The Importance of the Regina Dewdney Bye Election
by John W. Warnock
September 12, 2009
Act Up in Saskatchewan
Premier Brad Wall has called bye elections for Regina Dewdney and Saskatoon Riversdale, to be held on September 21. The Regina election is of particular importance because Dwaine Lingenfelter has returned from Nexen oil corporation in Calgary, has won the contest for leadership of the provincial New Democratic Party, and is now seeking a seat in the legislature. Sitting NDP MLA Harry Van Mulligan resigned his safe NDP seat hoping that Lingenfelter could take his place in the legislature.
The question of nuclear power
The biggest political issue in the province over the past year has been the proposal by the Saskatchewan Party government to build a nuclear reactor to provide electrical power to the province and the Alberta tar sands. This proposal has the support of the Saskatchewan Power Corporation.
As Lingenfelter stressed in the NDP leadership debates, NDP governments have a long history of supporting uranium mining, the processing of uranium and nuclear power development, beginning with Tommy Douglas. Leading up to the NDP leadership campaign Lingenfelter had been touring the province promoting nuclear power and tar sands development.
During the NDP leadership campaign candidates Ryan Meili and Yens Pederson, representing the youth movement in the party, strongly opposed nuclear power while advocating a shift to conservation, solar and wind power. They also urged a return to the founding principles of the party, which emphasized a commitment to expanding the welfare state and eliminating poverty.
In contrast, Lingenfelter was a member of the inner circle of Roy Romanow’s NDP government, serving as Minister of Economic Development, Minister for the Crown Investment Corporation, Minister of Agriculture, and Deputy Leader. He won in Regina Elphinstone in 1999 but then resigned his position in the government and the legislature to take a high level position with Nexen Inc. Ironically, Nexen had acquired the Crown-owned Saskatchewan Oil and Gas Corporation, privatized by the Tory government of Grant Devine and the Romanow government.
Rising inequality and poverty
Paul Gingrich’s recent research for the Canadian Centre for Policy Alternatives shows the growing gap in income inequality in Saskatchewan between the top 10% of families and the bottom 50% of families. The gap expanded greatly during the period of the NDP governments of Roy Romanow and Lorne Calvert. Lingenfelter was a key player in the decisions to cut resource royalties, cut taxes on corporations, and lower the income taxes on those in the highest income brackets. Social assistance allowances were frozen and fell well below the basic needs level.
So there is a current major ideological divide in the NDP between the old guard, which has pursued a policy direction of social democratic neoliberalism, commonly associated with the UK Labour governments of Tony Blair and Gordon Brown, and the young members on the progressive left.
Where are the environmentalists?
The past year has seen a revival of the environmental movement in the province, led by the Coalition for a Clean Green Saskatchewan. This has been spurred by the popular opposition to nuclear power. The best estimates are that a power plant will cost a minimum of $10 billion. Many studies show that the green alternatives available would be much cheaper and result in the creation of more jobs.
In the meantime, since its origin in 1998 the Green Party of Saskatchewan has been strongly opposed to nuclear power and has promoted the soft energy alternative. They are attempting to make energy policy the primary issue in the two bye elections.
This is a test for the new environmental movement. In the past the environmental organizations and their leaders have been reluctant to criticize an NDP government. For example, in 1997 the Romanow government brought into the legislature a resolution strongly opposing the Kyoto conference on global warming and climate change and demanding that major polluting industries only be assessed voluntary guidelines for cutting greenhouse gas emissions. This resolution was unanimously passed by the legislature. Environmental groups remained silent.
Part of this is due to the fact that a great many of the leaders of the environmental movement have also been members and supporters of the NDP. What will they do in these bye elections? Sit it out and not vote? Vote for Dwaine Lingenfelter? Or will they put their principles first and get out and support the Green Party? So far they are sitting on the sidelines.
Green Party policy
At their press conference on September 11, the Greens released their platform for the bye elections. Aside from energy, the party is supporting the introduction of proportional representation, health care based on prevention, a public child care system, free tuition for higher education and a new partnership with Aboriginal people. Victor Lau, the candidate in Regina Dewdney, stressed the necessity of providing affordable housing. Tobi-Dawne Smith, the candidate in Saskatoon Riversdale, argued that the elimination of poverty is as important an issue as nuclear power.
The RCMP and Lingenfelter
One other major issue came up at the Green Party press conference. What is the status of the investigation by the RCMP Commercial Crime Division into the complaint against Lingenfelter and his campaign team for fraud in the NDP leadership campaign? The media has widely reported the use of forgery and fraud in creating 1100 new party members. The campaign manager turned in $10,000 in cash in small bills to the NDP head office. The RCMP was to determine whether or not Lingenfelter was involved in these illegal acts and whether criminal charges would be laid.
The RCMP launched their investigation on June 11. It surely must be completed by now. Yet the RCMP has yet to release the report and announce the actions it will take. The Green Party promised to raise this issue with the Premier and the RCMP. It seems only fair that the voters of this province have an answer to these serious allegations before they go to the polls on September 21.
NOTE: John W. Warnock ran against Dwaine Lingenfelter in Regina Elphinstone in 1999 as a candidate for the New Green Alliance.
Americans Blow Us Away on Wind Power
by John W. Warnock
Guest Editorial
Regina Leader-Post
July 27, 2009
In Saskatchewan recent governments have been promoting the development of nuclear power. But just over the border in the United States governments are giving full support to the development of wind power.
In a recent tour of North Dakota, South Dakota and Iowa, I was struck by the dramatic increase in wind power since I was there four years ago. In Iowa there are now 2,056 wind turbines in place generating 2900 megawatts (MW) of electricity. Saskatchewan has 116 turbines providing Sask Power with 172 MW out of a total capacity of 3200MW.
In Carroll and Crawford counties in Iowa, where I stayed for a week, MidAmerican Energy added 100 of the popular 1.5 MW GE turbines to their existing 66. This was done within one year at a total cost of around $300 million.
Iowa farmers are major beneficiaries. They receive an annual royalty of $5,000 for the establishment of a turbine on their land. The contracts are normally for 50 years, with an increase of 2% per year. There is an additional payment of $2000 as an installation fee.
There are federal and state incentives, which also go to individual and community projects. Farmers put up wind turbines. Communities are using them to power schools. The town of Wall Lake (population 750) has built one turbine and is considering adding a second. Wind power development is encouraged by the installation of a system of net metering, which eliminates the need to provide a storage and backup system. Demand management systems, where energy is priced higher during peak periods, encourages conservation and individual and community energy projects.
Similar developments are occurring in North Dakota. Currently there are 488 wind turbines in operation, providing 715 MW of power, enough to supply the electricity needs of 205,000 homes. By the end of the year this total will rise to 1,000MW. As the North Dakota Public Service Commission points out, this equals the production from two new coal fired plants, which normally take around a decade to bring on line.
In North Dakota there are now formal applications being considered by the Commission for constructing 1,412 turbines with a capacity of 5540MW of electricity. In addition, the Hartland Wind Farm project is in the planning stage, to be sited northwest of Minot. This two-stage project would add 1200 turbines. It is waiting until ITC Holdings constructs a new transmission line to take the surplus power to Minnesota and other eastern states.
The commitment to wind power has brought Iowa eight new manufacturing plants and around 3,200 new jobs. TPI Components established a plant to manufacture turbine blades, creating 700 new jobs. President Barrack Obama recently visited this plant on a green power promotional tour.
North Dakota’s commitment has also brought new production facilities. LM Glasfiber has a plant in Grand Forks building turbine blades and employs 800 people. DMI Industries in West Fargo manufactures towers for turbines and has opened a branch plant in Ontario.
Saskatchewan is the best location in Canada for the development of wind power and solar energy. Our potential is much greater than Iowa. It is unfortunate that the NDP governments of Roy Romanow and Lorne Calvert showed very little interest in these industries. This attitude is shared by Brad Wall’s Saskatchewan Party government. We have lost the chance to be a leader in this field, but it is not too late to get on board.
Why would the people of Saskatchewan choose to develop nuclear power if they knew the alternatives? Ontario asked for bids to build two new reactors at their Darlington plant. The cheapest of the three bids came from Atomic Energy Canada Ltd. at $26 billion. It takes at least ten years to build a nuclear reactor, and they always require enormous subsidies from the taxpayers. Conservation and alternative energies provide much cheaper and more flexible alternatives.
John W. Warnock is a Regina political economist, author and long time environmental activist.
Social Democracy on the Verge of Collapse
by John W. Warnock
June 18, 2009
Act Up in Saskatchewan
The European elections in early June revealed the continued decline of social democracy. Across Europe the total vote for the traditional party of the left declined from 28% in 2004 to only 22%.
Where there were social democratic governments, the voters spoke loudest. In Great Britain, the vote for Labour fell to a meagre 16%, below that of the UK Independence Party! In Spain, the vote for the Socialist Party fell five percentage points. In Germany the vote for the SPD was down to 21%, an all time low. In Portugal, the vote for the Socialist Party fell to only 27%.
The turnout was only 43%, exceptionally low for Europe. It was lowest in the Eastern European countries of the former Soviet Union.
Why is this happening? As the Financial Times rightly pointed out, today’s social democrats are on the same page as the traditional conservative parties. There are no significant policy differences. The world is in economic and financial turmoil, the worst since the Great Depression of the 1930s, and the social democratic parties have nothing different to offer.
The foundations of social democracy
Social democracy as we know it was created following the Russian revolution. The Second International comprised those parties which rejected socialism and revolution, arguing that it was possible to create “capitalism with a human face.” In the period after World War II social democratic parties formed the government in many First World countries, allied with the non-communist trade union movement. They produced the Keynesian welfare state, which greatly improved the lives of most people.
This began to change in the 1980s with the election of the Labour governments in New Zealand and Australia. The leadership of the parliamentary party shifted gears dramatically and embraced the neoliberal policies represented by Margaret Thatcher and Ronald Reagan. Tony Blair’s’ “New Labour” government in Great Britain entrenched this move to the political right.
Following the collapse of the Soviet Union and their client regimes in Europe, social democracy was left with no serious competitors on the political left. Instead of moving to fill the vacuum, they all shifted strongly to the right.
Embracing neoliberalism
Across the First World, social democratic governments have pursued the same policy package. This has included tax cuts for the corporate sector, tax cuts for those in the highest income brackets, a shift to regressive sales taxes and user fees, privatization of state-owned industries, deregulation of the economy, and deregulation of the financial sector. Universal social programs have been steadily reduced. We know these well in Saskatchewan.
The result has been the same everywhere, but most pronounced in the more free market economies of the Anglo Saxon world: rising inequality of income and wealth and rising poverty rates. It is no surprise that the social democrats have been steadily losing their base of support in the organized working class.
In addition, environmental concerns, especial global warming and climate change, have emerged as very important political issues. Historically, social democratic parties have been quite hostile to environmental issues. That is the main reason for the rise of the Green Parties.
Canadian social democracy
Canada, of course, has been part of this political evolution. On the federal level, the NDP, under the leadership of Jack Layton, has struggled to keep their vote total at 15%. They have offered no alternatives of substance in the period of the Great Recession and now hope that Stephen Harper can postpone an election. They have been unable to come up with any alternative to the Tony Blair-Bill Clinton deregulation of the financial industry.
In Saskatchewan the NDP was in office from 1991 to 2007. During this time their policy direction moved significantly to the right, embracing all the major planks of the neoliberal agenda. Dwaine Lingenfelter played a key role in this shift from the policies of Tommy Douglas, Woodrow Lloyd and Allan Blakeney.
A group of progressives within the Saskatchewan NDP has called for a movement to regenerate social democracy, to move back to a policy of social and economic justice. But how likely is this to happen? In a party that chose Lingenfelter as their leader? In isolation from social democracy in the rest of Canada? In isolation from the decline of social democracy across the First World?
The European elections can tell us something. First, the working class and the marginalized poor largely abstained from voting. This is a trend across all the First World countries, including Canada. Second, they do not believe that the social democrats have anything progressive to offer them. As many have pointed out, the trend in the European elections was for the working class and the poor to give their votes to the new fascist and far right parties. Why not? They have been abandoned by the social democrats.
John W. Warnock is retired from teaching political economy and sociology at the University of Regina. He is author of Saskatchewan: The Roots of Discontent and Protest (2004).
Saskatchewan NDP Holds Off Reform Movement
by John W. Warnock
June 8, 2009
Rabble.ca
The Saskatchewan NDP held a leadership convention the past weekend to select a successor to Lorne Calvert, who is retiring from politics. The victor was Dwaine Lingenfelter, long time party stalwart who was a key member of the inner circle of the cabinet during the government of Roy Romanow. But the campaign for the leadership and the convention showed deep divisions within the party.
The NDP swept into office in 1991 under Roy Romanow and were re-elected in 1995. However, in the1999 election the NDP vote fell below that of the right wing Saskatchewan Party, and they lost their majority of seats in the legislature. The NDP government held on to power by forging an alliance with the three Liberal MLAs. It was expected that Romanow would step down and Lingenfelter, the Deputy Leader, would be his successor.
Alberta detour
However, Lingenfelter resigned his seat in 2000, quit politics, and moved to Calgary to take a position with Nexen, one of Canada’s major oil corporations. Nexen bought the assets of Sask Oil, the provincial Crown corporation privatized by Grant Devine’s Tory government and Romanow’s NDP government. Everyone thought Link was gone for good.
In the mean time, politics was changing in Saskatchewan. The number of people voting fell substantially. While the NDP under Lorne Calvert came from behind to narrowly win the 2003 election, by 2007 their time was up, and the Saskatchewan Party won with 51% of the vote. On the federal level, the NDP vote has fallen to only 25%, and a majority of voters supported Stephen Harper in 2004 and 2008. With Calvert scheduled to step down, and no obvious successors among an undistinguished legislative caucus, influential members of the NDP establishment began urging Lingenfelter to return. When he agreed, everyone assumed that he would be selected in a cakewalk.
Unexpected challenges
But there were some surprises to come. Yens Pederson, the party’s president, announced his candidacy. A young lawyer from Regina, he comes from a family with a history of strong support for the National Farmers Union, the Saskatchewan Wheat Pool and the Canadian Wheat Board, as well as the NDP. He was followed by Deb Higgins from Moose Jaw, a member of the legislative caucus, the Calvert government and a long time activist with the United Food and Commercial Workers Union. The last candidate, and the least known, was Ryan Meili, a young doctor from Saskatoon, a social justice activist. He had the support of many who had backed Nettie Wiebe in past elections.
Lingenfelter was endorsed by the majority of the party caucus, had strong support from a number of important trade unions, raised by far the most money, had the largest campaign team, and signed up the most members. Higgins had the support of several members of the caucus but was hindered, in my opinion, by her close ties to Romanow and Calvert. In contrast, Pedersen and Meili represented a new generation of NDP activists who argued for a major party renewal. This contrast was very evident at the convention, broadcast by the NDP on their web site.
Ideological debates
But there is also a major ideological division. Roy Romanow and his caucus were strong supporters of the general move to the right by social democratic parties. Romanow openly supported the Labour government in New Zealand (1984-90) which all but repealed the Keynesian welfare state and led a broad attack on organized labour by pushing the free market, free trade, deregulation and privatization. Similar “reforms” were undertaken in Australia under the Labour governments headed by Bob Hawke and Paul Keating (1983-96)).
When Romanow stepped down as Premier, he proudly told the Canadian media that his government was “Blairite” before Tony Blair became the leader of the British Labour Party. With their “New Democrat” allies, Bill Clinton and Gerhardt Schroeder, Blair and Gordon Brown embraced the general policy thrust of neoliberalism represented by Margaret Thatcher and Ronald Reagan. This included the deregulation of the finance industry. The “New Democrats” were also strong supporters of using NATO to back U.S. military actions around the world.
Lingenfelter and Higgins have a long commitment to this now mainstream social democratic form of neoliberalism. But not Pederson and Meili, both of whom called for a return to the tradition of the NDP government of Allan Blakeney (1971-82), with its commitment to social justice, the elimination of poverty, and government involvement in the economy. Pederson went the furthest, insisting that the NDP must once again be the party of democratic socialism, one which put the needs of people first. Both emphasized building a partnership with Saskatchewan’s growing Aboriginal community.
The NDP governments of Romanow and Calvert took a pro-business position on environmental issues, particularly global warming and climate change, joining with the Alberta Tories. In contrast, Meili and Pederson are very strong on green issues. The key political issue today in Saskatchewan is the proposal to build a nuclear power plant. As Lingenfelter stresses, the NDP has always been a consistent supporter of the uranium and nuclear industries. Pederson and Meili wish to change that.
Preferential ballot no necessarily preferable to delegate convention
The Saskatchewan NDP chose to allow all party members to vote to select the new leader, using the preferential ballot. Many were surprised that Lingenfelter received only 46% of the votes on the first ballot. Between them, the two young rebels received a surprising 40%. On the second ballot Lingenfelter received 55% and Meili 45%.
This election demonstrated the flawed nature of this liberal individualist system of selecting a party leader. Votes are cast before the convention. Polls showed that most NDP members could only identify Lingenfelter. Given the momentum and enthusiasm at the convention, it is likely that a traditional delegate convention would have chosen Meili as the new leader.
The Saskatchewan NDP is in bad shape. Their membership has fallen from 46,000 in 1991 to 13,000 today. The party has been virtually invisible since the 2007 election. Two recent polls show that the Saskatchewan Party government enjoys an approval rating of around 70%. Few believe that selecting Dwaine Lingenfelter as their leader will make any difference. A missed opportunity.
John W. Warnock is a Regina political economist and political activist and author of Saskatchewan: The Roots of Discontent and Protest (2004).
Lingenfelter Heads into the Homestretch
by John W. Warnock
May 24, 2009
Act Up in Saskatchewan
Saskatchewan’s New Democratic Party will choose a new leader at their annual convention in Regina on June 6. All the political pundits are predicting that Dwain Lingenfelter will win on the first ballot. Polling done for the Saskatchewan Party suggests that he has the support of around 64% of NDP members.
"Link" is well known to the people of Saskatchewan, as he was first elected an MLA in 1978, served in the government of Allan Blakeney, and was very prominent in Roy Romanow’s government as a cabinet minister and Deputy Leader. With the recent endorsement of Sandra Morin, he now has the open support of the majority of the NDP caucus in the legislature.
Saskatchewan’s labour movement is strongly behind Lingenfelter. He has the endorsement of the Steelworkers, the United Food and Commercial Workers, as well as Tom Graham, president of CUPE Saskatchewan. The building trades unions have made significant financial contributions to his campaign. None of the other three contenders have official trade union support.
A new direction for the NDP?
After sixteen years in government, the NDP is back in the opposition, and many are calling for a new political direction and a new generation of leaders. Lingenfelter is seen as a representative of the old guard in the NDP, those who have long supported Roy Romanow and Lorne Calvert. Deb Higgins also falls into this category. The other two candidates, Yens Pedersen and Ryan Meili, represent a new generation of young NDP activists. .
The other major division is ideological. Roy Romanow and his government were part of the move to the right by social democratic parties beginning in the 1980s. Romanow was a strong supporter of the new policy direction of the Labour government in New Zealand (1984-90). This government virtually repealed the Keynesian welfare state as it moved to embrace the policies of the free market, free trade, deregulation and privatization. The Labour governments in Australia headed by Bob Hawke and Paul Keating (1983-96) carried out similar “reforms.”
As Roy Romanow remarked when he stepped down as Premier, his government was “Blairite” before Tony Blair took over the leadership of the British Labour Party and was elected Prime Minister. Tony Blair and his minister of finance, Gordon Brown, with their “New Democrat” allies in U.S. President Bill Clinton and German Chancellor Gerhardt Schroeder, embraced the neoliberal agenda of Margaret Thatcher and Ronald Reagan, including the deregulation of the financial industry. They also strongly supported the use of NATO in major U.S. military adventures.
Dwain Lingenfelter was very much a supporter of the neoliberal orientation of the Romanow government. Deb Higgins followed suit as a member of the caucus and cabinet under Lorne Calvert. In contrast, Yens Pederson and Ryan Meili are both calling for a return to the social democratic tradition of social justice which characterized the NDP government of Allan Blakeney (1971-82).
The environmental crisis
There is another key division. The NDP governments of Romanow and Calvert were hostile to green issues, particularly global warming and climate change. They formed an alliance with the Conservative governments in Alberta to protect and support the fossil fuel industries. During their tenure in office no actions were taken on the Kyoto Protocol, and Saskatchewan’s greenhouse gas emissions increased dramatically. Lingenfelter, long connected to the oil industry, would likely continue this policy direction. Deb Higgins promises changes but is handicapped by her record in the Calvert government. In contrast, Meili and Pederson are very strong on green issues.
The campaign for the leadership has certainly been well hidden. Only the controversy over Lingenfelter’s 1100 new memberships from Meadow Lake made the news. The provincial NDP did everything they could to protect the party and its top candidate.
Over their recent sixteen years in government we have seen the vote for the NDP fall from a high of 276,000 in 1991 to 169,000 in 2007. The voter turnout out, the percentage of those eligible to vote, dropped from a norm of around 80% to less than 60%. The number of voters enumerated in long time NDP ridings has dropped significantly. Membership in the NDP fell from 46,000 in 1991 to less than 10,000 in 2008 and it is now up to only 14,000. In the two latest public opinion polls Brad Wall and the Sask Party government had an approval rating of 70% and 75%. Has the NDP under Roy Romanow and Lorne Calvert done anything wrong?
In the meantime, Larissa Shasko and the new, young Saskatchewan Greens are waiting eagerly to see the outcome of the leadership vote. Their key policies put them to the left of the Romanow-Calvert governments. You can see their election platform, approved at their annual convention, at http://saskgreen.ca/Policy.
John W. Warnock is a Regina political economist and political activist. He is author of Saskatchewan: The Roots of Discontent and Protest. Montreal: Black Rose Books, 2004.
NDP Leadership Hopefuls: “We Need to Move to the Left”
by John W. Warnock
April 24, 2009
Act Up in Saskatchewan
The four candidates to succeed Lorne Calvert as leader of the Saskatchewan NDP faced off last night at Western Christian College. Around 200 party members and others listened as the four responded to written questions submitted by those in attendance.
The questions covered many important issues, and the general response of all four seemed like a repudiation of the neoliberal Blairite policies followed by the NDP governments of Roy Romanow and Lorne Calvert, who were in power in Saskatchewan between 1991 and 2007.
The candidates
By all accounts, the leading candidate is Dwaine Lingenfelter, who has returned from a stint in Alberta with Nexen Inc. to seek the position. Lingenfelter was first elected an MLA in 1978 and served as a cabinet minister in the NDP government headed by Allan Blakeney. He was very prominent in the Romanow government, as a key cabinet minister and Deputy Premier.
At the meeting Lingenfelter argued that what a candidate brings to the party and the province is most important. He stressed that he was an active farmer, former minister of agriculture, regularly meets with farm leaders, and would be able to win back the many seats lost in rural Saskatchewan. He has the support of many of the sitting MLAs.
Deb Higgins is the only candidate who holds a seat in the legislature. First elected in 1999 she has served in Calvert’s cabinet. She is trying to separate herself from the neoliberal policy direction of the Calvert government, advocating a serious attempt to end poverty, to help women and families by expanding child care services, and do more in the area of affordable housing.
The other two candidate are young, articulate and want to see a new direction for the NDP. Both are very strong in the area of energy policy and other green strategies. The Romanow-Calvert governments followed the Alberta Tories in this area. In 1997, it will be recalled, the NDP government brought a resolution to the legislature denouncing the Kyoto conference on climate change and insisting that any Canadian policy on the reduction of greenhouse gasses only require voluntary action by major polluters. It passed unanimously.
Yens Pederson is a lawyer from Regina, who just missed getting elected in 2007, and who was elected president of the party at the last convention. But he is best known for his and his family’s long history of strong support for the National Farmers Union.
Ryan Meili is the least known of the four candidates. He is a doctor from Saskatoon who has worked in the North and on social justice issues. He has a strong group of supporters in Saskatoon, including Nettie Wiebe, Peter Prebble and Don Kossick.
Some differences were evident
The four candidates agreed on most issues raised at the Regina meeting. There were a few differences expressed. Yens Pederson was the only one to raise the question of provincial role in natural resource extraction, arguing that we need to regain control of the natural gas industry, privatized from Sask Power by Tory and NDP governments. He was the only candidate to raise the issue of the threat to our water supplies from climate change.
Lingenfelter was the only candidate not to endorse the introduction of anti-scab legislation. He raised the question of sharing resource royalties with Aboriginal people, a position that the NDP held in the 1991 election but then rejected. He argued that we should mobilize First Nations in the north to build affordable housing for the whole province.
Meili argued that the province should create a Crown corporation to produce and sell generic drugs. This was a major proposal advanced by the New Green Alliance in 1998.
Nuclear power
The key issue of the day is the question of nuclear power, which is being supported by the Saskatchewan Party government. It should also be remembered that the Calvert government was also keen on this development.
Lingenfelter pointed out that all CCF-NDP governments, beginning with Tommy Douglas, were strong supporters of uranium mining and the processing of uranium in the province, and this is still party policy. He said he was not taking a position on the need for a nuclear power reactor, arguing that this had to be carefully weighted with all the alternatives. He is a strong supporter of geothermal energy production. Higgins took the current position of the NDP caucus, that we need a complete examination of all the various alternatives to nuclear power and coal.
Pederson argued against any nuclear power for the province, saying there was no need for it, as there were much safer and cheaper options available. This view was echoed by Meili, who argued that nukes are too expensive and that there is no advantage to processing uranium in the province. We also need to reduce greenhouse gas emissions by phasing out coal fired generation. He drew the strongest applause of the evening when he said it is time for a major shift to a decentralized system of energy production and use.
A new vision
All of the candidates stressed in their summations that it is absolutely necessary for the NDP to advance a policy direction that is clearly different from the Saskatchewan Party. In the necessary renewal of the party there is a need for a new long term vision. The thrust of the debate indicated that this requires a break with the policies of the Romanow and Calvert governments. The current world Great Recession has demonstrated the failure of the pro-business neoliberal policies of the free market, free trade and tax cuts for the rich. .
Saskatchewan: No Need for Nukes
by John W. Warnock
Act Up in Saskatchewan
April 5, 2009
On Thursday evening several hundred people gathered at the Mackenzie Gallery to hear Tim Weis from the Pembina Institute explain why Saskatchewan does not need nuclear power and has the capacity to phase out coal-fired power plants as well. Weis is co-author with Jeff Bell of the report, Greening the Grid, which makes the case for an alternate energy strategy based on conservation and renewable energy.
The Pembina Institute study is for Alberta, but Weis stressed that the analysis fits well with the situation in Saskatchewan. Both provinces are heavily dependent on coal to provide electric power and are the two worst provinces when it comes to greenhouse gas emissions. Weis also drew attention to Ontario, where a coalition of grass roots groups successfully made the case to the public for phasing out coal-fired generation plants.
Alternative energy road
The Pembina study accepts the projections of the Alberta Electric System Operator (AESO) that by 2027 the province would need twice the power that is presently consumed. It then shows how this additional supply could be created through the use of alternative energy systems: efficiency, wind, hydro, biomass, geothermal, co-generation, and micro power projects..
For those who have been active in the environmental movement, the message was nothing new. Similar studies were done in Saskatchewan in the 1970s and 1980s. As Weiss noted, the technology has always been there for the alternative road but the political will was missing.
The presentation focused on the capabilities of the alternative energy systems. It would be useful to hear from his co-author, Jeff Bell, who has specialized in distributed generation and had a key position with the World Alliance for Decentralized Energy. The green road, in the era of climate change, must be towards decentralized systems with local controls and emphasis on energy security. This is most important for Saskatchewan, for winter ice storms here, similar to those we have seen in the east, would result in the loss of a great many lives and extensive and costly damage to households and businesses. This is one of the major problems with nuclear power which requires a highly centralized system and major backup facilities to cover shut down times.
Finding the political will
The success of the popular coalition in Ontario started with a consultant’s report that looked at the full costs of all energy systems. Including health, environmental and social costs demonstrated the very high cost of coal fired plants. Including these costs, plus full insurance costs, decommissioning and waste disposal makes nuclear power plants by far the most expensive. The historic position of Sask Power and Sask governments has been that coal is the cheapest available energy,
Opposition to nuclear power and uranium mining has always been difficult in Saskatchewan. The traditional right wing parties and governments - the Liberals, Conservatives and now the Sask Party - have always been for development. But from the time of the government of T. C. Douglas, the CCF-NDP governments have also strongly supported the industry. Most recently, Lorne Calvert’s NDP government supported the building of a nuclear reactor at La Loche, building transmission lines along the road to Fort McMurray to supply the tar sands industry, and then sending around 200 MW down the grid to Sask Power.
This is the issue which could revive political activism in this province. The enormous costs of a nuclear power plant and a new grid system will greatly increase the cost of energy to all households and businesses. As Weis stressed, Saskatchewan is the best site in Canada for wind and solar power. We have a major biomass potential. A serious program of conservation could greatly reduce the demand side for power. The business as usual approach makes no economic or ecological sense.
Squeezed Out in Saskatchewan: A Critical Look at the History of Provincial Housing Policy
by John W. Warnock
The Sasquatch
March/April 2009
Vol. 1, Nol. 1
By now everyone must know that we are experiencing a world economic downturn, with quite a vew economists projecting that we could be entering a period of deflation similar to that experienced by Japan after 1989. In every country financial institutions are on very shaky grounds; they have all purchased the “toxic assets” of the mortgaged-backed securities, once rated AAA by Moody’s, Standard and Poor and Fitch. The example of the failure of Lehman Brothers in mid-September 2008 suggests these highly leveraged assets may only be worth 9.5 cents on the dollar.
The housing bubble
The ongoing financial and economic collapse is being triggered by the inability of many people who bought expensive houses in the past few years to pay their mortgages – as well as meet the payments for debt incurred on their lines of credit at the banks, home equity loans, credit cards, car payments, and student loans.
While the North American media has concentrated on the huge debt bubble in the United States, even greater housing bubbles were built in Great Britain, Ireland and the rest of Europe. As many economists have pointed out, historically the price of a house has ranged between two and three times total household income. The price of a house should not exceed 16 times the annual rental income. Since the 19th century, house prices in North America have averaged an increase in market price roughly equal to the increase in the rate of inflation. By all the standard measurements, there is a housing bubble in Canada. A decline in house prices is starting to show across Canada, even in Saskatoon. But not in Regina. Yet.
To buy or to rent?
Mainstream economists also point out that it is always cheaper to rent than to own a home. Home ownership has higher costs, including paying for heat, water and sewer, insurance, property taxes and regular upkeep. The capital invested does not bring a regular return. This point is stressed by Garth Turner in his widely read book, The Greater Fool, in which he predicted that the U.S. housing bubble and collapse would move across the border into Canada.
According to Statistics Canada, the median household income in Regina in 2007 was around $60,000. So the median price for a house should be in the neighbourhood of $180,000. Yet the median price of a house sold was around $268,000, and even higher in Saskatoon.
In 2007 an estimated 50% of all houses sold in Canada were financed under the rules introduced by Stephen Harper’s government in December 2006: no money down and up to 40 years to pay. Not much different from the infamous U.S. sub-prime mortgages.
Shortage of housing in Saskatchewan
Many economists who follow the housing industry argue that Canadian housing trends lag similar trends in the U.S. by around two years. 2008 saw the beginning of the housing meltdown in Canada, with prices falling in Vancouver, Toronto, Calgary and Edmonton. In Regina the average price of a house grew by 27.6%, the highest in Canada. In Saskatoon, they rose 10.9%, but in the past two months they have started to retreat. The standard argument is that the house price bubble in Saskatchewan is due to the boom in the resource economy and the influx of people seeking jobs.
However, for people with a low or moderate income, this trend has been a disaster. The vacancy rate for rental housing has fallen to 0.5% in Regina and 1.9% in Saskatoon. CMHC reports that over the past year rents in the larger Saskatchewan cities have risen by 16%, far higher than the rate of inflation or the rise in costs. There are a number of reasons for this squeeze.
Why is there no affordable housing?
First, there is less social housing available today than fifteen years ago. In 1992 the federal government stopped financing new social housing, as well as non-profit co-operative housing. New financing only began again in 2003, and then it was at a lower level.
In 1996 Jean Chretien’s government decided to shift the responsibility for housing from the federal government to the provinces. In February 1997 Roy Romanow’s NDP government became the first in Canada to accept the devolution of responsibility to the provinces. Under this template agreement, federal operating support for existing social and affordable housing, now under provincial jurisdiction and responsibility, would be frozen at 1996 levels. With rising upkeep costs, housing authorities were forced to first raise rents and then sell housing. Today there are only around 31,000 social housing units in the province, down around 2,000 from 1997.
Second, In 1992 the Romanow government lifted rent controls which were applied to older apartments. Boardwalk Corporation from Calgary then entered the province, bought up much of the “affordable” rental housing, did some minimum upgrades, and raised rents significantly.
A key indicators of the policy direction of the NDP government involved Gladmer Park, a highly-valued housing project with low rents. With the mortgage completed on this federally-subsidized housing project, the owners wished to sell it. The tenants petitioned the Romanow government to take over the project and convert it to provincially-owned social housing. The government refused, and Gladmer Park was sold to Boardwalk. Following the upgrades, the rent was doubled and low income tenants were forced to leave.
Failure of the private housing industry
Third, the rationale for lifting rent controls was that they were an impediment to investment in privately owned apartments. But few apartments have been built since the rent controls were lifted. This is a prime example of how the private market does not fulfill social needs. Around 35% of Canadian individuals and families cannot afford to buy a house or do not want to own one. Yet since rent controls were lifted, only around 10% of new housing units have been for the rental market. Builders can make much higher profits by building condominiums, another popular but expensive form of housing. The new apartments which have been built serve the high end rental market.
Fourth, since 1992 Saskatchewan governments have taken the position that the private sector should have the responsibility for providing housing. New social housing has received a very low priority. Policy shifted to a few programs to try to help low income individuals and families buy houses. For obvious reasons, this new policy could not possibly solve the issue of the lack of affordable housing.
The crisis for people with low income
With a decline in the availability of good social housing, more low income people have been forced to rely on the private market for housing. Much of this housing is far below the standards found in Saskatchewan’s existing social housing. Entrepreneurs bought cheaper houses and rented them out to people on social assistance. But there have been no standards required for such housing.
As a general rule, the rent charged by the landlord exceeded the rental allowance provided by Saskatchewan Social Services. The answer put forth by the NDP government was to use taxpayers’ money to provide subsidies to private landlords. However, without any form of rent control or licensing, this program has been of little help to our citizens forced to exist on social assistance. Rents were just raised again.
Finally, municipal governments must also bear part of the responsibility for the lack of rental and affordable housing. In the past, when there was actual city planning, municipal governments would designate certain areas of every new development for rental housing. Today development firms and builders are doing the real city planning, and they are stressing housing where they can maximize profits. This is not the case everywhere. Many urban governments still require the construction of rental accommodations. Ken Livingston’s government in London required 50% of all housing in new developments to be affordable housing.
So as we survey the crisis in housing in Saskatchewan today, many of us who have been around here for some time are likely to ask: What happened to housing as a basic human right? What happened to “People before Profits” and “Humanity First”?
John W. Warnock is co-author with Della MacNeill of The Disappearance of Affordable Housing in Regina (2000).
Affordable Housing in Regina
In the fall of 1999 Della MacNeil and John W. Warnock prepared a report for the Council on Social Development Regina on the state of social housing in Regina. [Link below]. It was not well received by the Mayor and City Council, which proceeded to appoint a committee to prepare an alternative. The goal was to reject the central recommendation of the MacNeil-Warnock report, that the federal, provincial and municipal governments should actively engage in a process of developing new social housing for Regina. This was viewed as "the Winnipeg solution" by the City Council. The Mayor and City Council did not want to take on any responsibility for initiating or participating in social housing.
From 2006 to 2008 there was a rapid rise in the price of housing in Saskatchewan and Regina. Many people found they could not buy a house. The availability of rental housing is severely limited. Rents increased much more than the rate of inflation. Low income Canadians found that social housing was very difficult to obtain; in fact the number of units available is in decline as housing authorities are selling off older units. An additional factor was the decision by some property owners to transform their apartments into condominiums.
As a result of the growing housing crisis, I have agreed to revisit the housing situation in Regina and Saskatchewan. The results of this paper will be published by the Canadian Centre for Policy Alternatives - Saskatchewan in conjunction with the Social Policy Research Unit of the School of Social Work, University of Regina. The report will cover a number of topics, including the following::
(1) The impact of the North American housing bubble on the availability and affordability of private housing in Regina.
(2) While rent controls on existing rental accomodations were lifted by the NDP government of Roy Romanow in 1992, there has not been an increase in the construction of apartments.
(3) Private investors in the housing industry have chosen to concentrate on the construction of condominiums and not apartments and other rental accomodations.
(4) While the federal government has restored some funding for the construction of social housing, this has not been nearly enough to meet the needs of low income people. In Saskatchewan the state of housing among Aboriginal people on many reserves and in the north is abominable. Why is there no political commitment to good housing for all?
(5) What is the role of a municipal government with regard to affordable housing for all. What happened to city planning and zoning? What happened to the role of inspection of housing -- for health and safety regulations? Why has the City of Regina refused the request by community groups to license and regulate rental housing?
Regina Housing Bubble?
By John W. Warnock
October 31, 2008
http://www.actupinsask.org
All across North America housing markets are on a downward trend.. Even Saskatoon is reporting an increase in the listing of houses for sale, a drop in the number sold, and a decline in the average price. But Regina appears to be an exception
If we listen to our politicians, business leaders, the real estate industry, the mass media, and many academics, we have nothing to worry about. The Saskatchewan economy is strong. Canada’s banks are the safest in the world. We can see that builders are moving fast to add new houses to the local market. Compared to most places in Canada, Regina’s houses are still relatively inexpensive.
Trends in the U.S. housing market
All indications are that the United States is in a recession. The financial sector of the economy has yet to deal with the mountain of “mortgage backed assets” and other derivatives which they are hiding from the public and their stockholders. Governments everywhere are pledging trillions of dollars of taxpayers’ money to try to rescue the financial industry. The bubble in the natural resources industry is deflating. In every corner of the globe, governments are facing a financial and economic crisis. A world wide recession appears quite possible.
In the United States the median price on the sale of an existing house peaked in July 2006 at $230,200; the median price in September 2008 was $191,600. To return to the long term trend of the past thirty-five years, the price will have to move down to within the band of $150,000 and $175,000.
The U.S. housing crisis continues, with foreclosures climbing and the price of houses falling in almost all markets. With over a 10-month inventory of unsold new and existing homes on the market, builders have virtually stopped construction.
The housing bubble in Canada
Between 1998 and 2007 the average sale price of an existing home rose 65%, discounted for inflation. During this period there was a 28% increase in the general rate of inflation. Many commentators have argued that the price bubble in the housing marked peaked later in Canada because of changes to the rules on mortgages introduced by the Central Mortgage and Housing Corporation (CMHC) in December 2006. CMHC suddenly announced that it would begin to insure mortgages which included no down payment, interest only, and up to 40 years amortization. In 2007 40% of all new mortgages were for 40 years. In reality, these mortgages are not that much different from the U.S. sub-prime and Alt-A mortgages. Their owners will be in financial difficulty if the price of houses continues to fall and Canada moves into a recession.
The housing bubble in Canada peaked in the early part of 2008. House prices have begun to fall. The average price of a resale house in September 2008 was $289,916, down 5.4% from the previous year. CMHC projects that for 2008 the sale of houses will decline by 13.5% from 2007, and then another 4.2% in 2009. New housing starts are expected to fall by 16% in 2009. The estimates for 2009 assume a lower rate of economic growth but no recession in Canada.
The Regina housing market
The housing market is still in the bubble phase in Regina. CMHC reports that in September 2008 new housing starts in Regina were up by 48% over 2007. The average price for the sale of an existing detached bungalow was $279,000 in September, up 34% from the previous year. The Regina Real Estate Board reports that listings are up dramatically but sales are starting to level off.
Saskatoon is quite different. Housing starts in September 2008 dropped by 30% from the previous year. The average sale price in October 2008 was $280,000, still below the national average of $315,400.
David Wolfe and Carolyn Kwan, housing specialists with Merrill Lynch Canada, believe that Canada is “tracking the United States with a two-year lag.” While the decline in house prices in Canada has been more moderate so far than in the United States, they believe that this should change. The increase in new house construction in Canada is larger than in the United States during the peak. This “overbuilding,” they argue, will likely contribute to a decline in the price of houses in 2009.
To rent or own?
As a general rule, this would not be considered a good time to buy. The economy is definitely slowing down and a recession is predicted by many economists. There is rising unemployment, falling wages as well as higher mortgage rates. The time to buy a house is when prices are rising, not falling.
Real estate economists have noted that over the past 20 years there has been a close correlation between the price of a house and the cost of renting. The price-to-rent ratio has been fifteen times annual rents. So what does this standard say about Regina?
I looked at three bedroom town houses available for rent from Boardwalk Real Estate. At seven different sites, their average monthly rent is $1200. Over a year the total rent for one of these units would be $14,400. Multiply that by 15 (the price-to-rent ratio) and this produces a total of $216,000. If the three bedroom bungalow that you want to buy costs more than this price, then you should seriously think about renting.
There is nothing wrong with renting. Indeed, mainstream economists argue that you come out ahead by renting rather than owning. Thirty-five percent of Canadians are renting their home. One of the main problems we have in Regina (and Saskatchewan) is the fact that the capitalists in the housing business can make more money building cheap condominiums, and we have a general shortage of rental housing that is affordable, adequate and suitable. This is one of the drawbacks of allowing our governments to get out of the housing business.
John W. Warnock is a Regina political economist once again working on the issue of affordable housing.
Robert Shiller: Now Is Not the Time to Buy a House
by John W. Warnock
October 14, 2008
http://actupinsask.org
Robert Shiller is the renowned Professor of Economics at Yale University, one of the foremost experts on housing and markets. He is author of Standard and Poor’s widely-cited index on housing. He writes in the October 11, 2008 issue of Newsweek Magazine that home ownership is good for the community but not a good investment:
“What's ironic, as any classical economist would tell you, is that homeownership is actually not a great idea from an investment standpoint. A better strategy would be to diversify as much as possible—put your money into stocks, bonds, many different geographies—and then use the income to rent whatever you like, which allows for greater flexibility and efficiencies. The popular argument that renting is equivalent to throwing money down the drain is really fallacious, since the money you save can be invested to produce dividends.”
Governments promote home ownership
The idea of home ownership has been promoted by our governments. For example, the Saskatchewan government’s approach to “affordable housing” has shifted away from providing good quality rental properties. Since the last NDP government, the emphasis has been put on helping low income people buy houses. It is assumed that people are now acquiring a house primarily for investment purposes. Lost is the notion that people actually want a home, a comfortable place to live with family or friends in a desirable community. What does that say about Vancouver, where the majority of people live in rental housing?
It has also been widely assumed that the value of a house in the market will continue to grow at a steady pace. You can’t lose money and may be able to make a good capital gain. As we can see now from the continuing collapse of house prices in the United States, this is not always so. Moody’s is now projected by the end of 2009 30% of those in the United States with mortgages will be “under water,” defined in the industry as having a mortgage which is worth more than the market value of the house. This will ensure that house prices will continue to fall.
Home ownership in Regina
If someone in Regina is thinking about buying a house, how is it possible to tell whether or not this is a good decision? Currently the housing market may be stable in Regina, but house prices are falling across the United States and in most Canadian cities, including Saskatoon.
In addition, there is the continental and international melt down of the bubble in finance. The terms and conditions for obtaining a mortgage are much more constrained. Interest rates are rising. Can Regina really be the exception to this general trend?
The first thing to do is see how purchasing a house compares to renting. There are, of course, many additional costs to owning a house aside from paying the mortgage. For one, property taxes are very high in Regina compared to other cities in Canada.
Guides to the housing bubble
But a good place to start is the New York Times which has created a graphic where you can quickly compare the cost of buying a house to renting a similar residence. You just need to type in a few figures. Check this out:
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html
Is it really true that there is a housing bubble in North America? If you are skeptical of this claim, check out the Case-Shiller House Price Index for the United States:
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_093042.pdf
Whereas the construction of housing in the United States has all but ceased, and is dropping off across Canada, developers and builders are still ploughing ahead in Regina. Will the market change with the major expansion in Southwest Regina?
John W. Warnock is a Regina political economist and financial conservative.
What is a House in Regina Actually Worth?
By John W. Warnock
October 6, 2008
http://actupinsask.org
By now everyone knows that the housing market in the United States has been in steep decline since the peak in 2006. Sales of new and existing houses have been steadily dropping. House construction is down dramatically. Mortgage money has all but disappeared. Lending institutions are only providing mortgages to people with very good credit. Interest rates are rising. Buyers now are expected to come up with 20% or 30% of the value of a house as a down payment.
But our political and business leaders insist that Canada is different – the banks are sound and the “economic fundamentals are good.” Stephen Harper is still proclaiming that the U.S. housing problem will not move over the border into Canada. What can we make of this?
The Canadian housing market
However, the latest figures show that across Canada sales of new and existing houses are down, the price of houses being sold is dropping, and the number of houses listed for sale is rapidly rising. Several studies released in the past couple of months argue that Canadian houses are also overvalued.
Saskatchewan has been the exception. The former NDP government, the current Sask Party government, and the real estate industry have insisted that this province will not experience the same trends in the market and finance seen elsewhere in Canada. The local economy is too good for this to happen.
I recently received the assessment for my old house, built in1920, in and older area of Regina. According to the city’s calculation, based on house sales in the neighbourhood, the value of my house has increased 28% in the past year. I have done nothing to upgrade this house in the past few years, and it has never been renovated.
So how can someone who owns a house, or someone considering buying a house, know what a house is really worth? In researching this issue over the past month, I have found three basic approaches used by economists.
Ratio of the price of a house to household income
Many economists look at the long term relationship between the price of housing and average household income. This can be seen in the widely-cited index created by economist Robert Shiller. Discounted for inflation, Shiller and many other economists argue that historically the price of an average house has been the equivalent of three times the household’s income. When there have been house price booms, they have evened out with subsequent down cycles.
This historic average began to change in the United States in 1996, the beginning of the housing bubble. This bubble peaked in mid-2006. At that time the average price of a house had reached over 4.5 times the average household income. By the spring of 2008 this had fallen to 4.0 times the average household income. Thus many economists argue that prices will continue to fall until the average house price is between 3.0 and 3.5 times average household income. This analysis is also widely accepted in Canada.
Thus, for example, the new row houses that were originally to be built as rental social housing, Maple Leaf Estates at 14th and Toronto, were instead put up for sale as “affordable housing” at a price of $169,000. By this calculation they should have been bought by families with at a minimum income of $56,000. Shelter costs also include property taxes, water and sewer, electricity and energy for heating.
House prices and inflation
A second approach used by economists measures the price of housing in relation to inflation. This is easy to calculate. Between 1996 and 2006 house prices in the United States rose by 70% above the general rate of inflation. It is argued that historically the price of housing did not rise faster than the general rate of inflation. There were ups and downs which went with the economy, but it averaged out.
Since the peak in housing prices in 2006, the average price of a house sold in the United States has fallen about 25%. According to this standard, the average price in the United States will have to fall another 40% - 45%. Currently, there is a growing stock of unsold houses. It is expected that around 3.6 million U.S. homeowners will receive foreclosure notices this year. In Chicago the resale of foreclosed houses has been at a discount of 40% to 60% from the original mortgage price.
Household net worth and annual income
Other economists have pointed to the supposed net worth of a household in relation to annual income. According to the U.S. Federal Reserve Bank’s Survey of Consumer Finances, in 2004 the average U.S. household had an estimated net worth of $448,000 and an average income of $43,000. The estimated wealth of the family was the equivalent of 10.4 years of income. But in 1989 it was only 7.3 years of income and in 1962 even lower at 3.8 years of income.
How could it be that household net worth had risen to ten times annual household income? The answer is leveraging. Going into debt. With easy borrowing available, through very unusual mortgages, people bought unnecessarily large houses in the suburbs. Others moved from rental units into “owning” their own home. A great many saw the assessed value of their homes go up rapidly and took out home equity loans to buy other assets. The average U.S. family acquired many credit cards and maxed them out. They bought expensive vehicles on credit. Total household debt increased from 50 percent of disposable income to over 100 percent by 2006. This house of cards has started to crumble. The 1962 ratio seems more realistic in this period of the great financial melt down.
The value of a house today
Given this reality, what is the real value of a house today? California has made the headlines due to the high rate of foreclosures. Most of this has occurred among middle and upper middle income families. In many areas of California the housing market has been dominated by the resale of foreclosed properties. Sales in these markets suggest that house prices will have to fall to 50 percent of their original purchase price. Economists call this “de-leveraging.”
The lesson is here for all to see. Be careful if you are looking to buy a house or taking out a home equity loan. As prominent U.S. economist Martin Feldstein warned a couple of weeks ago, there will be no end to the present U.S. recession until house prices have reached the bottom, which may be a few years down the road.
John W. Warnock is a Regina political economist and co-author with Della MacNeil of The Disappearance of Affordable Housing in Regina (2000).
Regina House Prices are Too High - Merrill Lynch
by John W. Warnock
August 8, 2008
http://actupinsask.org
Do you believe that the prices asked for houses in the Regina market are too high for their value? You are not alone. A study just released by Merrill Lynch Canada concludes that across Western Canada house prices are “overvalued” by at least 10% and that we can expect a “sustained downturn” over the next few years.
The Regina Leader-Post carried this story but for some reason cut out the part which included the specific reference to Saskatchewan. Merrill Lynch pointed particularly at Saskatchewan where it concluded that house prices in Saskatoon and Regina “are almost 50 percent overvalued.” In July 2008 the average price of a residential property sold in Regina was $247,262.
Canada is experiencing a falling housing market
The real estate industry reports that across Canada listings are up and sales are down, and a “cooling in prices” is beginning to develop in a number of markets. In Regina 264 homes were sold in July which was down 37% from the previous year. For the first seven months of 2008, house sales were off 12%.
Statistics Canada reports that across Canada building permits were down 5.3% from 2007. New house and condominium construction in Saskatoon and Regina is down from the previous year.
When are houses overvalued?
Economists point out that historically prices for individual houses in North America have remained relatively constant in the period since World War II. Prices have been directly related to household incomes. The trend is that the average price of a house has cost around three to four times the total income of the household. In the United States this changed dramatically beginning in 2001 with the housing bubble. The average price for a house rose to between 4.5% and 5% of household income.
As we all know by now, this bubble was caused by the sudden availability of very soft mortgages, known as “NINJA loans” (no income, no job, no assets). Mortgages were pushed by brokers using new credit and borrowing arrangements encouraged by the government deregulation of the financial industry. These included 40-year mortgages, 100% financing of purchase price, and no serious investigation of the credit standing of those buying. The subprime mortgage loans (very low interest rates for the first few years, followed by an increase to market rates) were only one tool of this move to “free market’ financing. During the boom home equity loans greatly expanded: these loans were to access the equity tied up in a home, based on supposed market value. The capital borrowed was very often spent to buy new cars and trucks.
Canadian mortgage rules tightened
In Canada those who do not have a 20% down payment on a house or a condominium have been required to obtain mortgage insurance, very often with the Central Housing and Mortgage Corporation. While Canadian banks and other financial organizations do not face the capital losses of their American and British counterparts, they had ventured into the area of 40 year mortgages and 100% financing. But this has now changed.
As of October 15, 2008 all insured mortgages must meet new standards set by the federal government. The new rules include:
* Mortgage limits of 35 years.
* A 5% down payment is required.
* Borrowers must have a minimum credit score of 620 by the rating companies.
*New stricter loan documentation standards are required
The new rules require a debt-service ratio of a maximum of 45% of household income going to total housing costs. In some markets, like Vancouver and Calgary, this will reduce the number of people eligible to obtain a mortgage. It is expected that these new rules will weaken the housing market in such centres.
John W. Warnock is a Regina political economist and author.
Regina Boosts Trucking - Ignores Peak Oil and Climate Change
By John W. Warnock
August 1, 2008
http://www.actupinsask.org
Our political leaders in Regina and the provincial government are overjoyed that Loblaw Companies has announced plans to build a huge warehouse distribution centre just five kilometres west of the city. It will be close to the transport facility that Canadian Pacific announced in early July. Mayor Pat Fiacco believes that this will confirm that Regina will be on the great NAFTA highway, where trucks will be able to take a new freeway all the way deep into Mexico.
Loblaw has stated that about 1400 trucks will utilize this terminal each week. The Mayor has announced that other warehouse operations will also be housed in the same area. The provincial government will upgrade the roads. It is not clear yet who will provide the water and sewer for these projects, but it seems most likely that the City of Regina taxpayers will again be called on to fork up. The pollution from this operation, carried by the prevailing winds, will hit mainly those neighbourhoods north of the railway tracks.
Development in Regina always seems to be based on the short term. Investors must be able to maximize profits in the shortest possible time. We are used to land development companies and builders making all the important decisions. Can anyone remember if we ever had any real city planning?
Peak Oil is a reality
But people living in Saskatchewan are not unaffected by major world developments. Peak Oil is one. Oil prices are rising steadily due to the fact that since the early 1960s we have consumed more oil every year than has been discovered. What oil and gas is left, and available in North America, is much harder and more costly to extract. World oil consumption continues to increase every year. All the experts, including the International Energy Agency, project steady increases into the future. Only serious recessions, like the Asian crisis on 1998, reduce oil prices, and then only temporarily.
No one in Regina has seemed to notice that around the world truckers are striking as they cannot afford the present fuel prices. Yet the political leaders in Saskatchewan and Regina believe the future is in trucking and the long distance transportation of goods. The large supermarket chains like Safeway, Loblaw and Sobeys do not buy locally. They are highly centralized, top down operations. So the project west of Regina is business as usual. But for how long?
Climate change is happening now
Then there is also the reality of climate change. If governments ever decide to take action on greenhouse gas emissions, carbon taxes will further increase the price of oil and gas. Higher transportation costs, linked to higher fuel costs, are already contributing to higher food prices around the world. With the price of oil projected to rise to $200 a barrel by next year, there will undoubtedly be shifts in transportation strategies.
To those who run the City of Regina, it is always business as usual. Under public pressure they have been bringing in experts to give them advice. The consultants recommend a shift to Smart Growth and eco-friendly development. Remember the magnificent plans put forth by Avi Friedman and his colleagues? How quickly they went into the trash bin. The developers are firmly committed to suburban sprawl.
Portland takes a different road
In contrast, Portland, Oregon has been taking all of this very seriously. They created a Peak Oil Task Force to study the issue, to project changes and come up with some solutions. Portland had already broken with business as usual and adopted many Smart Growth options, including putting a boundary limit for the city, mandating the preservation of agricultural land, and introducing programs to assist low income people in their quest for housing. What are some of the findings of the Portland study?
* Automobile use will decline and there will be a greater reliance on expanded public transportation. Air travel will decline significantly.
* The transportation of freight will shift from air and truck to rail and boat.
* The amount and variety of food will decrease, food will cost more, and a shift will be made to local agriculture and processing. Food retailing will shift away from supermarkets in malls to more neighbourhood operations.
*Housing will shift to smaller, energy efficient buildings, and many will have to move to lower-quality housing.
* Higher energy costs will force consumers to reduce their discretionary spending, and this will adversely affect many business operations.
The Smart Growth alternative
The solution proposed by the Portland Peak Oil Task Force called on local, state and federal governments to play a more active role in developing alternatives. The first requirement was to build public knowledge of the situation, leading to broad participation in the planning process.
Fundamentally, there had to be a major change in urban design, away from the suburban growth model that has dominated North American development since the end of World War II and the introduction of the automobile economy. They endorsed all the proposals which are well known as central to the Smart Growth strategy. Emphasis is to be placed on reduced fossil fuel use through energy conservation. A major commitment is being made to expanding local food production and processing. A high priority is to be placed on protection of the vulnerable and marginalized populations.
It has long been said that in most trends Canada lags behind the United States by around 20 years. That appears to be the case when it comes to city planning and urban design. But we cannot afford to take 20 years to start seriously dealing with Peak Oil and climate change.
John W. Warnock is a Regina political economist, author and green activist.
Why Are Schools Closing? Clive Doucet Has Some Answers
By John W. Warnock
February 6, 2008
http://www.actupinsask.org
For the past year we have seen school boards across Saskatchewan closing schools. In Regina the public school board hopes to close eight, including some very important community schools. Why is this happening?
The obvious answer is the cuts to provincial funding to municipalities and school boards. During the old days of the government of Allan Blakeney, the province provided 60% of all local funding. Under cuts by the subsequent Tory and NDP governments, the province now only provides 40% of funding. That is why local governments and school boards have been forced to raise property taxes.
While in opposition Brad Wall pledged that the Sask Party would address these problems when in office. We will see. But the shortage of provincial revenues is due to the deep cuts that the NDP government made to corporate taxes and taxes on those in the high income brackets, as well as cuts to resource royalties. Wall and the Sask Party supported those tax cuts. Where will they find the revenues?
Clive Doucet Points to Other Causes
There are many other reasons for the closing of schools. They are described by Clive Doucet in his book Urban Meltdown. Doucet is a member of the Ottawa City Council and a long time activist on urban issues. He identifies a number of problems that are central to cities across North America.
First, there is a shift in urban development to “just in time” provisions of goods, from factory to suburban mall. This has eliminated warehouse districts, helped to promote urban sprawl development, and supported the automobile as transportation. Building and maintaining roads consumes 25-50% of all city budgets. Parking lots and parking spaces are subsidized by the government and are a net drain on the civic economy. Less money is available for historic services like libraries, schools and community centres.
In addition, tax money flows from the older part of the cities to develop the new low density suburbs. In Ottawa about 70% leaves the inner city for the outer fringes and their “traffic sewers.”
Who Pays for Services?
All across North America suburban developers are heavily subsidized by the older areas of the city. The “development charges” which cities impose on the developers cover water, sewer and local roads, but little else. In Ottawa the city council agreed to hire economists and accountants to discover the true costs of suburban development. They documented the enormous subsidy given to suburban development. But when the inner city councillors came up with a new sliding scale for development charges which would shift more of the burden to the new areas, the developers, their lawyers and the PR men showed up en masse and argued that the new plan would halt development and shift people to other cities. The city council caved in to the developers. New schools built in the suburbs. Older schools closed in the inner city.
Closing Schools Is a Bad Option
There are no good reasons to close neighbourhood schools. Doucet notes that all cities and neighbourhoods go through growth phases. When older people leave an area they are replaced by younger people with families. “Closing neighbourhood schools creates inner city rot because no young family will move into a community where their children can’t attend local schools.”
Once a local school in a city and its play yards disappear, they are gone forever. As Doucet recalls from the Ottawa experience, “They are too costly to replace. Schools are the lungs of the community. They give it breathing space and vitality.” There may be some small short-term savings in closing a school which only has 70% of potential enrollment. “Unfortunately, the long-term cost of creating just-in-time schools are incalculable. Community stability, greenspace, generational revitalization, property values and the neighbourhood quality of life all tumble.”
Making Privatization an Election Issue.
By John W. Warnock
http://www.actupinsask.org
October 31, 2007
Is privatization an election issue? Well if you watch TV you can’t avoid it. NDP advertisements insist that Brad Wall and the Saskatchewan Party have a secret agenda: they will privatize our Crown corporations if they are elected. This strategy worked for Lorne Calvert and the NDP in the 2003 election. But will it work again? Brad Wall has spent several years now trying to convince the electorate that they will not privatize our state-owned enterprises. But what about the NDP? What is their record on privatization?
Building our Crown corporations
Most people who live here know that we have had strong public ownership in the area of public utilities. These Crowns were built by the people of the province when private capital would not do the job. The private corporations had no interest in expanding services to people living in rural areas or the North. Today these Crowns are very successful, efficient corporations which give us great value. That is why private capital wants to take them over.
In the period between 1971 and 1982 the NDP government under Allan Blakeney built a series of Crown corporations in the resource extraction area. The goal was to gain greater control over the development of a major economic sector and to increase returns to the people of the province. Crown corporations were built in the areas of oil, potash and uranium. Sask Power already dominated natural gas and coal development.
Grant Devine’s privatization
When Grant Devine’s Conservative government took office they began the process of privatization. They sold most of Sask Oil, the Saskatchewan Mining and Development Corporation, and the Potash Corporation of Saskatchewan. They split the natural gas division from Sask Power and proposed its privatization. They sold controlling interest in the Prince Albert Pulp Mill to Weyerhaeuser Corporation. SaskMinerals was privatized. The Tories also began contracting out government services. These were not popular moves, and in 1991 the Tories were soundly defeated by the NDP. While in opposition the NDP promised to “buy back or expropriate any Crown corporations or government assets sold by the Tories.” The NDP has been in office for sixteen years. What is their record on privatization?
(1) The oil industry. The NDP sold the remaining government shares in Sask Oil; it is now part of Nexen. They did not re-establish the Heritage Fund. The Lloydminister Heavy Oil Upgrader had been created with 75% of the capital coming from Ottawa, Alberta and Saskatchewan and only 25% from Husky Oil. A 1994 agreement gave Saskatchewan 50% of the equity in this operation, a very good deal. However, the NDP government then turned around in 1998 and sold its shares in this $1.6 billion plant for $310 million.
(2) The potash industry. The NDP government completed the privatization of the Potash Corporation of Saskatchewan. It removed the requirements that limited the extent of individual ownership and that non-Canadians could not own more than 45% of the stock. The majority of the stock is now owned by Americans.
(3) The uranium industry. Cameco was created in 1988 by a merger of Saskatchewan Mining and Development Corporation and Eldorado Nuclear. In 1996 and 2002 the NDP government sold the government’s remaining shares in the corporation. Cameco is now majority owned by U.S. investors.
(4) The coal industry. Lignite coal is mined in Saskatchewan to fuel Sask Power’s generators. Originally coal was mined by Sask Power, seemingly a natural development. The Devine government privatized this operation. The NDP government has agreed with this decision. Since 2003 the coal industry has been sending profits to the owners of Sherritt International Corporation.
(5) Natural gas. Historically natural gas was under the control of Sask Power. It acted like a private corporation exploring and developing fields, creating storage facilities, developing pipelines and acquiring future supplies in Alberta. In 1985 the Tories deregulated the market. But the privatization of the industry came in 1998 when the NDP government abolished Sask Energy’s monopoly on selling gas, allowed big corporate users to buy from private suppliers, and then mandated that Sask Energy must allow the private companies the use of the pipeline system created by the Crown corporation.
(6) Forestry. The CCF government of Tommy Douglas created Sask Forest Products which built and operated a plywood plant and saw mill. This Crown corporation was “merged” with MacMillan Bloedel in 1995, completely privatized in 1999.
(7) Investment Saskatchewan. Over the years the Saskatchewan government had acquired major interests in private corporations, the result of subsidies and joint ventures. In 2006 the NDP government transferred these assets to Victoria Park Capital Inc., a private company, to manage and privatize. These assets included the taxpayers’ investment in the Meadow Lake OSB plant, Saskferco, and Big Sky Farms.
Recently I was in the General Hospital. There is no longer any cafeteria or food service there. You can get healthy foods at Robin’s Donuts. My neighbour used to work there as a cook. How many other such privatizations have occurred over the past sixteen years?
The Sask Party may have plans for privatization. They can find out how to do it by examining the record of the NDP government.
John W. Warnock is the author of Natural Resources and Government Revenues: Recent Trends in Saskatchewan, publishing by the Canadian Centre for Policy Alternatives - Saskatchewan in June 2005.
Saskatchewan Bucks the Trend on Alternative Energy
By John W. Warnock
May 3, 2007
Act Up in Saskatchewan
Global warming and climate change has dominated political debate over the past year. If the polls are accurate, the great majority of Canadians want action to be taken by our leaders, but little has been forthcoming.. The Ecologist and others have called for a “second industrial revolution”, transforming our economy and society from dependence on fossil fuels by switching to alternative energy.
In Saskatchewan we have always depended on coal and natural gas to provide our energy. We also built SaskPower, a Crown corporation, to produce and bring electricity and natural gas to all rural, northern and remote areas. The centralized system has served us well, but we now need a change of direction.
The move to distributed generation
The new trend is toward “distributed generation”, which is a shift to local generation of power and energy for local and regional consumption. This development is well on its way in Europe. The new alternative includes a range of policies to support the generation of energy by households and businesses, with the emphasis on conservation, demand management and renewable energies. The change is also seen as a requirement for protection against the dangers from the widespread power outages that we have seen in recent years. With climate change, these are expected to intensify.
However, distributive generation in Canada runs into entrenched bureaucracies and fixed political attitudes. SaskPower has a strong commitment to going slow on alternative energy. Our political leaders are calling for refurbishing our coal fired plants, spending $2 billion on a new “clean coal” operation, and holding out the prospect of a nuclear power facility. All these depend on the retention of the centrally run provincial system.
Learning from others: the example of Washington state
Saskatchewan used to be known as the most progressive place in North America. But we also have a contradictory tradition of rural conservatism and parochialism. This helps explain why we have such a poor record on sustainable energy, global warming and climate change. What can we do? There are political and individual options.
Last January I spent some time in Seattle. I looked into how the city and the state were approaching energy use and climate change. They are far ahead of Saskatchewan. To begin, a broad coalition of groups organized Initiative 937, adopted in a state wide referendum, which requires utilities with over 25,000 customers to implement conservation measures and acquire new supply from renewable energy sources. The state government has passed legislation enabling this initiative. The Seattle government has strongly supported this goal. In their new plan, adopted after wide consultation with the public, Seattle City Light, a public utility, will acquire 460 megawatts of new energy over the next 20 years through conservation, geothermal, wind, hydro, biomass and landfill gas. This move had bipartisan support from Republicans and Democrats.
The U.S. federal government, Washington state, the City of Seattle and Seattle City Light now provide individual homeowners and businesses with a variety of tax rebates and incentives which encourage them to weatherize and install solar, wind and biomass energy systems. Net metering is widely available, and in Seattle individual home owners who install energy production systems feed their surplus power into the city grid and then take back energy when they need it. The price is the same either way, and this form of net metering allows individual energy producers to avoid the cost of battery storage systems.
Examples from Seattle
On January 31, 2007 I was at the University of Washington where a group of organizations had an outdoor display celebrating wind and solar power in Seattle. On that day the American Solar Energy Society released a national plan to use conservation and renewable energy to reduce U.S. greenhouse gas emissions by 60% - 80% by 2050.
Pam Burton from Puget Sound Solar explained to me how they renovated and upgraded their large old two-storey Seattle home. They went to R-34 in the walls, R-57 in the ceiling, and R-33 in the basement walls. They replaced the standard windows with reclaimed low-E Argon-filled windows. “You can’t put in too much insulation,” she argued. “This alone reduced our energy use by 67%.”
They have added large solar collectors, as their goal is create a Zero Energy House. “Seattle has less solar potential than Germany, where solar energy is most developed, and far less than Saskatchewan,” she proclaimed. They bought a 1997 Solectria (Geo Metro) car, which was on display along with several others. “We power our Solectria from our solar collectors,” Pam stated, “and it serves us well for all our Seattle transportation needs, about 4,000 miles per year.”
I had a conversation with Robert Jones, a local organic farmer. He also maintains a house in Seattle. “If we are being serious about this issue,” he argued, “we have to look at the size of the houses we have. Families get smaller, and new houses get larger. I have an older1200 square foot bungalow. I added insulation. I put in larger south facing windows. I installed two 75 watt solar collectors, which cost me about $2000.”
He then talked about the advantages of wind power. “I also installed two small wind turbines, which I built myself, and they are connected to ordinary automotive batteries. In the worst month of the winter, my total cost for power and heat is only $30. This works well, for when the sun doesn’t shine, the wind always seems to blow.”
Wind power at the household level
In Saskatchewan we see new wind turbines in rural areas. But in Europe and Japan, small wind turbines are everywhere in urban areas. Many of these are the new Vertical Axis Windmills. In Europe it is common to see the 2.5 kilowatt hour VAWs mounted on the roofs of houses. They are now very silent, cause no noticeable vibrations and function with wind as low as 3 mph. In Seattle a small wind turbine which produces on average 400 watts of power costs $600. In Japan small wind and solar generators are widely used in urban settings. They are often a single solar panel on a pole, around eight feet tall, with a vertical wind turbine built into the pole.
Germany provides large incentives for home owners and businesses to install conservation and alternative energy. They pay around 45 cents for a kilowatt hour of energy fed into the grid. They know that alternative energy provides far more jobs than the fossil and nuclear fuel industries. Germany is now a major exporter of the new technologies.
Can North Dakota show the way?
In contrast to Saskatchewan, North Dakota is going all out for wind power. They are building large wind farms, small wind farms, wind systems for small towns, and Indian bands are now adopting their own local systems. They have introduced net metering and incentives to encourage energy production by households and small businesses. This strong commitment to the new energy has paid off. L. M. Glasfibre of Denmark has built a plant to construct wind turbine blades at Grand Forks. It is the largest manufacturer in the city, employing 700 people. D. M. I. Industries is building wind towers at Fargo. North Dakota is presently negotiating to establish a wind turbine industry in the state. A missed opportunity for Saskatchewan, as they will dominate the prairie market.
A new solar technology has been developed in South Africa. It does not use silicon but Copper-Indium-Gallium-Diselenide (CIGS), which is much more efficient than silicon in converting sunlight to electric current. Tests conducted in Europe found that the new solar panels are twice as efficient as the silicon system and operate much better in winter. This new solar technology is being installed across South Africa, and IFE Solar Systems of Germany, one of the world’s leaders in solar energy, has opened a major plant in Germany. What about Saskatchewan? Well, we have lots of coal, and the industry employs around 350 people.
John W. Warnock is a Regina political economist and long time environmental activist.
“Clean Coal” is the Wrong Road to Take
by John W. Warnock
Leader-Post (Regina)
May 3, 2007
Lorne Calvert’s NDP government and SaskPower seem determined to saddle the people of Saskatchewan with a new “clean coal” generating facility. The research has been done, the Estevan site has been chosen, and the project’s supplying corporations are on side. The 300 Megawatt (MW) plant will cost between $1.5 and $2.0 billion. But this is clearly not the best way to produce energy nor to reduce carbon dioxide greenhouse gas emissions.
In the first place, coal fired generators are very inefficient, capturing only around 33% of the energy in the combustion process; the remaining two thirds of the energy produced is dissipated into the environment. This waste energy cannot be captured and used where power plants are far removed from industrial projects and population centres.
The “clean coal” aspect of this project is the Oxyfuel system used to capture around 90% of the carbon dioxide, compress and chill it to liquid form, and then pump it deep into the ground for sequestration. Unfortunately, this is an expensive and inefficient process. Of the total 450 MW of electricity to be produced by the new plant, 150 MW will be used in the Oxyfuel and geological storage process. As many studies have argued, down the road carbon dioxide sequestration may permit the continued use of coal for power generation. But it is no solution to the current problem of greenhouse gas emissions and climate change.
Furthermore, the carbon dioxide extracted by the proposed SaskPower plant will be used to enhance oil recovery. The liquid carbon dioxide is pumped into the permeable oil bearing rock strata, is dissolved in the oil which reduces its viscosity, and it then sweeps the more mobile oil to the production wells. This is the system presently used by EnCana at Midale. Some of the pumped carbon dioxide escapes in this process. And of course this strategy completely undermines the goal of carbon sequestration as more petroleum is extracted and consumed, creating even more greenhouse gas emissions.
Building a very expensive new power plant at Estevan further commits Saskatchewan and Sask Power to a highly centralized system of electrical power production and distribution. We have a great many alternative sources of energy, and their development requires a decentralized system. We must also plan for disasters which are caused by climate change. In January 1998 there was an ice storm in Quebec, and many areas were without power for several weeks. What would a similar event do to Saskatchewan? How many people would die?
Last January I was in Seattle doing research and I looked into the energy strategy of Seattle City Light, a municipal public utility. In the 1920s they built three dams on the Skagit River which serve as their base supply. They also contract for some power from the Bonneville Power Administration. In 1976 they opted out of the Washington Public Power Supply plan to build nuclear reactors and chose instead to promote conservation. In 2002 they contracted to purchase power from the Stateline Wind Project on the Oregon-Washington border.
But the Seattle area has the highest annual population growth of any region in the United States. Therefore, in 2006 Seattle City Light produced an integrated plan for power development for the period 2007-2025. Over this period they will add 460 MW of electrical power. This will include 142 MW from conservation, 100 MW from geothermal development, 55 MW from additional wind sources, 25 MW from landfill gas, and 15 MW from biomass energy. The total projected capital cost of these additions is only $170 million.
For many years Seattle City Light has been providing direct financial incentives to promote conservation and the purchase of more efficient appliances. They have a very basic demand management system: for the first 10 kilowatt hours (kWh) consumed a household pays 3.76 cents a kWh, above that the cost is 7.93 cents kWh. They are now promoting individual household and business production of solar, wind and biomass electricity. Through a net metering system households are paid market price for the energy they provide to the city grid. Households and businesses who install new generating facilities get city, state and federal rebates and tax incentives.
Seattle City Light is only one example of how communities can shift to renewable energy. How long to we have to wait before a Saskatchewan government takes this issue seriously?
John W. Warnock is a Regina political economist and environmental activist.
Al Gore Visits the Lion’s Den
by John W. Warnock
April 14, 2007
Act Up in Saskatchewan
Premier Lorne Calvert has invited Al Gore to speak in Regina on April 23 on global warming and climate change. Calvert states that Gore’s lecture and slide show, An Inconvenient Truth, released in 2006, has become “a significant moment” in his understanding of this issue. Tickets for the performance at the Brandt Centre can be obtained from Ticketmaster for between $50 and $75; students, bleacher and standing room tickets are only $20.
In the 1970s scientists began to report the impact of greenhouse gases on climate. In 1979 the UN World Meteorological Organization (WMO) held a World Climate Conference and called on all nations to seriously address this question. The WMO held a joint conference with the UN Environment Programme in1985 which again called attention to climate changes being introduced by human behaviour. In 1987 the WMO and the UNEP urged the creation of a body to assess the scientific data on climate change, and the Intergovernmental Panel on Climate Change (IPCC) was created in 1988. The following year the UN General Assembly called for special reports on climate change for the UN Conference on Environment and Development to be held in Rio in June1992.
Why do we need to reduce emissions from fossil fuels?
In 1990 the IPCC issued its first report in which the scientists concluded that they were “certain” that human activities and greenhouse gas emissions were a cause of many climate changes. At the UN meeting in Rio member states, including Canada, signed an international convention where they agreed to stabilize greenhouse gas emissions at 1990 levels by 2000. This convention was ratified (including Canada) and came into effect in 1994.
Thousands of scientists have participated in the periodic surveys of scientific studies conducted by the IPCC. They have concluded that to stabilize the climate we need a 70% reduction in the burning of fossil fuels below 1990 levels. This is necessary to avoid “dangerous anthropogenic interference” (DAI), the tipping point where the global warming process would begin to feed off itself and become irreversible. This is often estimated at between 450 or 500 parts per million of carbon dioxide in the atmosphere, up from the 380 ppmv at the present. In recent years annual increases have been around 2.5 ppmv.
Despite the threat which appears to be quite serious, governments and major emitters are everywhere trying hard to avoid facing this challenge and instead are opting to pretend that they are doing something. Many have criticized the environmental movement for focusing on back yard issues and overlooking the bigger picture.
Impact on Saskatchewan
For some years now scientists have been reporting on the major effects that climate change will have on Saskatchewan. We can expect a significant decline in stream flow, higher winter runoff and lower summer flows in rivers, declining aquifers, higher pollution concentrations in water, and a drop in hydroelectric power. There will be an increased likelihood of severe drought. Higher temperatures will increase evapotranspiration and adversely affect crops. Disease and grasshopper problems will intensify. Pastures will be adversely affected. Livestock will experience heat stress during summer months. The Boreal forests will experience more fires as well as serious insect and disease problems.
So what has the Saskatchewan government been doing since 1992? Grant Devine’s Tory government created the Saskatchewan Energy Conservation and Development Authority (SEDCA) which produced a series of excellent reports detailing the abundant alternative energy potential we have: conservation, demand management, solar, wind, biomass, small hydro and geothermal. In 1995 Roy Romanow’s NDP government abolished SEDCA, and their reports have been ignored.
The Kyoto Protocol
In 1997 the UN Conference on Environment and Development met in Kyoto to reassess the commitment that members had made in 1992. The new Protocol actually reduced the goals set at Rio. In Saskatchewan the NDP government introduced a resolution in the legislature, which passed unanimously, denouncing the Kyoto meeting. Our political parties agreed that we would not send delegates or observers and that this province would not accept anything but voluntary guidelines for the reduction of greenhouse gases. The NDP government and the opposition denounced the pledge made by the Canadian government to reduce our greenhouse gas emission to an average of six percent below 1990 levels by 2012, a very minimum first step. When Jean Chretien’s government ratified this pledge in 2002, the NDP government proclaimed that this was “unacceptable” to Saskatchewan. The Saskatchewan Party agreed.
Lorne Calvert’s NDP government recently spent $86 million to refurbish generators at Coronach and Boundary Dam so that they can burn coal for another 25 years. They endorsed George W. Bush’s call for a new continental energy pact, and Lorne Calvert and Eric Cline have twice gone to Washington to urge the USA, which burns 25% of the world’s fossil fuels, to buy even more from Saskatchewan. At the meeting of the Western premiers at Gimli in 2006 they agreed to reject the Kyoto Protocol and adopt Stephen Harper’s “made in Canada” plan to do virtually nothing about climate change.
Saskatchewan has a well known record on this issue. The Pembina Institute gave the NDP government a failing grade for having taken the least action of any province on global warming. We have the fastest growing greenhouse gas emissions rate, the highest per capita rate, and are about 62% above the 1990 levels.
The Calvert government continues to stress that it is moving in the right direction. It is providing subsidies to promote ethanol, a strategy which is now widely criticized around the world. There is also the $2 billion committed to building a “clean coal” megaproject which is being designed to capture carbon dioxide and pump it into the ground in order to extract more petroleum. Last week the government held a hyped up press conference to announce the new “green strategy” for the province. The total amount of funds allocated to alternative energy projects will be $7.5 million. Al Gore has a lot of work to do in this province.
John W. Warnock is a Regina political economist and author and has been active in the environmental movement for over thirty years.
Property Taxes as an Election Issue
by John W. Warnock
Leader-Post (Regina)
October 24, 2006
If you ask my neighbours what is the most important issue in the upcoming municipal election, they will reply “property taxes.” Many are seniors, like myself, who live on fixed incomes. Property taxes are regressive, falling heaviest on those least able to pay. They do not take into account the income or wealth of the family occupying the residence. As many studies show, it is not unusual for low income people and seniors to devote ten percent of their annual income to property taxes.
We know there are good reasons for the high property taxes in Saskatchewan. Over the past twenty years our provincial governments have reduced the provincial grants to local governments and school boards. Whereas these grants used to provide 60 percent of local financing, they now provide only around 40 percent. The Saskatchewan Local Government Financing Commission (1986), appointed by Premier Grant Devine, argued that we should not become over-reliant on property taxes and should set a goal of the province providing 75 percent of local financing. As the Commission concluded, this would provide “equity and fairness.”
Our recent provincial governments have off-loaded their deficits on local governments and school boards because they have cut many sources of revenues. They steadily reduced the rate of royalties paid by the trans-national corporations for the right to exploit our resources, they have cut provincial taxes on businesses, and they have cut the income taxes paid by those in the higher income brackets. One solution to the reduced revenues was to cut grants to local governments. The result has been higher property taxes, flat taxes on utilities and higher user fees on a wide range of public services.
The other reason for the increase in property taxes has been the elimination of the municipal business tax. All across North America and Europe it is the norm for businesses to pay some form of municipal business tax. This is different from a property tax on commercial property.
The present Mayor and City Council are enamoured with big box “power centres” which presently operate at the east end of Victoria avenue and in the Northwest corner of the city. Another is planned to be in the proposed Southwest development. When one of these big box stores or corporate chains arrives they are here to maximize their profit. They are not here to provide a public service. That is their obligation to their investors. But as we know from many studies, they drive out locally owned businesses. For every two jobs they create they eliminate three. The next time you drive through our big box power centres, take a good look. Very few of these businesses are owned or controlled in Saskatchewan. They each form a huge black hole which sucks our economic surplus out of the province.
When a new business establishes in a community it takes advantage of the existing infrastructure, the services, and the well-developed market for its products or services. It hires people trained by the local schools, technical institutes and universities. A business tax has always been seen as a way of meeting its obligation to support and financially contribute to the local community.
In 1997 Roy Romanow’s NDP government changed the Municipalities Act to make the local business tax optional. It was well understood that once one city abolished the tax, the others would follow. Grant Devine’s Local Government Finance Commission recommended that the business tax be retained and made uniform across the province to avoid municipalities competing against each other.
Business taxes assessed on square footage or as a percentage of the value of the commercial property occupied have been deemed unfair. They do not take into account the value of the business. A more equitable business tax is one based on the gross revenues of the business. This form of municipal business tax is widely used in the United States and has been used in Newfoundland.
Where this business tax is used in the United States it normally takes the form of a one or two percent tax on gross revenues. This is considered a cost of doing business and is not a tax on profits. For Regina, we could have a gross revenue tax that is progressive. For example, a gross revenue tax of one percent could only apply to business revenues over $1 million. This would exempt a great many locally owned businesses. It could rise to two percent or more for all revenues over $5 million. One advantage of a progressive gross revenue business tax is that it would fall heaviest on those large corporations which are owned outside the province. I have discussed this with several small Regina businessmen in the past, and they all thought it was a good idea. We need some new thinking at City Hall. It is time to make some changes there.
Development a Key Issue in Regina's Municipal Election
by John W. Warnock
Leader-Post (Regina)
September 29, 2006
One of the key issues in the upcoming municipal election is the decision by the Mayor and City Council to approve several large suburban developments, starting with the proposal southwest of the airport. Obviously, some people will benefit from this plan: the large developers, the corporations who build houses, and those people who have invested in land speculation. Another large shopping centre will benefit the box stores and national and international chain businesses. But for all the rest of us, we will undoubtedly have to pay for this via higher property taxes, a further hollowing out of the city’s core areas and fewer locally owned businesses.
Numerous studies across North America all show that suburban development has to be subsidized by the residents and businesses in the older areas of the city. Hectorage fees charged to developers usually cover the basic costs of development within the building zone. But they do not cover the costs of expanded roads, water and sewer upgrades, telephone and power upgrades, public transit, garbage collection, snow removal, road repairs, schools, libraries, police, community centres, and other public services. The taxes paid by the new residents and businesses never cover these costs.
Furthermore, there are social costs to suburban sprawl development. Prime agricultural land is absorbed, material costs are higher, there is higher energy use and there is a greater dependence on automobiles. People have to travel farther to work, school, shops and services. Increased automobile use leads to more traffic deaths and injuries and noise and air pollution. None of these costs are factored into suburban development - they are just passed on to the population as a whole. Sprawl development does not serve the current general need, where we have much smaller families, many single parent families and a growing percentage of single member households.
Some may remember that Avi Friedman and his students came to Regina and over several years showed us a beautiful alternative to suburban sprawl development. Across North America and Europe this is called “smart growth.” This effort seems to have had no impact on those running our city.
Friedman also stressed that city planners should recognize the coming post-carbon era including the disappearance of natural gas on the Canadian prairies. We are facing other major challenges from climate change. Scientists predict that the North American plains will be one of the areas experiencing the highest adverse effect. Agriculture will become much more precarious. Recent studies point out that the prairies, and in particular Saskatchewan, face serious water problems in the near future.
What Regina needs is real city planning which involves direct participation by the citizens as a whole. Having developers buy land, draw up their own plans and then have them rubber stamped by City Hall and the Mayor and City Council is not planning. It is time to throw out the bunch now on City Council and send the city planners back to school. This is no longer the 1950s.
The CCF-NDP in Saskatchewan: From Populist Social Democracy to Neoliberalism.
by John W. Warnock
Chapter in William K. Carroll and Robert S. Ratner, eds. Social Democracy in Neoliberal Times; Challenges and Perils in Canada. Halifax: Fernwood Books, fall 2005, pp. 82-104.
Extract: Social democracy on the international level
People in Saskatchewan tend to be quite parochial. It is rare that someone seriously looks at international developments and how they might affect what it going on within the province. Despite the fact that Roy Romanow regularly praised the New Zealand Labour government, and handed out speeches by Tony Blair, hardly anyone in the province links the move to the right to the political shift of social democracy throughout the industrialized world. Many thought that when the communist parties virtually disappeared following the collapse of the Soviet bloc, the social democratic parties would shift to the left to fill the void. But as my colleague Joe Roberts has argued, social democratic parties have only been left wing in their general orientation when they are forced to contest with a strong communist party or a strong labour movement committed to socialism or communism. In countries with a weak radical left, the social democratic parties have been moderate Keynesian parties, like the Labour parties in Great Britain, New Zealand and Australia. A move to the right after 1989 was to be expected. (See Roberts, 1991)
Even fewer people have an historical view of social democracy. They have no knowledge of the split in Europe between the social democratic parties and the communist parties around World War I. Few see social democratic parties as the parties of the aristocracy of labour, the minority of workers who are in trade unions. Fewer yet see them as part of the "social democratic alliance" between the aristocracy of labour and their capitalist classes, beginning in the era of colonialism and imperialism, as described by Samir Amin and others in the Third World. Few today want to discuss the role of social democratic parties and governments in backing military alliances like NATO which serve to aid the U.S. government and the capitalist classes in their domination and exploitation of the less developed countries. Few are willing to admit that their high standard of living and conspicuous consumption comes at the expense of the poor in the less developed countries. Social democratic parties have been First World parties. Their success has been due to their close links to the reformist trade union movement. Many were created by the trade union movement. There was an alliance between the two, with the trade unions supporting the social democratic parties during elections; in return the social democrats in the legislature would defend the legal and political rights of labour. But at least since the collapse of the Soviet Bloc, and the rise of neoliberalism, social democratic governments have proven to be the best instrument for controlling the labour movement and imposing the neoliberal order on a resisting population. This pattern was clearly established by the Labour governments in New Zealand (1984-90) and Australia (1983-1996). (See Przeworski, 1985)
* * * * * * * * * * * *
Big business sets the agenda
The Calvert government has undertaken a major campaign to convince capital that Saskatchewan is a good place to invest. The government's official web site boasts that "Saskatchewan had the highest corporate profits from 1990-2000." It also had "the highest increase in profitability of any Canadian province in the 1990s." The province has the lowest manufacturing tax rate at 10% and "the most loyal employees of any Canadian province." Strikes are few and far between, and they are managed by the NDP government. The data shows they are right. There has been a shift of provincial net income with an increasing share going to corporate profits:
Provincial Net Income at Factor Cost, 1991-2002
Millions of Dollars, Three Year Averages
1991-3 % 1994-6 % 1997-9 % 2000-02 %
-------------------------------------------------------------------------------------------
Wages & Salaries 9,983 (63) 10,903 (57) 12,417 (60) 13,769 (58 )
Corporation Profits 1,242 (8) 3,205 (17) 3,798 (18) 5,242 (22)
Interest Income 2,922 (19) 2,767 (15) 2,503 (12) 2,892 (12)
Small Business
Net Income 1,214 (8) 1,488 (8) 1,729 (8) 1,929 (8)
Farm Net Income 402 (3) 704 (4) 207 (1) 59 (0.2)
Total Net Income 15,747 (100) 18,985 (100) 20,609 (100) 23,846 (100)
-------------------------------------------------------------------------------------------
SOURCE: Saskatchewan Bureau of Statistics. "Gross Domestic Product at Market Prices." 2003.
Public opinion polls in 2003 all suggested that the NDP would lose the next election. The NDP leadership hired a new public relations firm and ran a U.S.- style negative campaign attacking Elwin Hermanson, leader of the Saskatchewan Party. This worked. The political right and organizations representing primarily local Saskatchewan business interests strongly supported the Saskatchewan Party. But big business, the large corporations, offered no criticism of the NDP government. They had done very well over the thirteen years of NDP government. (Brown, 1999; Warnock, 2004)
* * * * * * * * * * * *
The NDP in Saskatchewan
In Saskatchewan the NDP always had strong support in the working class ridings and those with a high percentage of low income people. But the leadership of the trade union movement was never really able to deliver the vote of the organized working class, as many studies have shown. When Grant Devine's Tory government was in office, organized labour mobilized with other popular groups to actively resist the neoliberal agenda. But once the NDP was in office, all organized opposition to the neoliberal agenda being imposed disappeared. In Saskatchewan, with its high percentage of low wage jobs, organized workers are clearly the aristocracy of labour. In the resource extraction industries, the individual trade unions usually line up with their corporate employers on key issues like resource royalties. (Warnock, 2004; 2002)
Chris Howell notes that today social democratic parties "display a disarming enthusiasm for economic orthodoxy emphasizing neoliberalism, macroeconomic stability, labour market flexibility, and a shrinking role for organized labour in the political economy of the Left." That would certainly describe the NDP leadership in Saskatchewan. They frankly state that the times do not permit a return to the Keynesian economic and welfare state that existed under the government of Allan Blakeney. Janice MacKinnon stresses this argument. (Howell, 2001; MacKinnon, 2003)
Herbert Kitschelt has argued that the future of social democracy is in replacing the reliance on the organized working class with an alliance with the new social movements and with the left libertarian interests. He has argued that this means opening up the social democratic parties to feminists, the green movement, and human rights organizations. To do this in Saskatchewan would require a virtual revolution within the NDP. There has always been hostility to feminist issues within the party, little concern about the humans rights and economic status of Aboriginal people, and the party has a long history of backing industry on ecological issues, from uranium mining to industrial farming to global warming and climate change. (Bradford, 2001; Kitschelt, 1994; Warnock, 2004)
What possibility is there for a shift of direction within the NDP? First, it should be remembered that there was virtually no support in the Saskatchewan NDP for the New Politics Initiative (NPI). Not even for a reform of the federal NDP. They have no social democratic or democratic agenda. Many people re-joined the NDP to support Nettie Wiebe in her run for the leadership of the party following the resignation of Roy Romanow. They attracted people from the peace movement, the anti-globalization movement, and even a group within the New Green Alliance took out NDP memberships. But the vote for Wiebe peaked at 25% of the NDP membership that voted. Since then this group has fragmented and faded away. There was no effort to try to create a left structure within the NDP. Many people, myself included, do not believe that there is any hope of changing the NDP from within.
In the 2003 election the NDP platform stressed that they were a "Green Party." Their campaign literature prominently used the Green colour for the first time ever, playing down the orange and black. They were quite fearful that the progressive and marginalized voters, as well as the left wing of their own membership, might shift to the more left wing New Green Alliance. But this did not happen, and once re-elected they quickly abandoned the pretense of being a Green party. The biggest cuts in the March 2004 budget were in the ministry of the environment, particularly in environmental monitoring and control.
Can the Saskatchewan NDP change direction?
What is the future for the NDP in Saskatchewan? People today are generally very disappointed with the Calvert NDP government. Many political commentators say that the best thing they have going for them is the Saskatchewan Party with its even more right wing policies and commitment to social conservatism. If the major opposition party were the Liberals, the NDP would be quickly tossed out of office. The unpopularity of the NDP in general was reflected in the 2004 federal election, where the NDP did not win a single seat in Saskatchewan. They received less than 100,000 votes, only 24% of the total, and finished third behind the Conservatives and the Liberals. Nettie Wiebe, former president of the National Farmers Union, and considered one of their strongest candidates, finished third with only 25% of the vote in Saskatoon-Humboldt, a seat that the NDP used to win.
The NPI and others have argued that the party needs a good dose of democracy. But the NDP in Saskatchewan is definitely not interested in that. Since the Blakeney period they have resisted popular participation and bottom up policy formation. They have a very strong bureaucratic tradition. They do not consult with people on key policy decisions before they are implemented. For example, in the 2003 provincial election the general public and the party members did not know what the NDP platform was until it was released two weeks into the campaign by the leader, Lorne Calvert. That is one of the reasons why they are so hated in rural Saskatchewan today. (Stevenson, 2002; Swartz, 2001)
Within Saskatchewan there is a polarization between those with relatively good incomes and a growing percentage of the population that is marginalized. To date those outside the structure of the three major parties - including those with low incomes, recipients of social assistance, the Aboriginal community, women, and youth - are not participating in politics. They are not even voting. In the 2003 provincial election only 57 npercent of eligible voters went to the polls. The three main parties seek their votes, but they are not prepared to offer them any program to deal with their basic problems. The new left wing party, the New Green Alliance, sees these people as their allies and potential supporters, but so far they do not have the members and finances to begin to organize a major political movement. (See New Green Alliance: www.nga.sk.ca)
The general feeling around the province in 2005 is that this will be the last term for the Romanow/Calvert NDP government. Despite a low confidence in the opposition Saskatchewan Party, the voters will choose to dump the NDP in the next provincial election. There is still very strong opposition to the NDP in rural areas, and this will not change. Their monopoly of seats in the urban areas was challeneged in the 2003 election and will probably break in the next election. The Saskatchewan Party has a new leader, Brad Wall, who is not a Christian fundamentalist, and he is trying to give the impression that the party is moving to the centre. Most political observers feel that the voters will also conclude it is just time to change which party is in office. It would be a great surprise if the province does not get a Saskatchewan Party majority government.
At this point the NDP will have to decide whether to remain committed to the Third Way neoliberal agenda or choose a new direction. The problem for the party is that there is no alternative vision among the members of the legislature, the party leadership, or even the remaining active party membership.
How Do We Confront and Change the Neoliberal Order?
By John W. Warnock
Presentation to the Dialogue on Poverty, Welfare and the CST: What Kind of Saskatchewan Do We want? Sponsored by the Canadian Council on Social Development and the Social Policy Research Unit, Faculty of Social Work, University of Regina. September 30, 2005
My presentation departs from that of others. While I think it is very useful to set forth goals for social welfare and social policy in Canada and Saskatchewan, I think to a large extent this can be a utopian exercise. We have to confront the fact that we live in a political world where our governments and those who primarily influence them are strongly committed to the political economy system of neoliberalism, what we all know as the free market and free trade regime. Under this system the role of governments in the economy is being minimized. Government revenues are shrinking. Everywhere, what we know as the historic Keynesian welfare state is being cut back and even abolished.
We know this all too well in Canada. Those of us who look at the figures know that government program spending has steadily and significantly declined as a percentage of the gross domestic product. The first priority of our federal and provincial governments has been to cut certain taxes: income taxes for those in the higher brackets, wealth taxes, and taxes on corporations. Here in Saskatchewan resource royalties have been drastically cut. Those taxes that have been increased are consumption taxes, user fees and taxes, and property taxes, all of which fall hardest on middle and lower income people.
For example, in the 2004-5 federal budget, spending initiatives called "building a secure society" (which includes the Canada Health and Social Transfer) was projected to be $15,614 million. In that same year "general tax relief," or as we call it tax cuts, was estimated to be $29,599 million. When the federal NDP recently focused on a $4.5 billion tax cut for business they ended up misleading the general public. At no time did they indicate the real extent of the grossly inequitable tax cuts. (See Appendix: Budget Plan, Annex 1, Budget 2003)
The political shift to the right
There has been a steady shift to the political right in the years since the election of Margaret Thatcher (1979) and Ronald Reagan (1980). We have seen the collapse of the Soviet system in Eastern Europe and the USSR. In the rest of the world the communist parties and their trade unions have either disappeared or have been greatly reduced. Without discussing why this happened, the fact remains that these parties and trade unions were strong advocates for social justice for the poor and the working class. That pressure on our governments and the social democratic parties disappeared.
In Eastern Europe since 1989 we have seen the electorates shift between new right wing nationalist governments and then governments led the by so-called reformed communists, the Parties of Democratic Socialism. But whatever group of parties happens to be in office, nothing changes; unemployment remains high, there are gross inequalities of income, wealth and status, and the general standard of living of the large majority remains well below what it was under the old state communist regimes. The Globe and Mail reports this week that the average income in Russia has fallen to $U.S.150 per week. The result has been disillusionment with the political system.
In the western European countries (as well as Australia and New Zealand) all of the social democratic parties have moved steadily to the right. They support free trade and the free market. In government they remove controls on capital, support deregulation and privatization of state enterprises, cut social programs, and support militarization. (See Moschonas, 2002)
In the recent German election the voters were basically given a choice of supporting the Social Democratic Party-Green Party coalition or the Christian Democratic Party-Free Democratic Party coalition. The SPD-Green government had enacted the Hartz IV "reforms" which greatly reduced the power of trade unions and the Agenda 2010 plan which radically cut pensions, unemployment insurance and welfare programs. The CDU-FDP coalition approved but just wanted to go faster and further. Voters in the United Kingdom were given a similar choice, between Tony Blair's New Labour and the even more right wing Tories. In the 1980s the Labour parties in New Zealand and Australia went even farther than Margaret Thatcher in repealing the welfare state. (See Riches, 1997)
We know this trend only too well in Saskatchewan. There has been little if any difference in policy orientation between the Tory government of Grant Devine (1982-1991) and the subsequent NDP governments of Roy Romanow and Lorne Calvert. During the NDP government of Allan Blakeney (1971-82) Saskatchewan had the highest minimum wage in Canada and social assistance rates were well above the poverty line and basic needs line. That has changed dramatically. Today Saskatchewan has the highest percentage of low wage jobs of any province in Canada. We also have the highest percentage of people working two or more jobs.
What is the political alternative?
There has to be an alternative to the present situation. How long can we accept a growing percentage of the population being marginalized, unemployed or under employed, with a growing percentage of people trapped in precarious work (part time, casual, temporary, contract and self-employment). All the data show a significant increase in inequality of income, wealth and status in Canada, Saskatchewan and in the industrialized world in general.
On the international level, all reports show a widening gap in standard of living between the industrialized capitalist countries and the relatively less industrialized capitalist countries. It may be that most people in the First World consciously or unconsciously have come to the conclusion that what we have now is the best of all possible worlds. The alternate might be to see your job fly away to some distant less developed country. We have seen what happened to full employment and good social security in the USSR and Eastern Europe when they shifted from the Soviet model to free market capitalism and rule by a newly created capitalist mafia. Change can include devastating social and economic consequences.
What is the alternate? In the First World the 1970s and 1980s saw the creation of the Green Parties. They were not simply ecology parties but parties of social justice. The West German Greens, the model for most of the European Green parties, wanted a third way that was a rejection of competitive capitalism as well as the hierarchical, bureaucratic, environmentally destructive Soviet system. But after a major internal debate in 1991, the majority who stayed in the party moved it to the right to accept the dominate position of private free market economics. While some Green parties remain strongly committed to social justice issues, they have rarely been able to win more than 10 percent of the vote. Those parties which joined "progressive" coalition governments with social democratic parties (as in France and Italy) also were required to move to the right and compromise their commitment to social justice. The Greens, operating as political parties, have been unable to build alliances with the trade union movement as well as the poor and marginalized. Only in Australia in recent years has a Green Party made a significant effort to build a base among inner city marginalized people.
The former communist parties have dropped Marxism, and many now call themselves left social democrats. Some have joined with other groups and formed new Left parties in Europe. But they remain rather small. In the recent election in Germany the newly reorganized Left Party received almost nine percent of the vote. They took a strong stand in defence of the universal welfare state. But they still failed to attract the working class that had organized large demonstrations against the neoliberal policies being implemented by the SPD-Green government.
In Europe there has been the rise of the new right wing nationalist parties which are sometimes called quasi or neo-fascist. In contrast to the fascism of the 1930s, which had it basis in the middle class, the new rightist parties have their roots in the marginalized people, particularly those who cannot find work which pays a living wage. These are the people who used to support the communist and social democratic parties. They have been abandoned by their parties.
The other major development in the First World is the refusal of many people to be involved in any way in the political process, even voting. Elections in many Eastern European countries has dropped to less than 50%. All the European countries report a drop in voting. We know this trend in Canada. In the last two federal elections, 40% of the electorate refused to vote. In Saskatchewan the percentage of eligible voters turning out has dropped from 78% in 1991 to 53% in 2003. As elsewhere, the turnout in inner city ridings has dropped below 50%. Political scientists who have studied this problem find that those who refuse to vote have concluded that it does not matter who is elected for the parties all do the same thing when in office. Why should workers and the poor bother to vote when all governments are systematically cutting the programs that used to give them support? (See Borst, 2005)
What is to be done
There are a lot of examples of new political movements for social justice. The problem is that they all seem to be based in less developed countries which have experienced the full force of savage capitalism under the neoliberal political economy. With the collapse of the right wing regime in Argentina, for example, many were inspired when workers took over their own factories and began running them. But this movement has faded, as it did not have support in a strong political party and movement.
The most successful example has been Venezuela under the leadership of Hugo Chavez. He was able to build on the strong political work of two major left wing parties, Radical Cause (Causa R) and Movement Towards Socialism (MAS), who had been elected government in Caracas and quite a few states. With strong majority support, Chavez has used the power of the democratic state to resist the two right wing parties, the Christian conservatives (Copei) and the social democrats (AD) and their allies in the business community and the United States.
The World Social Forum has been a most important international development bringing together social movements, the peace movement and the green movement around the world to proclaim that "Another World is Possible." It is now moving out of Latin America to Asia, Africa and even Europe. But the organization is primarily a Third World movement. It has little support in the First World. It has stressed political organization at the community and non-government level.
But in the neoliberal world where power is held by large corporations, the capitalist class, and their supporting governments, more is needed. The original German Greens in 1980 argued that the party "walked on two legs, one in the legislature and one in the popular movements." Unfortunately, that is no longer a case for the German Greens. But I would argue that this is the process that has to be developed, where popular groups are mobilized but also have a structure that can challenge the system through the electoral process. In my opinion the only way to contest the political power of big capital and their political allies, and confront their power on the international level, is to capture the state and build democratic state power.
For years many of us were active within the popular alliances which opposed the free trade agreements with the United States and worked for social justice on the provincial level. We worked very hard on that project. But as we look back on that experience, it is hard to think of any battle that we actually won. A new strategy is needed. That is the only way we are going to build a political system that can eliminate poverty and injustice.
John W. Warnock is a Regina political economist, sociologist, and author of Saskatchewan: the Roots of Discontent and Protest (2004). He has been a member of the steering committee of the Saskatchewan Coalition for Social Justice, an active board member of the Council on Social Development Regina, a member of the Poverty Action Group (Regina), and special adviser to the Aboriginal Council of Regina. With Della MacNeil he is author of The Disappearance of Affordable Housing in Regina (2000). Currently he is an active Saskatchewan Green and was a candidate in the last two provincial elections.
Recommended references:
Albert, Michael. 2003. Parecon; Life After Capitalism. London: Verso.
Amin, Samir. 2003. Obsolescent Capitalism; Contemporary Politics and Global Disorder. London: Zed Books.
Aronowitz, Stanley. 2003. How Class Works; Power and Social Movements. New Haven: Yale University Press.
Bello, Walden. 2005. Dilemmas of Domination; the Unmaking of the American Empire. New York: Henry Holt and Company.
Borst, Chris. 2005. "On Not Playing the Game: Reflections on the Federal Election." Socialist Studies Bulletin, No. 75, Winter, pp. 14-17.
Callinicos, Alex. 2003. An Anti-capitalist Manifesto. Cambridge: Polity Press.
Cavanagh, John and Jerry Mander, eds. 2002. Alternatives to Economic Globalization; A Better World is Possible. Report of the International Forum on Globalization. San Francisco: Berrett-Koehler Publishers Inc.
Foster, John Bellamy. 2000. Marx's Ecology; Materialism and Nature. New York: Monthly Review Press.
Hahnel, Robin. 2005. Economic Justice and Democracy; From Competition to Co-operation. New York: Routledge.
hooks, bell. 2000. Where We Stand: Class Matters. London: Routledge.
Kovel, Joel. 2002. The Enemy of Nature; The End of Capitalism or the End of the World? Halifax: Fernwood Books.
Lerner, Gerda. The Creation of Patriarchy. New York: Oxford University Press.
Mellor, Mary. 1992. Breaking the Boundaries; Towards a Feminist Green Socialism. London: Virago Press.
Moschonas, Gerassimos. 2002. In the Name of Social Democracy. The Great Transformation: 1945 to the Present. London: Verso.
Riches, Graham, ed. 1997. First World Hunger; Food Security and Welfare Politics. London: Macmillan Press Ltd.
Shull, Tad. 1999. Redefining Red and Green; Ideology and Strategy in European Political Ecology. Albany: State University of New York Press.
Wood, Ellen Meiksins. 2003. Empire of Capital. London: Verso.
Woodin, Michael and Caroline Lucas. 2004. Green Alternatives to Globalization; A Manifesto. London: Pluto Press.
Appendix:
Government of Canada, Ministry of Finance. Budget 2003 - Budget Plan. Annex 1: Spending and Tax Relief Since the 1997 Budget.
Table A1.9 Summary of Spending and Tax Action since 1997 budget.
http://www.fin.gc.ca/fin-eng.htm
The New Saskatchewan NDP
by John W. Warnock
Briarpatch Magazine, Vol. 32, No. 5, June 2003, pp. 25-27.
Review Article:
Janice MacKinnon, Minding the Public Purse: the Fiscal Crisis, Political Trade-offs, and Canada's Future. Montreal: McGill-Queen's University Press, 2003.
Extract:
Janice MacKinnon has recently published her political memoirs: Minding the Public Purse; the Fiscal Crisis, Political Trade-offs, and Canada's Future. In case you don't remember her, she was elected Member of the Legislative Assembly from Saskatoon Westmount in the NDP sweep in 1991, immediately became part of Roy Romanow's "war cabinet," and served for five years as the Minister of Finance.
Her story is a partisan defence of the Romanow government and the changes it made to the New Democratic Party. This is the first insider report of those years and should be required reading for those interested in Saskatchewan politics and the politics of the political left in Canada. She documents the shift in ideology of the Saskatchewan NDP from the social democratic Keynesian welfare state orientation of the T. C. Douglas and Woodrow Lloyd governments (1944-64) and the Alan Blakeney government (1971-82) to the neoliberal pro-business approach of the Roy Romanow and Lorne Calvert governments (1991-2003)
The heart of her book is a defence of the fiscal policies of the Romanow government. The battle she describes is never with the political right and its allies in the business community. The struggle of the Romanow government was always with the "left" and "leftists," who include the trade union leadership, particularly those in the public service unions, social justice organizations, writers like Linda McQuaig and Murray Dobbin, Briarpatch Magazine, the Canadian Centre for Policy Alternatives, the Saskatchewan Alternative Budget, and social democratic professors. In government, the new group of NDP leaders is constantly in conflict with the "old NDP," those who had ties to the Blakeney government and wanted to continue to pursue an active, progressive government. They also have to do battle with the membership of the NDP, who are still foolishly tied to Keynesian social democracy.
MacKinnon praises the Blakeney government for balancing the budget on a regular basis, but she is critical of it for "raising the expectations" of the people of Saskatchewan, leading them to believe that they could afford extensive social programs like subsidized drugs for the elderly and dental care for children. She insists that the province does not have the resources to support such programs.
Setting the new direction of the party
She does agree with Briarpatch Magazine and other leftists on one key issue. We argued (June 1992 issue) that the direction of the Romanow government was basically set at the April 1992 three-day meeting in Saskatoon between the inner circle of cabinet ministers and 35 important business leaders. At this meeting the NDP government assured business leaders, as Mackinnon puts it, "that we would not return to the 1970s, with its high royalties and big government, but would create the right climate for investment." The new economic development policy was formally set forth in Partnership for Progress, released in November 1992. It pledged that the NDP government would create a "competitive tax regime" [with Alberta], reduce government red tape, train the workforce, and build required infrastructure and research facilities. Emphasis was to be put on creating "a regulatory and taxation environment in which it is easier for business to operate."
The new NDP policy ruled out regaining control over the privatized Crown corporations in the natural resource sector or creating new ones to aid economic development. At best the NDP would create "innovative public-private partnerships." Soon after this meeting the Romanow government established an industry-government committee to revise oil and other royalty rates. They were not raised back to previous levels, as promised in the 1991 election, but lowered below those set by the Tory government of Grant Devine. Other tax breaks for business followed.
Prior to the 1991 campaign the NDP caucus had released a document, Tax Fairness for the 1990s. It pledged that an NDP government would introduce a social democratic tax policy, progressive taxation based on ability to pay. It called for corporations to pay their fair share of taxes and denounced the Tory government for cutting resource taxes and royalties. The 1991 election platform, "The Saskatchewan Way," promised to repeal the Provincial Sales Tax, introduce the "wellness system" to health care, improve farm insurance programs, bring in an Environmental Bill of Rights, introduce a comprehensive energy conservation strategy, eliminate poverty in the first term of government, and balance the budget. A public opinion poll contracted by the NDP and released in November 1991 revealed that Saskatchewan citizens wanted a real change in policy direction, with first priorities on job creation and the elimination of poverty. There was no concern expressed in the size of the government deficit. The people of Saskatchewan did not give the NDP a strong election mandate just to continue the unpopular policies of Grant Devine's Tory government. As MacKinnon stresses, the first task for the new government was to change public opinion.
The Disappearance of Affordable Housing in Regina.
by Della MacNeil and John W. Warnock
Prepared for the Council on Social Development Regina.
Regina, Saskatchewan, January 2000
ISBN 1-895975-15-8 91 pp.
People living on low incomes in Regina have a very difficult time finding safe, good affordable housing. Very good social housing exists, but no new social housing has been built since 1992. Those on social assistance are forced to live in sub-standard housing provided by the private market. The Department of Social Services provides the rent for those on social assistance, thus contributing to the expansion of poor quality private housing. With the general trend towards neoliberalism, the federal and provincial governments have greatly reduced their role in providing affordable housing for low income people and disabled people. This problem is discussed in this paper:
The need for affordable housing in Regina
Saskatchewan Politics From Left to Right '44 - '99.
by Lorne A. Brown, Joseph K. Roberts, and John W. Warnock
Regina: Hinterland Publications, 1999.
ISBN 0-9685886-0-3
Paperback, $10 , 112 pp.
Cover by Betty Meyers
Extract: Introduction
Saskatchewan
has historically enjoyed a reputation as one of the most
politically progressive provinces in Canada. Our people pioneered much
of what is commonly called the "positive state" or the "welfare state"
in this country. The provincial government intervened in the economy on
behalf of the population more than in any other province. This began to
occur even before the Co-operative Commonwealth Federation (CCF),
forerunner of the New Democratic Party (NDP), was elected as the first
social democratic government in North America in 1944. After 1944 this
positive intervention increased markedly and would continue off and on
until 1982. Many other provinces and the federal government would
emulate much of what had been pioneered in Saskatchewan. Our small and,
until recently, mainly agricultural province developed a national
influence out of all proportion to our population and economic
importance.The list of accomplishments is truly impressive, especially when considering that for much of our history we have been a "have not" province often among the poorest in Canada. The 1940s and 1950s witnessed the modernization of the infrastructure of what had been one of the most backward provinces in our country. The same era saw the introduction of hospital insurance, free treatment for many diseases including cancer, some of the most advanced trade union legislation in North America, the first provincial Bill of Rights and an array of welfare state measures which would culminate in 1962 with the first universal public medicare plan on the continent. Within a few years medicare became a national program and has been considered by Canadians ever since as one the implicit rights of citizenship.
The Co-operative Commonwealth Federation
The CCF-NDP (NDP after 1961) governments also experimented with creative ways to expand public ownership in a province where historically most large corporations were owned by outside interests. This included insurance, bus transportation, telephone, electricity and natural gas, exploitation of timber reserves and limited secondary manufacturing and ultimately include considerable public ownership of resource development such as oil, potash and other resource companies during Allan Blakeney's NDP governments of the 1970s.
This widespread public ownership made it possible to provide a wide range of services to the population, often at a lower cost than private corporations. It also enabled the province to develop in a manner more attuned to the economic well being of the population. Very importantly it allowed governments to capture more of the surplus value and resource rents, kept in the public sector of the province rather than being sent to the shareholders of outside corporations. This meant a relatively poor province could afford medicare and similar programs without an onerous level of taxation. New programs to improve the quality of life of Saskatchewan people continued to be introduced as late as the 1970s. The Blakeney governments added prescription drugs to the medicare plan, introduced a dental program for children, passed progressive occupational health and agricultural legislation, expanded public housing and embarked on a number of other measures made financially possible in part by profits from Crown Corporations. In many areas Saskatchewan remained in the forefront of Canada's provinces until 1982.
In the past seventeen years Saskatchewan has lost its position on the leading edge of social progress. We have fallen behind much of the country. For nearly two decades there have been few social programs introduced for the benefit of the population. The reverse has been the case with social programs in decline and government legislation more often than not favouring corporate rather than community interests.This has occurred through two terms of the Conservatives under Grant Devine from 1982 to 1991 and two terms of the New Democrats under Roy Romanow from 1991 to the present.
Grant Devine's Tory government
The Devine regime abolished or crippled most social programs and privatized entirely or in part many Crown corporations including some of the most important and most profitable. In many areas they wrecked what had taken four decades to build. They also indulged in an orgy of corruption, mismanagement, waste and incompetence which made Saskatchewan the laughing stock of the country rather than a province to be emulated.
The Devine nightmare has been followed by eight years of the Romanow New Democrats. More competent and certainly less corrupt that the Tories, they have almost totally abandoned the traditional CCF-NDP approach to the political economy. In fact the NDP have adopted a neo-liberal strategy which is almost identical in most fundamental respects to their Tory predecessors and the federal governments of Brian Mulroney and Jean Chretien and most Liberal and Conservative provincial governments throughout Canada. Not only have they refused to reverse the Tory privatizations but have extended them. The New Democrats have continued the cut backs to health and social services and made an unfair taxation system worse. The main developmental strategy has been the encouragement of corporate capital. The provincial NDP has become a liberal rather than a social democratic party, like the other parties increasingly financed by corporate capital. Tommy Douglas was never more right when he insisted that "he who pays the piper calls the tune".
Saskatchewan people have historically looked to provincial governments to offer protection from powerful vested interests. This historic belief that governments can improve the lives of people once made Saskatchewan the most political province in Canada. Political debate was at a high level and there was a real choice in politics. This was reflected in the voter turnout which was among the highest in Canada. In recent years many people have given up on politicians. They have become anti-political and cynical about the entire process This was reflected by the drastic decline in the turnout for the 1995 provincial election and three recent 1999 by-elections. It is an unhealthy development which could lead to a disintegration of any sense of community. People could retreat into their exclusive individual lives while the corporate interests and their political pawns impose the neo-liberal agenda to the detriment of the vast majority.
Where do we go from here?
The dilemma facing the electorate in the upcoming provincial election illustrates what has become of our politics. While there will be alternative candidates in some constituencies most voters will have only the three main parties to choose from, and none of them are an attractive choice. The NDP has objectively abandoned its traditional base in favour of the interests who support the neo-liberal agenda. The newly formed Saskatchewan Party is a motley array of recycled reactionaries consisting of the discredited Tories, federal Reformers and renegade right-wing Liberals. The Liberal Party consists of a disunited rump with no consistent strategy other than to survive with the hope of making a try for office at some future date. Some commentators are predicting record numbers of voters will throw up their hands in frustration and decline to vote at all.
How did a once proud and progressive province reach this sorry state of affairs? It is not an historical accident and the reasons go much deeper than a few unimaginative and opportunistic political leaders. It is the purpose of this book to attempt to ascertain the reasons why our small hinterland province once managed to provide a positive example to the entire country and then declined to what some people unkindly describe as a veritable political wasteland. We will briefly examine possible alternatives for the popular movements in the hope of beginning the long and difficult process of reconstruction to get the province back on the road to social progress.
The plan of the book
We have divided the book into four sections. The first is a survey of our history up to the end of the Blakeney era in 1982. It examines what is almost a unique phenomenon whereby a social democratic party like the CCF took root and eventually achieved hegemony in a province which was overwhelmingly rural until the 1950s. The American right-wing referred to Saskatchewan as "the red beachhead in North America". This dominance is attested to by the fact that the CCF-NDP have governed for 39 of the 55 years since 1944. In more than half a century no other party has governed for more than two terms - the Liberals from 1964-1971 and the Conservative from 1982-1991. As rural Saskatchewan and left social democratic populism declined the NDP also transformed themselves into a more conventional urban social democratic party under Blakeney and eventually into a liberal party under Romanow almost indistinguishable from other liberal parties across Canada.
The second section consists of an analysis of the transformation of the world political economy which began earlier but got underway with a vengeance in the 1980s during what has become known as the Thatcher-Reagan era after the British Prime Minister and the U.S. President. By the end of the 1980s neo-liberalism had replaced Keynesianism as the dominant ideology and corporate strategy in all Western capitalist societies. This was a reversal of forty years of history. It has led to "free trade" agreements, the gutting of the welfare state and so-called "globalization" whereby huge trans-national corporations now run the world with little interference from national governments or governments at any level. Saskatchewan was affected by the international triumph of neo-liberalism and the effect has been negative for most of the population. The Devine Conservatives who governed during this period welcomed the new neo-liberal approach with open arms as did right-wing parties everywhere. What surprised many people was that the NDP, like many other social democratic parties, mounted no real resistance to the neo-liberal agenda. In fact England's "New" Labour Party, under the leadership of Tony Blair, and many European social democratic parties adopted a slightly watered down version of the new agenda. By the 1990s the Saskatchewan NDP had adopted the neo-liberal approach almost in its entirety.
The third section comprises an analysis of the record of the New Democratic government since their election in 1991. It examines whether the contention that the Romanow government has managed to balance the budget while maintaining a high quality of education, health, social services and pro-people programs and maintaining a fair taxation system is a myth or a reality. This is a detailed and documented analysis of the provincial government's approach to workers, farmers, welfare recipients, women, Aboriginal people, youth and the environment. Has the NDP governed differently from the governments of neighbouring provinces? The facts speak for themselves.
Our final section discusses possible alternatives for those individuals and organizations who are resisting or would like to resist the neo-liberal agenda. We do not claim any definitive answers but wish to contribute to the debate on the most fruitful alternatives. The political and intellectual spokespersons for capital would like us to believe that there are no alternatives to the "New World Order" mapped out by the trans-national corporations and their captive governments. We beg to differ and we think countless thousands of others agree though few of us claim to have a road map to the future. There has already been resistance around the world including Canada. The recent nurses' strikes in Quebec and Saskatchewan are excellent examples. The nurses have been defending not only their own living standards and working conditions but also the very essence of medicare itself. It is little wonder they enjoyed such overwhelming public support. We heartily endorse Tommy Douglas when he said in the last years of his life: "Take courage friends. It's not too late to build a better world."
Saskatchewan Politics From Left to Right is out of print but is available from Amazon.ca and other used book sellers.