Is Redford’s resignation the end of Lougheed’s dynasty?

by John F. Conway

John ConwayIn October 2011, after Premier Ed Stelmach had been driven from office by a caucus fearing defeat by the surging Wildrose Party, Alison Redford unexpectedly won a third ballot victory to become the party’s new leader and the province’s new premier. But Redford, with the support of only one caucus member, was not supposed to win. Gary Mar, frontrunner and caucus choice, won top spot on the first and second ballots — but the preferential system gave Redford victory after second choices were counted.

Redford, a newcomer to provincial politics, was elected in 2008 and served Stelmach as Attorney General/Minister of Justice. An adviser to Joe Clark in the 1980s, she was considered a red Tory, unlikely to succeed in rural Alberta. She proposed Alberta break with the past and embrace a positive engagement in national debates, a suspect position among old Reformers. Alberta, she argued, the leading economic powerhouse in Canada, must occupy a place of primacy in national debates.  She surprised many by proposing increased social, health and education spending.

In March 2012, Redford called an election.

Repeated polls recorded substantial leads for the Wildrose Party, and its attack on Redford was a relentless, right-wing rant: a return to “firewall Alberta” with a new provincial constitution including referenda and recalls, entrenched property rights, and unfettered gun ownership; an aggressive attack on Ottawa’s equalization program; more private health care and a move to a two-tier system; cuts in spending and lower taxes. Redford stood her ground: a positive role for Alberta in national politics, more spending on education and health programs, and a moderate tax policy.

Redford also argued Alberta must embrace the future of its economy, emphasizing the need to win the pipeline debate to reach new markets. She recognized tarsands oil was under successful international siege as “dirty oil,” and knew that climate change denials and refusals to get serious about the environment were not helping win allies.

In short, Redford proposed a significant shift in the political culture of the old Tories.  But polls indicated she was on track to defeat.

The game-changer was former premier Peter Lougheed’s intervention in the campaign’s final week. Urging Tories attracted to Wildrose to reconsider, he endorsed Redford as representing the hope for the future.

It was the first time Lougheed publicly endorsed a Tory premier during an election.

On April 23, Redford won, defying all the polls predicting a Wildrose victory.  Redford’s Tories won 61 of 83 seats with 44 per cent of the vote — a fall in seats of 11, and in popular vote of nine per cent. Smith’s Wildrose took 17 seats with 34 per cent, becoming Official Opposition. The Liberals dropped 17 per cent, as support shifted to the Tories to stop Wildrose, which was locked up in rural southern Alberta, the hard-rock foundation of the right.

Things did not get better for Redford and her government after that humbling win. Her government immediately faced a series of crises.

From Bad To Worse

Wildfires and flooding in 2011, and the June 2013 flood, were unprecedented natural disasters with major economic consequences: half the province’s oil and gas export capacity was shut down until waters receded. Billions were needed to rebuild the devastated infrastructure. Uncounted millions in revenues were lost due to production cuts. Coming on top of the crises afflicting the oil and gas industry, it had potentially negative political fallout.

The financial burden of the disaster came at a time when the province’s revenue stream was in serious trouble. The extreme weather — unprecedented torrential rains over three days, combined with an unusually heavy snow runoff — awakened the greenhouse gas and climate change debate at a sensitive time.

The glory days of the Klein boom years were over. The future did not look bright.

The promised endless bonanza from tarsands oil was fading. Previous projections indicated tarsands oil production doubling or tripling by 2030, assuming it could be delivered to markets. But oil production exceeded existing pipeline capacity. Much of the oil was locked in. New pipelines were vital, since moving vast quantities of oil by rail and truck was expensive and controversial. But public resistance to new pipelines was growing, slowing the approval process.

On top of that, Alberta faced lower oil prices resulting in growing government deficits. Though the world price continued to hover between between $90 and $100, Alberta’s heavy oil faced steep price discounts in the U.S. Tarsands oil has always faced discounts, but in the past they were small, given strong demand in the U.S. Not any more: In 2013, Alberta heavy crude faced discounts per barrel of $40 in January and $15 in July — the discount moved up and down depending on the market. In order to be commercially attractive, tarsands oil needed $80 to $100. Huge projected future developments seemed increasingly unlikely, as $9 billion in new investment awaited approval of the Keystone pipeline.

The price discount was, importantly, driven by expanded oil production in the U.S. The Alberta dream of a limitlessly prosperous future was premised on the U.S. market remaining insatiable for all the oil Alberta could deliver, including the heavy crude from the tarsands. That was no longer true. New horizontal-drilling technology led to opening long shut-in wells in all the traditional oil-producing states in the U. S., bringing a flood of new, lighter crude to the market. Further, new hydraulic-fracturing (“fracking”) technology made the recovery of oil and natural gas from shale deposits commercially viable. The new Bakken field provided an unexpected gush of new oil and natural gas to the market.

This stiff competition caused the heavy price discounts. The solution was to find new markets — in Asia and Central and Atlantic Canada. This required a greatly expanded pipeline network throughout the continent, and to Canada’s west coast for export to Asia. In the meantime, the prices Alberta received for oil and natural gas remained depressed. In fact, natural gas prices fell to historic lows. The new production created a glut, with huge surpluses in storage across North America. Alberta had 3,400 trillion cubic feet of natural gas with no place to go.

How bad was it? In 2007 Alberta received $6 billion in annual natural gas revenues. In 2013 it was $965 million, as Alberta slipped from being the leading continental supplier to primarily serving Canada’s west.

The Redford government was having big problems, and they were about to come to a head.

The New Alberta Austerity

The March 2013 budget was bad news. Redford warned Albertans of tough times ahead due to falling oil and gas prices. The province faced its sixth consecutive deficit, projected at $6 billion. Redford cancelled the 2012 spending promises and warned that the province must cut spending, increase taxes, delay programs, and borrow $12.7 billion. Attacked from the left for reneging on spending promises and from the right for leading Alberta into a morass of deficit and debt, support for Redford’s Tories tanked.

By February, Redford was in trouble. Polls put Wildrose 10 points ahead. In March, Redford’s approval rating fell below 20 per cent. Redford faced an open caucus rebellion, allegedly over her lavish travel expenditures and abrasive leadership style, but much more related to her loss of support among the Tory popular base. Wildrose was on track to victory in 2016. The Alberta Tory machine always promptly ousts leaders who couldn’t deliver… Getty, Klein in his last, sad term, and Stelmach.  On March 19, Redford resigned.

Redford’s brand of a softer neoliberalism, and her efforts to pull Alberta out of its isolation to play a more reasonable role in national debates, were sandbagged by the economic crunch and her own caucus.

The fates of Alberta’s two most recent premiers — Stelmach and Redford — suggest Lougheed’s Tory dynasty is fading. Both were ousted by their own caucuses, despite winning majority governments. Neither could stop the growth of the Wildrose right-wing alternative. Alberta’s political dynasties go as suddenly as they come: Liberals, 1905-21; UFA, 1921-35; Social Credit, 1935-71.

Will the marker on Lougheed’s Tories read 1971-2016?

Lougheed’s dynasty, now in office 43 years, is the longest-lasting. Lougheed lived to see Redford win the April 2012 election. Dying in September 2013, he was spared the spectacle of her fall from grace, and the possible collapse of his dynasty at the hands of Wildrose in 2016.