Top three reasons Kenney and the UCP would be BAD for Alberta’s economy

Many Albertans don’t like Jason Kenney.

They don’t like his arrogant attitude or his willingness to stretch the truth.

They don’t like his eagerness to privatize health care and cut public services.

And, they don’t like his apparent coziness with bigots and extremists.

However, despite all of these concerns, many people are still willing to hold their noses and vote for him because they’ve been convinced that only conservatives know how to manage the economy.

Don’t believe it! The truth is, Jason Kenney and his policies would hurt the Alberta economy, not help it.

Here are the top three reasons why Kenney is literally the last thing our economy needs right now.

1. Trickle-down economics don’t work

 

The core of the UCP’s economic strategy is a discredited theory that hasn’t worked anywhere or anytime.

Jason Kenney says that, if elected as premier, he would cut taxes on corporate profits by 33 per cent, meaning that profitable corporations in Alberta would pay less than corporations in any other province.

The first problem with this approach is that investment in Alberta is not down because of our tax rates or any other policies of the current government; it’s down because of low oil prices. Tax cuts for rich people won’t change that fact.

The second, and much bigger, problem with Kenney’s plan is that it won’t work: in fact, it will shrink the economy, rather than grow it.

How do we know this? Well, we know this because Kenney’s “handouts-for-the-rich” approach has been tried before. Many, many times.

Just look at what happened in Kansas and Oklahoma when these policies were implemented; or at the national level in the U.S. with Trump’s tax-cut plan.

Conservatives call this approach “trickle down” economics  because the benefits of giving hand-outs to the rich are supposed to “trickle down” to everyone. But as Nobel prize-winning economist Paul Krugman says: “There isn’t a body of serious work supporting (those) tax ideas, because the evidence is overwhelmingly against those ideas.”

In a nutshell: corporate tax cuts don’t spur investment or create jobs, because corporations just pocket the savings in the form of higher compensation of CEO and share buy-backs to articifically boost share price. But they DO lead to increased public debt and underfunded public services.


We’ve calculated that Kenney’s plan to slash corporate tax rates by 33% would actually lead to 12,000 fewer jobs for Albertans, hurt GDP growth, and leave a $2 billion hole in the provincial budget.

2. Kenney will suppress jobs and wages … which suppresses the economy

 

If he’s elected, Kenney has promised that this summer will be the “summer of repeal”.

He will freeze the minimum wage and reduce it for young workers.  He will tear up all the workplace and WCB laws passed by the NDP, laws that finally gave Alberta workers the same kind of protections in the workplace as other Canadians.

And, of course, he will go after unions and cut public-sector jobs.

It’s not often framed or presented this way, but it’s important to recognize that workers’ rights are an economic issue.

They’re an economic issue because 60 per cent of the economy is driven by consumer spending and if jobs, wages and benefits are suppressed by anti-worker policies from anti-worker governments, the economy suffers.

The Alberta Federation of Labour has calculated that the Notley government’s increase in the minimum wage to $15/hr had the effect of injecting an extra billion dollars into the provincial economy each year, while also helping to cut the poverty rate in half. A freeze or cut in wages would have the opposite effect.

In a similar way, Kenney’s promise to cut spending on public services by as much as 20 per cent, would have a very negative effect on the overall provincial economy. Cuts of that magnitude would lead to the loss of thousands of jobs. This would, in turn, result in a significant drop in consumer spending. It could, in fact, set off a new recession (which we could call the “Kenney Recession”).

What Kenney ignores is that laying off a teacher or nurse doesn’t doesn’t bring back jobs lost by tradespeople or drillers; it just adds to the ranks of the unemployed.

To put it another way, the economy is like a plane with two engines: one for the private sector, the other for the public sector. Low oil prices are making the private-sector engine sputter. Jason Kenney would deal with that problem by turning off the public-sector engine. If you think that’s a recipe for an economic nose-dive or crash, you’d be right. But that’s exactly where we’d end up with Kenney in the cockpit.

 

3. Kenney’s UCP has no plan to address unprecedented changes the oil and gas sector

 

The third reason why Jason Kenney would be bad for the Alberta economy has to do with the oil and gas sector.

Albertans are feeling anxious about our most important economic sector. And that anxiety is justified because what we’re experiencing is NOT just another boom and bust cycle.

Instead, our economy is being buffeted by an unprecedented transformation in the global oil and gas economy.

This transformation starts with the fracking boom in the US that has completely upset the global supply-demand balance for oil and has turned our biggest customer into our biggest competitor.

It continues with the wave of automation that is eliminating jobs in the oil patch, allowing oil companies to produce more oil with fewer workers and it culminates in the move away from fossil fuels that is gaining steam across the world.

Jason Kenney and the UCP deny that this change is happening and have no plan to help prepare our oil and gas sector for the future. Instead of a coherent economic strategy to deal with change, all they offer is finger-pointing, scapegoating and potentially counterproductive PR campaigns and political attacks on other Canadian jurisdictions.

What the Alberta oil and gas sector really needs is:

  • Support from the government to gain access to markets other than the US (which the Notley government is doing)
  • Support from the government so that oil sands producers can reduce their per-barrel emissions in order to gain access to markets in Asia with increasingly stringent emissions standards (which the Notley government is doing)
  • Support from the government to diversify into segments of the market where demand continues to grow, like petrochemicals (which the Notley government is also doing).

When it comes to our oil and gas sector, the future will be defined by change. The Notley NDP understands this is preparing for the future by diversifying both within and beyond the oil and gas sector. The Kenney UCP, on the other hand pretends that they can wave a magic wand and go back to a past that no longer exists.

 

So, what does all of this tell us?

It tells us that if you’re concerned about jobs, if you’re concerned about investment, if you’re concerned about the economy…  Jason Kenney is literally the last person you should support in the upcoming election.

 

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