We know what we’re against, but what are we for?

Advancing a progressive jobs agenda
May 1, 2016

Christy Clark took British Columbia’s 2013 election based largely on a few outlandish promises about a single non-existent industry: liquefied natural gas (LNG). In a context of economic insecurity, the premier convinced a lot of voters she would be able to convert the province’s overstated (and mostly fracked) natural gas reserves into liquid form—an extremely expensive and energy-intensive process—then ship it by tanker to new Asian markets, apparently at a premium. Clark said LNG would generate 100,000 new jobs, and $100 billion in new public revenues, allowing the province to become debt free—all while helping the planet lower greenhouse gas (GHG) emissions. It was an attractive proposition. Completely unsubstantiated, but attractive. 

Since the election, the CCPA’s B.C. office has produced a series of reports debunking each of the government’s claims about LNG. We’ve argued that, as we wrestle with the realities of climate change, now is hardly the time to sink a lot of money into building infrastructure for a new fossil fuel industry. Yet, people want and need well-paying jobs; their feelings of economic insecurity are real and legitimate. If we are to oppose carbon-economy developments like LNG—as we must—we also have a responsibility to propose an alternative economic plan in its place.

In November 2014, the CCPA-BC, with support from the B.C. Federation of Labour, the Centre for Global Political Economy and the Progressive Economics Forum, took an important step in this direction by hosting a solutions-oriented conference entitled A Good Jobs Economy in B.C. Attendees considered 15 papers outlining more than 50 proposalsfor a vibrant, sustainable good jobs agenda—more than enough ideas for any interested government or political party to choose from. The one-day conference acknowledged that the government’s official B.C. Jobs Plan isn’t working; its focus on resource extraction is just too risky, as it ultimately puts investment decisions outside our control. The push for LNG in particular will ensure we keep riding that rollercoaster we call the B.C. economy, whose chaotic ups and downs are closely tied to global commodity prices that have plunged rapidly over the last year. 

But we can’t stop there—at challenging a bad jobs policy that takes the province further away from meeting the climate change imperative. In our call for papers for the conference, the CCPA challenged authors to focus on solutions. As a public policy institute, we were especially interested in the role of the state. In other words, what can governments do directly to create jobs, or indirectly to foster job creation, in key sectors that are committed to the province? The conference also sought to answer the following more specific questions related to financing, industrial strategy, employment equity and what constitutes a “good” job. 

  1. How can we finance or capitalize alternative job-creation ideas? It’s not hard to demonstrate that most green infrastructure and green-tech industries produce more jobs per dollar invested than the fossil fuel industry. It’s even easier to make the employment case for investment in public services. As usual, the problem for us—the elephant in the room—is where to find the money. Fossil fuel companies come to the table with billions of dollars to invest in new infrastructure; there is much less for the alternatives. So how can we change that? How might we marshal new sources of investment capital for more sustainable, good jobs?
  2. What does a modern industrial policy look like? We’re often told such thinking is passé (though this happens less often since the economic crisis of 2008–09). Clearly, the status quo isn’t working. Corporate Canada has had its way on the policy front for decades now: in exchange for dramatic reductions in federal and provincial corporate tax rates, big business promised to invest in new production and job creation. Yet, over half a trillion dollars of corporate “dead” money is sitting idle. How can we legislate some of that capital back to work? How are other countries, like Finland, Denmark and Germany, outperforming us on many measures of economic performance, employment and diversification? 
  3. Finally, our conference participants were asked to consider how to ensure that training and employment opportunities are more accessible to traditionally excluded populations. And, fundamentally, how might we guarantee that existing work, and the new opportunities we are striving to create, in fact qualify as “good” jobs—i.e., they pay well, offer benefits, provide the core elements of economic security that most of us need, and (dare we even consider it) are rewarding and meaningful?

The conference papers 

Answering these questions was no small challenge, but conference participants rose to it. I couldn’t possibly list all of their 50–70 ideas for a progressive jobs agenda in this space—conference submissions can be read at www.policyalternatives.ca/offices/bc/goodjobspapers—so I’ll highlight just a few examples here. 

Some presenters focused on the need for a bold “green jobs” plan consisting of major investments in building retrofits, public transit, high-speed rail, renewable energy, zero-waste initiatives, value-added forestry and reforestation, and clean technology. Here, some innovative partnerships between First Nations and Crown utilities have led the way toward what we might call green economic development. 

For example, the T’Sou-ke First Nation on Vancouver Island is Canada’s first Aboriginal solar community, producing enough solar electricity to power local homes and meet local agriculture, greenhouse and shellfish industry needs, while selling surplus power to the B.C. Hydro grid. In the process of becoming solar leaders, the T’Sou-ke have trained their youth so well they are now the “go-to workforce for the region’s solar projects,” according to Jonathan Kassian, former co-ordinator of Green Jobs BC. 

In her contribution to the conference, the CCPA-Manitoba’s Lynne Fernandez wrote about a similarly innovative partnership between Aki Energy, an Aboriginal-owned social enterprise, and Manitoba Hydro. Aki Energy trains young Aboriginal people in the installation of geothermal heating and cooling systems—a highly portable and in-demand skill—in northern First Nations communities. Given Manitoba’s cold winters, geothermal heating lowers energy bills dramatically, alleviating energy poverty in low-income communities. The initiative is also easing power demands on Manitoba Hydro, in some cases displacing GHGs if the previous heating source was oil or gas.

Other participants to the jobs conference spoke of the need to get local and provincial governments, as well as large local businesses, to do more of their purchasing in-province. Simply put, when governments and businesses prioritize purchasing supplies, products and infrastructure (e.g., ships and buses) locally, more money circulates within the province and more jobs are created. 

In his presentation, Internet start-up entrepreneur Matt Toner discussed the Finnish model for incubating and nurturing new tech companies. He explains: 

the government has carved out a series of public-private mechanisms that have created a range of globally competitive technology companies to anchor their innovation industry and economy at large…. Finland has opted for direct up-front investments [in] new intellectual properties wholly owned by Finnish companies. This approach has been underpinned by a government-controlled investment fund known as Tekes, the Finnish funding agency for investment. Of the 600 million euros invested annually, Tekes sets aside 70 million euros for the computer games industry: over the years, it has invested in more than 100 Finnish games companies through either loans or direct investments.… Tekes makes rather large investments in these new companies, which gives them the capital needed to succeed on the world stage. Up to 1 million [euros] are made available per project as either investments or loans: companies can apply for several projects to make up a slate that can amortize technology and talent in the most efficient ways. The model is dynamic and flexible, allowing companies to come forward with project proposals at any time.

Toner concludes, “It is time to re-examine the potential role Crown partners can play in creating a made-in-B.C.-for-B.C. industrial strategy, one that favours the development of local innovative companies.” As a major co-owner of these companies, the public (as government) would have more control over their ultimately remaining in Canada and employing people here. 

Entrepreneur Kenneth McFarlane shared his ideas for fostering local manufacturing. McFarlane is drawn to the ideas of economist Mariana Mazzucato in her book The Entrepreneurial State: Debunking Public vs. Private Sector Myths, which highlights the key role of government and public universities in driving such innovations as the Internet, biotechnology, breakthrough pharmaceuticals, the iPhone, nanotechnology and renewable energy. In most of these examples Mazzucato finds that the public has borne (socialized) much of the risk while private interests realized the profits. Clearly, the state needs to gain more from its stake and achieve a better return on the public’s collective investment.

McFarlane proposes the following in his conference paper:

  • Use of a public development bank to directly invest in new enterprises, particularly “early-stage ventures” that normally have difficulty finding financing due to risk-averse private lenders.  
  • Government should expect and receive “healthy royalties” from applied technology breakthroughs—returns that could be re-invested in “innovation funds.”
  • Our university research institutions need resources to carve out “world class” expertise. But much better follow-through is needed, or homegrown innovations will end up leaving the province (as has often occurred in the past).
  • A future-oriented government should focus on the opportunities that will come with the advent of 3D printing, nanotechnology and biotech. If a government can give companies that seek to adopt these technologies room to fail, perhaps by sharing some of the risk, we are more likely to find ourselves home to factories for those efforts that succeed.
  • There is a core need for government planning, particularly in the form of identifying the crosscutting challenges and needs manufacturers will face with respect to infrastructure, human resources and skills, technology priorities, etc. Undertaking such planning would be a source of job growth. 

McFarlane proposes that state support of this kind can and should come with a clear quid pro quo: companies that benefit from government investment and infrastructure should expect to pay reasonable taxes and royalties, and public support should be linked to the achievement of collective economic, social and environmental objectives, such as demonstrable job creation and the provision of higher wages. He warns, however, that B.C. may lack the necessary pool of companies, venture capitalists and entrepreneurs willing to foster an advanced manufacturing sector as envisioned. Given this limitation, and in line with Toner’s exploration of the Finnish model, McFarlane recommends creating a new Crown corporation (or multiple new public enterprises) to help lead the endeavour.  

“Public enterprises are the most reliable means to ensure that manufacturing operations remain in the province once they are established and that corporate earnings are used for human resource development and local public services rather than primarily for the enrichment of private owners,” he writes. A few key new Crown corporations would allow for better long-term planning, ensure the downstream benefits of risk-taking investments return to the public, and be in a position to anchor new clusters of private firms.

Environmentalist and futurist Guy Dauncey is keen on the need for a particular kind of new state enterprise: public banks. The institution would likely not engage in retail banking in the same manner as a regular bank or credit union (though it could), but would instead focus on business development/investments and other policy goals. In his paper for the conference, Dauncey notes that public banks are common throughout the world for their many benefits, which include the following:

  • When a public bank creates money (via the provision of credit), the interest earned is returned to the public rather than to shareholders.
  • The public Bank of North Dakota has a loan portfolio of US$2.6 billion, has allowed the state to be debt free, and is credited with helping North Dakota maintain the lowest unemployment rate in the U.S. 
  • A public bank can support (with low-interest loans) community development funds, First Nations business development initiatives, social enterprises, community forestry initiatives, co-op start-ups, 100% renewable energy projects, local farms, home and building energy retrofits, and various other initiatives related to climate action.
  • A public bank could give low-interest or even interest-free loans to students.
  • A public bank would be able to offer financing for provincial and municipal infrastructure projects, significantly lowering their interest costs.
  • A public bank could issue low-interest loans to the kinds of sector clusters described above by Toner and McFarlane.

A new public bank could be capitalized from the reserves of existing Crown corporations and, once established, quickly set to work undertaking the ideas above. 

We also need to re-assert the role of public services—including new public services—in job creation. Lynell Anderson described to the CCPA conference how a comprehensive public child care plan would have a number of economic and employment spinoff benefits. For example, it would lead to many more jobs with better pay for child care providers (and in a low-GHG service sector), significantly boost women’s labour force participation, and provide benefits to employers from reduced staff turnover to improved work-life balance.

Paying for the plans

As mentioned, this is just a smattering of the more than 50 proposals explored during our one-day B.C. jobs conference in 2014. As a final word, let me return to the important question of where the money would come from to implement all of them. 

First, in some cases the initiatives pay for themselves over time. When more people are working and earning a good income, government will see a boost in tax revenues, making the up-front investments—think of the child care example—well worth it.

Second, there are many ways a government could raise additional income, as the CCPA has proposed in the Alternative Federal Budget and as I outlined in my CCPA-BC paper with Iglika Ivanova, Progressive Tax Options for B.C.: Reform Ideas for Raising New Revenues and Enhancing Fairness. For example, increasing the B.C. carbon tax to $50 per tonne could raise $2.2 billion annually, half of which could go to rebates for low-income families and the other half to funding new public transit or building retrofits that bring down GHG emissions. 

Third, a public investment bank, as exists in North Dakota and elsewhere, offers an attractive vehicle for financing badly needed (and climate-positive) government projects. It would also make sense for government to borrow money and debt-finance such spending, amortizing the cost over time. Even if our governments merely maintained current capital spending as a share of GDP, billions of dollars in the coming years would become newly available for jobs- and development-oriented investment. 

All of which is to say, there is nothing tying us as a province to LNG and other fossil fuel projects. We have much better options—lots of them. We just need governments prepared to be ambitious. Most importantly, we need our public leaders to recognize that many of these ideas—like a bold public transit or building retrofit plan, and capitalizing a public investment bank or innovation fund—constitute elements of what should be an ambitious social and green infrastructure investment plan. 

They are also core elements of the Leap Manifesto, a high-employment agenda for quickly transitioning the Canadian economy away from fossil fuels (see the November-December issue of the Monitor). The alternative (i.e., status quo) on offer, which is to sink our money into new carbon infrastructure, is dangerous from the perspective of climate change and unable to address real job insecurity. With all-time low prices for oil, renewables and borrowing, all the prices are right to make the leap to a new economy today.   

For more on the jobs ideas developed here, see the CCPA’s B.C. Good Economy ProjectSeth Klein is Director of CCPA’s BC Office. Follow Seth on Twitter @SethDKlein.

This article was published in the May/June 2016 issue of The Monitor. Click here for more or to download the whole issue.