Posted: Monday, 1 June 2009

Struggle within at a time of prosperity

The thing about a ‘boom to bust’ economic model is who pays the price for the ride?  Workers and community activists in Saskatoon know who is paying and who is being carried. They also have a critical understanding of what the very real and too often hidden cost’s look like for local residents.

May Henderson is the Executive Director of the Saskatoon Indian & Métis Friendship Centre. For nearly a decade she has been part of the front lines battling the persistence of poverty.  Elders struggle with questions like, "do I buy my pills today or do I pay the rent? Most of the people I see everyday sleep under bridges or have no place to go. They say Saskatoon is booming, but these people are being left out.”

Numbers reveal another part of this crisis.  While the provincial economy has been booming and corporate profits are exploding, government revenues from corporate capital tax have actually declined because of government tax cuts.

In 2005-2006, the provincial government received $513 million in revenues from corporate capital tax, which dropped to $431 million in 2007-2008.

The Saskatchewan Bureau of Statistics details how the distribution of wealth is shifting in favour of corporations. From 2002 to 2007, the labour income share of gross domestic product (GDP) dropped from 42.2 % to 38.5 % of provincial GDP, while corporate profits jumped from 13.3 % to 24.5 % of GDP in the same period. It is mind-boggling to think that corporate profits represent one-quarter of the province’s GDP.

May’s daily reality tells another part of the story.  “We have one young fella, when he’s not here we miss him. He says he’s living in a place with 17 other people. He can’t stand it. I can’t understand why they say it’s booming – booming for the upper class sure, but for the lower class and homeless they are really forgotten.>  I thought Saskatchewan has been in a boom period for some time, not everyone is sharing in the benefits of the boom.  Resource revenues from potash, oil and other mining enterprises have been instrumental in filling government coffers."

So amidst the wealth where are the benefits?

The July issue of SaskTrends Monitor revealed average weekly earnings grew by an annual average of 3.5 % from 2002 to 2007.  Aggregate employment income increased 6% per year in the same period.

While average wage increases have been higher than the cost of living, they don’t come close to the increases in corporate profits. From 2002 to 2007, corporate profits before taxes grew from $4.8 to $12.5 billion, or by an average of 21 % per year.

Gord Bedient, a USWA member, puts the numbers in perspective. He and 385 workers and 100 managers’ work at the Agrium Potash mine located outside of Saskatoon. The workers who mine it, process it and the farmers who use potash to help increase crop yield and nutritional value of fruit and vegetables, rice, wheat and other grains, sugar, corn, soybeans, palm oil and cotton, all know, this resource represents significant community wealth if managed wisely.

However, a drop in potash prices and global decline in demand has meant the storage bins outside of Saskatoon are full and workers at Agrium experienced their first layoff this year. They know more layoffs are coming.

The record profit’s reaped by potash companies has been no secret, but the sound of money being accumulated has not resonated into equitable benefits for the workers who mine this natural resource. While a profit sharing agreement resulted in about $3000 per worker –by contrast CEO of Agrium Michael M. Wilson took $8.6 million out of the operation for himself.  Although potash revenues had filled government coffers, a miscalculation of the proceeds now translates into a projected short fall of $1.3 billion less this year.

Gord notes the potash companies and the provincial government were betting on continued high prices – ‘they could have sold what the workers had mined – but they chose to hold out for $1,200/tonne because of corporate greed’.  “Potash resources belong to the people of Saskatchewan and the benefit should be for everyone – not just the CEO’s who take millions. “

The current model is a failure.

Milton Tootoosis’s, job title reveals an important direction for better public policy options rather than continually riding a boom bust economic model that generates disproportionate benefits.  He is the Livelihood/Economic Independence Coordinator with the Office of the Treaty Commissioner. Milton quips, “if Canadians are complaining that unemployment is at record levels of 6, 8 or 10%, well in Indian country it is more like 50%, if not higher. Some communities report unemployment levels as high as 80%.

Milton points out the economic crisis for some needs to be put into perspective. “We’ve been in a depression for the last 500 years – so moving up into a recession is actually a step up.”  Todd Standing, the Coordinator for the Labour Force Development program with the Saskatoon Tribal Council Urban First Nations Services echo’s the need for options amidst the global crisis that can truly build sustainable economic opportunities for everyone.

The only way that Aboriginal people are benefiting from natural resource exploration and extraction is by being a source of labour. Todd points out, “there are no direct revenue benefits or profit. Like the pipeline going through Saskatchewan and specifically Treaty 6 territories’ – there is no real and sustainable benefits –merely temporary ones. It’s a struggle.”

Shine the hood, but forget the engine.

Mike Stefiuk is one of 350 ‘outside’ workers who maintain Saskatoon’s roads, street lights, sidewalks, water and sewer lines, bridges and other infrastructure. The rapid growth of the city has meant more workers, many are now permanent and almost no one experiences a seasonal layoff now. However, with more city infrastructure to maintain, there has not been the much needed investment in equipment or comprehensive training so that workers can do their jobs better and safely.

“We are still using equipment we used 15 years ago, and there has been no increase in graders for example for street maintenance. The result is poorer quality of service to city residents.”

Last year snow removal was the worst the city had ever experienced, because city workers could not get to all the streets in a timely manner. With aging equipment, minimal job training, Mike points out another crisis is brewing- ‘a major health and safety concern one.’

Changing course: charting a new direction out of the crisis

Saskatchewan is nearing an economic contraction this year and more government budget cuts are expected. In mid October 2009, Saskatchewan’s Finance Minister Rod Gantefoer made this reality clear when he introduced $102 million in spending reductions.  The impacts will be severe.

Community food activist and Professor at University of Saskatchewan Rachel Engler Stringer points out that, “About 10% of Canadians go hungry and despite current levels of prosperity for some in Saskatoon, there is evidence that at least 10% or more go hungry here.”  Simply put, a boom time always translates into higher costs of living for housing and food.

Breaking the cycle of boom to bust economies requires charting a different path.  Community activists and unions are doing just that with a variety of community led affordable housing, food security, literacy and educational initiatives.  Station 20 West points out a new direction. This community driven project incorporates a good food store, organizing capacities to establish affordable housing, as well as providing community based health services.

Despite the vindictive withdrawal of $8M of previously committed funding by the Conservative led government of Saskatchewan, Station 20 West remains on track.  Building healthy communities and sharing the wealth in times of prosperity and struggle remains underway in Saskatoon. Why? Because of the support of citizens, trade unions, faith groups and individual residents each committed to ensuring economic and social justice will take root and flourish.