ALBERTA

Alberta Budget 2013 Questioned Over Oil Patch Subsidy In Wake Of Education Cuts

04/06/2013 03:02 EDT | Updated 04/09/2013 04:06 EDT
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The budget tabled by the province last month was a tough pill to swallow for many Albertans, post-secondary students being no exception.

With slashes to funding that cut advanced education deeply, many students and administrators were left pondering the tough choices they'll have to make to make up for lost funding.

That sacrifice may be even harder for beleaguered students and schools to accept, when they consider while their funding was being cut, the oil and gas industry was receiving a hefty subsidy from the provincial government to build a carbon capture and storage plant north of Edmonton.

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Alberta Budget Woes: Environment vs. Education Spending

The province gave the Athabasca Oil Sands Project $745 million to build the Quest CCS plant at the Scotford Upgrader near Fort Saskatchewan. CCS (Carbon Capture and Storage) is a process where emissions that are commonly released into the atmosphere, are captured and sent below the surface via pipes, where they are stored underground.

According to Royal Dutch Shell CEO Peter Voser, the Quest CCS plant will be the company's "flagship project,” to meet Shell's "climate change goals."

But if Quest really is the keystone in Shell’s climate change goals then the investment should come from them, not the taxpayer, said University of Calgary political science professor Barry Cooper.

"If Shell thinks it's important, they can spend their own damn money on it," said Cooper. "This is not the type of thing taxpayer money should be spent on."

Shell Canada owns a 60 per cent share of the Athabasca Oil Sands Project, while Chevron and Marathon Oil each have a 20 per cent stake.

According to Forbes magazine, as of April 12, 2012, the total market cap of the three companies’ totals are close to $714 billion.

Exxon was listed as the second most profitable company in the world, while Royal Dutch Shell sat in fourth on the list.

For Cooper, this project is about, "giving money to a private corporation to make money."

Mike Feenstra, Press Secretary for the Minister of Energy Ken Hughes, said allegations of corporate welfare have come up.

But, in reality, the CSS project is about creating jobs and adhering to the government's, "commitment to take action on climate change," he said.

In an op-ed written in USA Today and in The Huffington Post, in which Redford aimed to sell the United States on the idea of the Keystone XL pipeline, she said Alberta has a, "strong desire to address climate change and we're already taking action."

"Clean technology development," is one of the steps the government has taken to address concerns over climate change, she added. CCS falls within just that mandate.

The province has already committed $167 million to clean energy initiatives, which Redford says will show the world that Alberta will, "continue to push the bar on greenhouse gas reductions."

But funding the CCS project is more than meeting environmental targets. It's also about fulfilling promises made to oil companies, Feenstra said.

"These are commitments we made a while ago, and of course it is important that we follow through on our commitments," said Feenstra.

But where promises to oil companies seem quite unbreakable, promises to education seem not quite so binding, said University of Alberta President Indira Samarasekera.

Post-secondary education was promised a two per cent increase in funding but received a $147 million cut instead Samarasekera said, calling the move, "extremely serious."

"It's quality, not access, that is on the chopping block today. There's going to be a very significant reduction in the quality of student experience," she told the Edmonton Journal.

The funding gap created by the cuts are causing panic among students, fourth year political science student Brent Kelly told Global News Edmonton.

"People are very upset. People are very mad and justifiably so," Kelly said.

"Academics and non-academic staff are potentially losing their jobs. Administrators have to be the bad guys again and students are going to have to deal with huge cuts, with massive increases to class sizes.

"The reality is less people are going to be able to go to university."

Administrators are already debating the measures they'll have to take to make up for the funding shortfall.

Mount Royal University President David Docherty said the institution was facing a budget deficit of $5 million before the cuts. Their operating debt now stands at $14 million.

"The actions we will be forced to take to meet our mandated obligation to present a balanced budget to the ministry mean significant changes to the way we operate and the services we provide our students," Docherty told Metro Calgary.

And the timing could not be worse.

According to the Lethbridge Herald, the average student with student loans in Alberta graduates with a personal debt of $23,000.

Those numbers take on a frightening dynamic when one takes into account the fact that an average of 53,000 students in the province are paying for their education with loans.

An article in Maclean's states 60 per cent of grads in Canada carry an average debt of just less than $25,000.

Add the fact that one third of Canadian post-secondary students work low skilled jobs after graduation, and the ramifications of cutting funding to post-secondary education take on a much more macroeconomic significance.

Prospects for post-secondary graduates are bleak, said economist and public interest researcher at the Canadian Centre for Policy Alternatives, Iglika Ivonova, in a study published on policynote.ca.

New grads, burdened with debts and entering an anemic job market, find themselves without benefits, working for low wages, in industries well below their skill sets, said Ivonova.

"Those lucky enough to get jobs that use their skills often have to contend with short contracts that provide few benefits and little job security," Ivonova said.

"Getting a permanent full-time position after university is almost unheard of these days."

Political risk management is likely how the province ended up where it is today, said Cooper, explaining that taking on post-secondary education, or the public sector, rarely exacts a political cost in Alberta.

The cuts to education amount to angering, people who are "politically easy to offend," he said.

"They'd actually have to make some hard decisions. Something that politicians are generally never interested in doing."

Wildrose leader Danielle Smith attacked Redford for the promises the opposition leader says the Tory boss made and then broke.

"It is quite clear to me that they don't want to live up to the commitments they made to Albertans, and she doesn't want to live up to the commitments that she made during the election," the Globe and Mail quoted Smith as saying.

The Quest CCS plant is expected to be completed by 2015, and according to Shell, will employ an average of approximately 400 skilled trades workers over roughly 30 months, peaking at about 700.