Danielle Smith brings Social Credit back to life in Alberta
In 1971, after more than three decades in power, Alberta’s Social Credit government was finally defeated. The kooky economic policies and constant red-baiting that defined its time in office — along with the good fortune of governing alongside an oil boom — was replaced by Peter Lougheed’s more pragmatic and market-oriented approach to governing.
Now, in 2023, the spirit of Social Credit is being resurrected by Danielle Smith’s United Conservative Party, and it’s already wreaking havoc on the province.
Like the Social Credit governments of Ernest Manning and “Bible” Bill Aberhart, Smith’s UCP depends heavily on rural Alberta for its political base. Case in point: In the 40-plus years of the Progressive Conservative dynasty, along with Jason Kenney’s three-plus years at the helm of his UCP government, they always had the biggest caucus from Calgary and Edmonton — and it was never really close. In the 2023 election, though, Rachel Notley’s NDP won more seats in Calgary, and ran the table up in Edmonton. That makes Smith’s UCP the most rural-oriented government in Alberta, by far, since the last one Manning led in 1967.
Like Aberhart and Manning, Smith’s government is backstopped by right-wing religious conservatives. David Parker, the head of “Take Back Alberta” (and a personal friend of the premier), has made it abundantly clear he sees a much larger role for religion and faith in Smith’s government than the ones preceding it. “I grew up in rural Alberta and these are my people,” he told Global News during the recent provincial election. “Are they more Christian and right-wing, by and large … in rural Alberta? Absolutely. But I was seeing them being completely pushed out of society.” Parker’s group has already taken over half of the UCP executive and intends to capture the rest at this fall’s AGM in Calgary.
Smith’s UCP has also been unafraid to do things that would instantly be described as “socialist” if they came from her political rivals. Alberta’s recent moratorium on new wind, solar and geothermal projects has damaged confidence in the renewable energy sector, which was growing more rapidly than anywhere else in Canada. Dozens of projects worth hundreds of millions of dollars are at stake, along with Alberta’s reputation as a safe place to invest capital. But because Smith’s rural base was apparently uncomfortable with the sight of solar panels and wind turbines in their communities, she put a stop to all of that.
Her decision to nationalize Dynalife Medical Labs, an Edmonton-based company that took over previously publicly operated testing and lab services just last year, is yet another decision that would surely be characterized as creeping socialism by the far-right journalists and pundits who seem to cheer her every move. Indeed, when the previous NDP government tried to centralize testing services under one publicly owned umbrella, it was characterized by Kenney and his UCP allies at the time as “ideological.” "We're standing by our commitment to cancel the expensive and disruptive superlab project and the ideologically driven plan to nationalize Dynalife," said then-health minister Tyler Shandro in 2019. All told, his government spent more than $35 million tearing down the so-called “superlab” that was already being built.
Smith’s willingness to trade in conspiracy theories invoking the spectre of “Marxism” — whether it’s in reference to UNDRIP or the World Economic Forum — harkens back to Ernest Manning’s obsession with the same, especially when it came to the media. “There are always a goodly number of men in that field who are sympathetic to the socialistic and even communistic philosophy. You even have the same thing, to varying degrees, in the field of education. It isn't by chance that you find these agitations of Marxism and so forth in many of our universities."
But it’s Smith’s plan for the oil and gas industry and its ever-growing environmental reclamation debt that might be the biggest throwback of all. The controversial “RStar” program, which would hand taxpayer money to highly profitable oil and gas companies in order to get them to clean up their old wells, has been on Smith’s mind ever since she lobbied for it as the CEO of Alberta Enterprise Group. It’s in the mandate letter for Energy and Mines Minister Brian Jean, who has been charged with “developing a strategy to effectively incentivize reclamation of inactive legacy oil and natural gas sites and to enable future drilling while respecting the principle of polluter pay.” And while the premier was conspicuously quiet about it during the recent election campaign, expect that silence to end shortly.
Cleaning up these old wells is, of course, something companies are legally obligated to do, even if those obligations are rarely enforced. The irony of suspending permits for wind and solar development on the basis that its own future reclamation liabilities aren’t sufficiently funded, while continuing to push for more oil and gas production, isn’t lost on anyone who’s paying attention. But Smith has made it abundantly clear her first loyalty is to the near-term interests of oil and gas companies, and cutting them a multibillion-dollar cheque seems like a pretty good way to advance them.
This flurry of questionable decisions has understandably left the province’s business community a bit bewildered. Both the Calgary Chamber of Commerce and the Alberta Business Council, organizations that should instinctively stand up against anti-free market behaviour, have been conspicuously silent about the renewable energy moratorium and the nationalization of Dynalife. Smith’s behaviour might even confuse some of her Calgary supporters, who thought they were electing a pro-business conservative rather than an anti-market rural populist.
But make no mistake: This is who she is, and she’s only getting started. Expect more pitched battles against reality, whether they involve “Marxist” environmentalists or a federal government that remains determined to do something about climate change. Brace for things like an Alberta pension plan and tax collection agency, ideas that don’t actually make economic sense but speak to the populist desires of her base. And know that as dumb as things might seem today, they can and will get dumber.
When it comes to the rising cost of groceries in Canada, there are two popular explanations: the carbon tax and “greedflation.” The former has been largely debunked by economists like Trevor Tombe, while the latter has been a popular subject for politicians like Jagmeet Singh. But when it comes to Alberta’s soaring electricity prices, the culprit is much more obvious: the province’s private utility sector.
Unlike most provinces in Canada, Alberta’s electricity market revolves around private companies bidding into an open market. With the so-called “power purchase agreements” signed by the former PC government rolling off after their 20-year terms, utilities were suddenly free to operate in ways they couldn’t before. That includes something called “economic withholding,” which is when a utility decides not to offer power to the market because it thinks prices aren’t high enough.
All of a sudden, Alberta’s electricity prices skyrocketed. With less competition and growing demand for electricity, utilities could raise their bids significantly above their costs — or simply not bid at all. The result was a huge leap in the so-called “market markup” in just one year. “In 2020, the difference between the realized market price and what we get from our model with all firms offering at their marginal cost — what we call the “market markup” — was only $9/MWh,” University of Calgary economists Blake Shaffer, David Brown and Andrew Eckert noted in a 2022 paper. “In 2021, this markup nearly quintupled: to $44/MWh — a change of $35/MWh.”
This particular version of “greedflation” has only gotten worse in the years since. Jim Stanford, an economist and the director at the Centre for Future Work, noted Alberta’s electricity charges were up more than 127 per cent on a year-over-year basis in July 2023, a huge leap compared to the 12 per cent rise in neighbouring Saskatchewan, never mind B.C.’s paltry 1.5 per cent increase. “The free market does it again,” he tweeted. “Chaos in Alberta's privatized electricity system is now contributing materially to inflation (hence, higher interest rates, risk of recession, etc.). Meanwhile, prov's with publicly-owned & stably-regulated power (BC, Que, Man) have stable prices.”
If Danielle Smith is willing to nationalize a medical testing company, maybe she’s open to introducing some form of public ownership or investment in Alberta’s increasingly destructive electricity market. Desperate times, after all, call for desperate measures.
When it comes to housing, the problem is us
No matter where you live in Canada right now, NIMBYism is a huge impediment to getting new housing built in your community. But as a recent column by the Vancouver Sun’s Dan Fumano reminded me, there’s still no NIMBY quite like a Vancouver NIMBY.
At issue was a proposal for a daycare in a leafy westside neighbourhood, one whose residents reacted to the prospect of eight additional children in their midst like they were being asked to live next to a chemical weapons facility. And so, they took their grievances to city council and its board of variance — which, true to form, ruled unanimously in their favour.
Fumano’s story reveals why it’s so hard to get anything done on the housing front these days, and how much of it has to do with our selfishness. Brian Peers, a resident who appeared at the public meeting, submitted written comments suggesting, “If this precedent is set, there is nothing stopping another homeowner to convert their house into a funeral home, motorcycle repair shop, corner store, gym, dry cleaner, etc. Should this application be granted, you can expect legal action against the city on behalf of the neighbourhood… Govern yourselves accordingly and deny this application.”
Another opponent, a commercial realtor named Mark Goodman, wrote that “it does not make sense to have 16 children being dropped off and picked up five days a week in an already [jam-packed] area with traffic congestion and a lack of parking.” Goodman’s opposition was notable, given that he has argued for a dramatic increase in the pace and density of real estate development in a variety of different fronts and forums. One can only assume those other neighbourhoods where he’s recommending more density would also experience increased traffic congestion and parking issues.
Most galling of all, perhaps, was the opposition from James Lehto, a former senior planner with the City of Vancouver. In his comments during the meeting, he said: “One always wants to have something that they want, that’s useful, right beside them,” which presumably includes a daycare. “I’d like to have some certain uses beside my house, then I wouldn’t have to go so far.'' But when it came time to translate this theory into practice, Lehto suggested it should happen in someone else’s backyard. “It’s too much,” he said of the proposed daycare. “It’s a bridge too far.”
Homeowners going to bat for their narrowly drawn self-interest is nothing new, of course. But it continues to have a dramatically outsized impact on the planning and development choices being made in this country’s cities, and it’s slowly choking the life out of places like Vancouver and Toronto. We need elected officials who are willing to stand up for the greater good, even if it’s not being represented as vociferously as the status quo at these sorts of meetings. Homeowners aren’t entitled to have their neighbourhoods encased in regulatory amber, and the squeaky wheels don’t have to get the grease — not, at least, if we want to build more vibrant and livable communities.
Good News of the Week: Europe is kicking its addiction to fossil gas
When Alberta Premier Danielle Smith, Energy Minister Brian Jean, federal MP Greg McLean and a bevy of oil and gas industry executives gather in Banff today for the Canadian Energy Executive Association’s “Energy Business Forum,” you can bet there will be plenty of talk about LNG. Like most conservatives, and especially the ones in Alberta, they continue to believe they can meet their emissions reduction targets by exporting LNG, a fantasy that I’ve debunked any number of times already.
The odds of Alberta getting emissions reduction credits for LNG exports are only slightly higher than my odds of becoming Alberta’s next premier, and that’s not just because most of the gas that will be exported from B.C.’s LNG facilities is going to come from … B.C. It’s also because the global LNG market is continuing to shift in ways that aren’t favourable for countries looking to export more of it.
In Europe, for example, the continent continues with its ever-accelerating divorce from gas. Russia’s invasion of Ukraine and subsequent weaponization of its exports has triggered a huge rush towards technologies like heat pumps, whose sales rose 39 per cent in Europe in 2022. Installations of new solar rose almost 50 per cent last year, making it the first time renewable sources created more electricity than combusted fossil gas.
As the Wall Street Journal’s Carol Ryan wrote: The forecast for global gas demand has already shifted from 18 per cent growth by the end of the decade to just 10 per cent. According to Gergely Molnar, an analyst at the International Energy Agency: “The window of opportunity for natural gas is tightening all around the world.” Yes, growing economies in Asia will need more in the years to come, and Europe still has work to do to fully wean itself off gas imports. But as Ryan noted: “Buyers and sellers of natural gas took very different lessons from last year’s record prices, and the fuel’s reputation as a cheap, reliable form of energy took a hit. The pace of change in Europe’s gas market raises the risk of a glut.”
As far as the climate is concerned, that’s very good news. The people at today’s business forum up in Banff, one that includes a “fireside chat” about the energy sector’s future? Well, their dreams of endless growth for fossil fuels are probably going up in smoke.
Last week, I wrote about Suncor’s decision to eliminate its chief sustainability officer role and focus squarely on its traditional business model. Or, as new(ish) CEO Rich Kruger likes to call it, “winning.”
This strikes me as a form of surrender on Suncor’s part, one that’s probably informed by the posture of its premier and provincial government in Alberta. But it also gives the federal government a perfect opportunity to make its case for a legislated oilsands emissions cap — and maybe even turn it into an election issue down the road. I’ll probably write about that soon.
I also covered the ludicrous conspiracy theory about The Canadian Press that was ginned up by Pierre Poilievre, Andrew Scheer and Leslyn Lewis, among others. No, a bunch of different outlets running the same CP story isn’t a sign of “collusion” as they intimated, especially since it happens all the time — including on stories that aren’t flattering to the governing Liberals.
But if the advertising campaign and new look for Poilievre are part of an effort to soften his image, this instinctive petulance on his part is what the Liberals have to swim against. Neither Poilievre nor the party he leads can help but take a swipe at the media and in the process, remind Canadians — and even Postmedia heavyweights like John Ivison — that, to borrow Logan Roy’s famous line, they are not “serious people.”
Finally, I pointed out why tweeting against the carbon tax while your own riding is on fire might not be the best look for Conservative MPs like Tracy Gray. I don’t expect any of them to listen to me, of course, but their steadfast refusal to take climate change even a little bit seriously tells me this could be a winning issue for the Liberals in the next election — one that might just come at the end of another smoky summer.
Here’s hoping you can enjoy what remains of this one.