How about that headline in this newspaper’s business section on Thursday: “Carney: Strong loonie to slow economy.” That’s Mark Carney, governor of the Bank of Canada. Here’s the rest of the story: The financial wires are winging the notion that the Canadian economy is mightily overvalued with its volatile resource economy, and may be ready to plunge as the worldwide recovery slows in the face of rising oil prices. Worse, the high dollar is damaging our manufacturing.
What does this have to do with the business at hand? First, it reaffirms my own suspicion that if the present election was being held next fall, Stephen Harper’s name might be mud on his strongest boast: the economy.
Although Harper is riding smugly high on those pollsters’ virtues of competence, trustworthiness and vision, mainly because the public isn’t looking as long as the economy is good and the opposition is fractured, he’s actually riding an unstable bubble that could pop any time.
Here are a few sobering insights from the British- and Montreal-based consulting firm MRB Partners, fished from Wednesday’s Globe and Mail. Canada has some “alarming structural imbalances building,” the firm warned investors. Canada’s record in taming the deficit is “terrible” given its commodities boom, it says. Plus, Canada’s exports outside the oil and minerals sector are increasingly not competitive.
Since the political debate is unfocused and muddled, let us ask this question for ourselves: What exactly is Harper’s economic “vision” that is so immune to attack? We’ll find that it is just that: speak in prime ministerial tones and hope the illusion doesn’t pop before the election. But it has deeper roots.
When Harper returned from visiting former President George W. Bush and company in Texas a few years ago, he proclaimed Canada was the new “energy superpower.” At the heart of the scheme is Alberta’s oil — and the whole “Alberta economic model,” which he had touted long before becoming prime minister as something other provinces should emulate, instead of pursuing the “socialistic” and the “second-rate.” And, lest we forget, the Atlantic provinces had an active “culture of defeat.”
Alberta’s economic status is a nearly taboo subject, like Quebec’s constitutional status, (which did break out meekly at public prodding in the French debate). After all, our young people flock to Alberta for the high-paying jobs. What would we do without them? Is this not a clear plus, as long as we don’t get queasy about the environment and Canada’s international black eye over the tar sands?
Alas, despite the huge wealth of its oil boom, the Alberta government is all but bust: deficits in the billions, schools and hospitals being cut back to pinch pennies, inadequate infrastructure, and accumulated oil money from the past being depleted to pay the bills. All this is the result of basically giving it away to oil companies — in the middle of a resources boom!
Someone sent me a link to a B.C. online investigative magazine called The Tyee which interviewed Allan Warrack, a minister from the Peter Lougheed government of 40 years ago when plans were laid down to preserve Alberta’s oil wealth for future generations, and to diversify the economy. He says the province is now being run like a “banana republic” for failing to extract fair rents from its resources; the Alberta Heritage Fund which he helped set up hasn’t had a cent added since 1987; and a huge legacy of environmental “carnage” is building up with no money to fix it. Worse, the economy has not diversified, having become even more dependent on oil.
Even a $300-million fund for medical research, set up in 1980 to attract scientific talent to the province, has been shut down, despite its arm’s-length status and the fact that its endowment had grown to $825 million. “It’s hard for me not to fly into a rage when I recount what happened,” says Warrack.
This is the “vision” that’s playing out for Canada on a larger scale: an increasingly resource-dependent economy with its booms and busts, massive giveaways to oil and mining companies (including tax cuts), environmental controls out the window, the dollar up and down, and manufacturing taking hit after hit. And no plan for tomorrow, except to seek more resources jobs with ever more corporate giveaways as our manufacturing shrivels, thanks to a high and volatile dollar.
And not just manufacturing. Western Nova Scotia, where I’m at, lives mostly off the lobster fishery, which has been on the brink of crisis since the dollar rose thanks to the commodities boom. Fishermen, unable to make a living at it, have been off to Alberta in droves. Good jobs. But I don’t know any who wouldn’t rather be making a decent living at home in a paying lobster fishery. But, as they say, an election campaign is no place to talk about complicated stuff like that — unless, I suppose, the bubble pops right in the middle.
Ralph Surette is a veteran freelance journalist living in Yarmouth County in Nova Scotia. This article was originally published in The Chronicle Herald.