Friday, June 15, 2007

Just whose boom is it?

Like many Calgarians I have witnessed Alberta's boom and wondered where on earth I can find it in my life? Across the board, my cost of living has increased while my income has not kept pace. While I'm not complaining, I don't see my bank account leaping upward every month with the price of oil.

In a province perceived by most Canadians to be the land of milk and honey, Diana Gibson, Research Director for the Parkland Institute, an Alberta research network situated within the Faculty of Arts at the University of Alberta wanted to find out, just whose boom is it? Her report, The Spoils of the Boom: Incomes, profits and poverty in Alberta, (June 2007) released June 13 by the Parkland Institute, clearly shows that the discrepancy between perceived and actual wealth is a fact of life for low income Albertans and for the 'squeezed middle'. Her research showed, for example, that over half of Albertans surveyed by Environics Research Group in March 2007 stated they were not benefiting from the boom ( According to the survey, one-half either felt worse off (17%) or "about the same" (34%).

On Thursday, June 16th, Ms. Gibson provided an overview of the report's findings to an audience of approximately 50 Calgarians who met at the Drop-In to hear her speak. Ms. Gibson was joined by a panel of three individuals involved in poverty reduction and homelessness, Connie Johnson, Interim Director Vibrant Communities Calgary, Chris
MacFarlane, Director Poverty Reduction Coalition and Dr. Linda MacLean, Manager Special Projects, Calgary Drop-In & Rehab Centre. The moderator for the evening was Bob McInnis, Executive Director of Brown Bagging for Calgary's Kids.

Is it a figment of our collective imaginations?

According to Ms. Gibson, the boom and its impact on average Albertans is not a figment of our imaginations. The boom exists, but the average Albertan is not benefiting from its largess. Using Alberta's Gross Domestic Product (GDP) as a standard measurement of economic growth, Ms Gibson stated that GDP increased by approximately one third between 1991 and 2003. Average incomes stayed the same.

In addition, to support her findings, she conducted an analysis of ten Alberta based oil and gas corporations. The analysis revealed that average revenues in 2005 for the ten companies considered were $5.2 billion each; an increase of 26.5% over average revenues in 2004. For the period of 2003 to 2005, average return on investment increased by 21.7% for 2003 and 23.1% in 2005. For these ten companies, the trickle up trend ensured that average salaries and bonuses increased, especially when stock options of up to $7.4 million are included. Average dividends also increased by $213 million in 2005, up by 28.6% over 2004.

So, where is all the wealth going?

According to the study, record amounts of GDP are going to corporations, not to individual Albertans -- unless they're in the top 10 percent income bracket that is. For these folk wealthy enough to be in the 10% group, trickle up trends abound in boomtown. As do unprecedented corporate profits and revenues. In February, 2007 Statistics Canada released a report stating corporate operating profits had reached their second consecutive record high in 2005, led by the oil and gas sector. The bulk of these monies benefit foreign corporations and foreign shareholders. According to Statistics Canada, close to half of the assets and over half of the revenue in oil and gas extraction in Canada are foreign-owned.

And the poor get poorer.

For all the upside, there is a downside. Those most affected by the downside of the boom are those who can ill afford it. While current unemployment rates show that more Albertans are working and fewer are living below the low income cut off (LICO), for the 56,000 Albertans receiving social assistance, the boom has become the bane of their existence.

Our rapidly expanding economy, with its soaring real estate prices, tight labour market and strong immigration are putting the 'easy life' out of reach of the average joe. Homelessness is being fueled by one of Canada's lowest minimum wages and non-inflationary indexed social assistance incomes are impacting the lives of those who cannot look out for themselves without a little help from the Province. In their Cost of Living Fact Sheet, published by Vibrant Communities Calgary, the average monthly cost of living in Calgary is $1,769.16. A family of three with one minimum wage earner would come up short every month by $702.16, just for basic necessities.

According to the National Council on Welfare, "Lone parent families in Alberta, Canada's richest province, received just $12,326 -- only 48 percent of the poverty line." Struggling to exist on fixed incomes, these individuals and families are being hit hard by the boom's sky-rocketing rent increases and the ricocheting affect of daily cost of living adjustments.

In her concluding remarks, Ms. Benson stated that for the past few years, Alberta has been experiencing "dramatic uncontrolled growth." In her report she concludes by stating that "Average Albertans are less well-off than they were previously and those whose incomes are rising, are making gains because they are working more hours, not receiving higher wages. For those Albertans at the bottom, their incomes are falling; social assistance rates are at 50% of the levels of the 1980s, minimum wages are not keeping up with inflation and are still amongst the lowest in the country. Homelessness rates have been skyrocketing and increasing numbers of Albertans are at risk of homelessness. Middle income Albertans, already the hardest working families in the nation, had to work more hours to get ahead."

While Ms. Gibson acknowledged that the scope of the report could not provide an in-depth set of policy recommendations to address all of the issues raised, it did set out brief, general recommendations in five key areas that Albertans could and should be lobbying the government to take:

1. Address the crisis and work towards poverty elimination -- take immediate measures to address poverty and homelessness and implement long term strategies to eliminate poverty.

2. Democratize -- Develop counterbalances to offset the disproportionate weight of oil and gas extraction companies on government police.

3. Rent Controls -- Take action to protect lower income Albertans from the downsides of the boom by pacing the development in such a way that growth in Alberta is slowed to a more orderly, manageable pace.

4. Capturing a greater share of unearned profits -- Implement measures that will curb the flow of extraordinary and unearned profits going to foreign corporations.

5. Progressive taxes and corporate taxes -- The government's current reliance on volatile fossil fuel revenues to fund social programs needs to be addressed through reinstating progressive taxes that capture more of the riches at the top end of the income scale.

For the participants at the session, Ms. Benson's comments were supported by the three panel members who all agreed -- It is not the time to point fingers. It's time to take action and make a difference in the lives of those for whom the only difference the boom has made in their lives, is the speed at which they're falling behind and the distance they have to travel to hit rock bottom and .

If you are interested in reading the Parkland Institute's report, The Spoils of the Boom: Incomes, profits and poverty in Alberta, (June 2007) visit their website at: or call, 780-492-8558.

1 comment:

Anonymous said...

Rent controls do not work for obvious reasons. Forcing landlords to subsidize needy people is grossly unfair. The needy sector of the population should be subsidized by all taxpayers...not just landlords.