influence as president. You could go to your, you could require it at your rallies. And you could say, everyone put on a mask right now. And the University of Washington says you would save lives. University of Washington.

Then you have other places say different things. You have a lot. Hey, Dr. Fauci said, don't wear a mask, right? At first, but then everybody agreed. Well, I don't know that he changed his mind. But then you have a report coming out two days ago that 85% of the people wearing masks. I looked at that report.

It's not about mask wearing. It was neutral on the question of masks. We're on the same side. I say wear the mask. I'm fine with it. I have no problem. We're on the same side. Biden and Trump are scheduled to debate each other for the second and final time before

the election on October 22nd. That's all for this week. FrontBurner comes to you from CBC News and CBC Podcasts. The show was produced this week by Imogen Burchard, Elaine Chow, Ali Janes, and Shannon Higgins. Derek Vanderwyk does our sound design with help from Mandy Sham. Our music is by Joseph Chabison of Boombox Sound. The executive producer of Frontburner is Nick McKay-Blocos, and I'm Jamie Poisson. Thanks so much for listening, and talk to you on Monday. For more CBC Podcasts, go to cbc.ca slash podcasts.