GLENBOW ARCHIVES (ND-3-6742)

The Rise and Fall of Alberta’s Welfare State

How social services came and went

By Eric Strikwerda

After the Second World War, Albertans were tired: tired of doing without, tired of rationing, tired of deprivation. During the Depression, diminished federal and provincial government spending only worsened the economic crisis. Slowing the flow of money and “hunkering down” was, it turned out, exactly the wrong strategy for mitigating its worst effects. From 1939 to 1945 Albertans had seen the tremendous power of the state to harness the economy for “total war.” Post war they cast critical eyes at the province’s education, healthcare, infrastructure and public welfare, and saw little difference between their social services in the mid-1940s and those of the darkest years of the Great Depression. Why not, many Albertans asked, marshal the enormous power of the state, so clearly evident during the war, to spend and raise the level of social services available to all Albertans?

Most social services remained municipal responsibilities, as they had been since villages incorporated into towns and towns into cities. Intervenors in Alberta’s 1948 Royal Commission on Taxation called for a much stronger provincial role in the provision of social services, from education to healthcare to public welfare. The Alberta Association of Municipal Districts called for full provincial funding and administrative responsibility for unemployment relief. The Alberta Board of Trade and Agriculture demanded that the province pay for at least 50 per cent of education costs. The Alberta Farmers Union insisted that Alberta assume full responsibility for mothers’ allowances, old-age pensions and unemployment relief. The Edmonton Chamber of Commerce, the Property Owners’ Association, the Union of Alberta Municipalities and individual municipal districts, towns and cities all called for state interventions into the social-services economy on a massive and unprecedented scale.

It was a powerful idea, and for many Albertans a necessary one. This was the dawn of the atomic age, a time when technological and scientific advances were transforming citizens’ expectations from small and parochial to grand and global. Albertans wanted a modern educational system for their children. They wanted a healthcare system that could employ new and emerging medical advancements to care for the ill and the infirm. They wanted investments in infrastructure to modernize their cities and towns, and to renew and rebuild housing that had been deteriorating since at least the early 1930s. And they wanted a modern, provincially organized, funded and administered public welfare system to protect the unemployed, the unemployable, the elderly and the disabled.

Part of the trouble was the Constitution. The federal government had more revenue-generating options open to it but none of the responsibility for social services, while the provinces were limited in their revenue-generating options but had all of the responsibilities for social services. The British North America Act had delegated jurisdiction over social services to the provinces. No one in 1867 could have imagined that social services would, by the Great Depression of the 1930s, become the costliest and most complicated of jurisdictional competencies. And so the BNA Act granted the greater taxing powers to the federal state, which was responsible for defence, criminal law and foreign affairs, while smaller taxing powers were awarded to the provinces.

But Depression-era Canada was not the Canada of the 1860s, and policymakers at both the federal and the provincial levels were compelled to find some means of redressing this jurisdictional/revenue-generating imbalance, a problem well recognized by the federal Rowell–Sirois Commission. Reporting in 1940, the Commission pointed out that “relief and public welfare overshadowed all other government activities during the depression,” and “governments were immediately harassed from two sides—rapidly falling receipts… and sharply rising costs due to relief, other public welfare and debt charges.” The Commission concluded that the crux of the problem was “the constitutional division of taxing powers,” arguing that “a better allocation of taxing powers and responsibilities is imperative.” In the end, though, Albertans, like Canadians generally, cared not for constitutional technicalities. They wanted public investments in social services.

The massive unemployment and poverty of the Great Depression ended in 1939 with the onset of the Second World War and nearly full employment. This eased the financial crunch nationwide even though the constitutional imbalance remained. Governments faced mounting pressure to meet Canadians’ expectations. In Alberta the Social Credit government introduced a dramatic series of interventions designed both to meet these expectations and to consolidate social welfare programs under provincial, rather than municipal, control. In 1944 the province created a public welfare department with social welfare responsibilities for everyone from children to single men, the Métis, veterans and the indigent. By 1945, responsibilities for mothers’ allowances and old-age pensions had migrated from the various municipalities and municipal districts to the new department. And over the course of the next two decades, up to the mid-1960s, the Social Credit government embedded no fewer than five more categories of public welfare into the department, including widows, the disabled, deserted women and people living in care homes and institutions.

None of this, of course, could happen, at least to the extent that it did in Alberta, without massive public investment in social services. And the discovery of oil near Leduc on a cold late afternoon in February 1947 made this massive public investment possible. Between 1946 and 1967, journalist John Barr indicates, provincial spending “increased three-and-a-half times as fast as the population.” This represented the highest per capita spending of any provincial government in Canada. Alberta led the nation in spending on education in 1964, and was “second only to Ontario in per capita spending on welfare, health, sanitation, agriculture, forestry, recreation and culture.” Belying its reputation as a fiscally conservative government opposed to “spending, bureaucracy and the welfare state,” the Social Credit party boldly, albeit incrementally, instituted an elaborate, far-reaching set of welfare reforms. The people of Alberta had demanded extensive state intervention into the economy, and the Alberta government had delivered.

As impressive as the Social Credit government’s forays into public investment in social services were, though, they must be measured against the government’s tendency—which has survived to the present day—to link social policy spending to oil and gas revenues rather than to other means of revenue generation, including personal and corporate income taxes. In fact, the Social Credit regime offered Albertans and outside investors the lowest taxes continent-wide, preferring to fund provincial business largely through oil and gas royalties that were themselves the lowest in North America. The trouble with linking social policy spending to wildly fluctuating oil and gas revenues, of course, is that social programs benefit when the price of oil is high but suffer when it drops.

Belying its fiscally conservative reputation, Social Credit boldly instituted elaborate, far-reaching welfare reforms.

Meanwhile, the federal government was busy establishing an equally impressive architecture of public welfare, both independent of the provinces and in collaboration with them. Accepting the Rowell–Sirois Commission’s recommendation to amend the BNA Act to set unemployment insurance within the federal jurisdiction, Prime Minister Mackenzie King’s Liberals passed the Unemployment Insurance Act in 1940 (it might also be said that King had warmed considerably to state intervention in the economy in light of Canadians’ increasingly strong support for the socialist Cooperative Commonwealth Federation, the forerunner of the NDP). The Act created an unemployment insurance fund into which employers, workers and the federal government made contributions and out of which unemployed workers could draw funds.

But collaboration with the provinces was the real social-policy story. Through the early 1950s the federal government and the provinces concluded agreements to share the cost of provincial old-age pensions and allowances for the blind and disabled. In 1961 Alberta’s Social Credit government and the federal government jointly funded a social-allowance program for unemployable persons and their families. And in 1967 Alberta signed on to the Canada Assistance Plan, which amalgamated and rationalized all welfare cost-sharing arrangements between the province and the federal government.

To be sure, not all Albertans benefited from the rise of the province’s modern welfare state. Aboriginal peoples, married women and migrant workers did not fall under Alberta’s public welfare initiatives. Aboriginal peoples fell almost exclusively under federal jurisdiction, and so the province felt no obligation to attend to their needs. Married women, provincial policy assumed, would share in the wages and benefits of their husbands, and so provincial policy could remain largely silent on their needs. And migrant workers’ peripatetic ways meant that no province could—or should—take long-term or meaningful responsibility for their welfare.

Peter Lougheed’s Progressive Conservatives swept to power in Alberta in 1971, taking nearly two-thirds of the seats in the provincial legislature and reducing the long-governing Social Credit party to opposition status. Albertans, it seemed, were ready for change once again, widely embracing Lougheed’s urban and cosmopolitan image and progressive, modern style of governing. In truth, in terms of social welfare, Lougheed’s Progressive Conservatives did not stray far from the trajectory begun by their Social Credit predecessors. Responsibility for social services was largely transferred from the local to the provincial and federal governments by the mid-1970s. In 1979 the provincial government established an assured income for the severely handicapped (AISH) and a widows’ allowance shortly thereafter. And in its 1988 social policy document “Caring and Responsibility: A Statement of Social Policy for Alberta” the government boasted that “the definition of social programs includes a very broad range of government programs and services—our excellent education system, outstanding health care, quality child care programs, varied housing programs and employment training initiatives, plus an extensive array of cultural, multicultural and leisure programs as well as a comprehensive system of support for Albertans in need.”

Many of these assertions were true enough, and they were the legacy of more than four decades of incremental investment in social services and programs. But the winds were shifting once more, and social policy thinking would shortly change as dramatically as it had at the end of the Second World War. In the 1960s, economist Milton Friedman of the University of Chicago had begun espousing a set of ideas that ran starkly counter to the widely accepted Keynesian thinking that undergirded the emergence, growth and wide popularity of the modern welfare state.

First and foremost, Friedman and his colleagues advocated shrinking the money supply to avoid rising inflation. Making less money available, the thinking went, would put an absolute cap on inflation and enhance the value of a dollar. This in and of itself made some sense, in some ways, though it must be said that “tight money” policies—shrinking the supply of money in the economy—had only exacerbated the crisis of the Great Depression. The Depression’s worst effects were ameliorated only when governments increased rather than decreased the flow of money. But the “monetarists” associated with Friedman’s Chicago School took matters several steps further. They decried state intervention in the economy—including social services—advocating instead for an enhanced role for the private sector in providing such services to the public. They also called for tax cuts for big business, believing that doing so would encourage further investment in the economy and ultimately create a more robust, muscular capitalism.

Underlying the monetarists’ models and tables and charts was an ideology that the welfare state had robbed individuals of initiative, and that the people—especially those marginalized by the capitalist economy—had become complacent, had lost the capitalist drive to make entrepreneurial life decisions and couldn’t make their own way in the world. This emphasis on individual responsibility—even in a complex economy—spoke volumes about the way the monetarists thought about the welfare state. Interestingly, such thinking would have found a warm embrace amid ideologies prevalent in some quarters during the 1930s in Canada and propagated by people such as Charlotte Whitton, the famed director of the Canadian Family and Welfare Association. Whitton’s prescription for the Depression’s social and economic ills was to offer jobless workers less unemployment relief, not more, arguing that relief raised the standard of living of layabouts, thereby depriving hundreds of thousands of people of dignity and initiative.

Monetarist thinking slowly but surely made its way into policymakers’ minds. This was especially true when “stagflation” appeared through much of the Western industrial world in the 1970s. The bugbear of rising inflation and falling wages confounded Western governments, and many, including those in the United States and Great Britain, embraced monetarist policies with vigour. US president Ronald Reagan, who relied in large measure on Friedman himself for economic policy advice, adopted “tight money” policies and worked hard to reduce public spending on social services. Great Britain’s Prime Minister Margaret Thatcher followed suit, adopting policies of fiscal restraint on public spending, especially on social programs. In Canada the federal government of Pierre Trudeau tried to walk the middle ground, accepting the Bank of Canada’s tight money policies even while avoiding significant reductions in social service spending.

But the tide had already turned. After the election of a Progressive Conservative majority under Brian Mulroney in 1984, the federal government cut social spending generally and slashed grants for the shared social services to the provinces. In Alberta, as in many provinces nationwide, the government took up the cry of unsustainable spending and focused its ire on the rise of “big government,” the ostensible enemy of free-market capitalism and sustainable economic growth. However muted at first, this cry would become much more vociferous by the early 1990s.

After 1984 the federal government cut social spending and slashed provincial grants. Alberta took up the cry of unsustainable spending.

The seven-year era of Alberta premier Don Getty came to an end with his resignation in 1992. The subsequent leadership race between Environment Minister and former Calgary mayor Ralph Klein and party stalwart Nancy Betkowski rested in large measure on who could promise to make funding cuts faster. Klein won the contest, and in 1993 redoubled his efforts to appear as the fiscal hawk, ready and willing to cut corporate taxes, slay the provincial deficit and slash social spending. If anyone was even more vocal on these policy directions, it was provincial Liberal leader Laurence Decore, who demanded “brutal cuts” to social services as opposed to Ralph Klein’s promise to deliver “massive cuts.” The fix for Alberta’s social services, it seemed, was in.

Klein led the Progressive Conservatives to a seventh straight majority in the Alberta legislature in June 1993. Shortly thereafter his government began making good on its election promise to diminish the province’s welfare system, employing a two-stage process designed to reduce the numbers of people on the welfare rolls and the amount of public spending on welfare programs. First, Alberta Family and Social Services caseworkers were directed to deny prospective welfare recipients any aid unless the applicants had absolutely exhausted all other avenues of support and had nowhere else to turn for help. Second, the agency’s policy ensured that no welfare recipient received benefits in excess of the lowest-paid working Albertan.

The changes had the desired effect. Alberta Family and Social Services managed to reduce its overall caseload by half (from 95,000 people to 50,000 people) in the first three years following the cuts. What happened to those 45,000 people cut from the welfare rolls is difficult to say, since the government had no mechanism for tracking them. Doubtless some entered training and education programs designed to transition unemployed workers into the labour force, but, for the most part, such programs did not lead to jobs. Others were forced to turn to charities and family to stay off the street. And others still did wind up on the street. Public policy researcher Gordon Laird has pointed out that homelessness in Calgary alone increased 740 per cent between 1994 and 2006.

The Klein years represented a fundamental break from Alberta’s history of social policy development since the end of the Second World War. Almost at a stroke, Klein’s Conservative government undid decades of incremental policy changes in the delivery of social services to Albertans. In the end, Albertans were left with a mere ghost of a welfare state and a government with a radically different ideological bent than they had known through the four decades immediately following the Second World War. Through those decades Alberta’s governments had, following international policy trends, created an enviable social-service system marked by high-quality education and healthcare systems and a robust and multi-layered welfare system to care for the province’s most vulnerable. By the 1990s Alberta could only boast to potential investors of having the nation’s lowest tax regime, among the nation’s lowest minimum wages and among the nation’s weakest labour legislation. For his part, Ralph Klein is sometimes remembered as a true-blue Alberta maverick who restored sanity to a welfare state run amok. In fact he was only a small part of a much broader slavish following of anti-state-intervention ideology and neoconservative thinking.

Eric Strikwerda is the author of The Wages of Relief: Cities and the Unemployed in Prairie Canada, 1929–1939 (AUP, 2013).

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