From: Issue 40

Boom or Bloom?

17 September, 2012

Rather than fret over the so-called Dutch disease, Canadians need a prescription for long-term economic and environmental health as the resource sectors blossom

Written by Peter Gorrie

In China last spring, Prime Minister Stephen Harper declared: “We want to sell our energy to people who want to buy our energy. It’s that simple.” Critics fumed, just as they had nearly three years earlier when, in Seoul, he praised South Korea’s “genius for industry and manufacturing” and pledged Canada “has the energy and minerals Korea needs to fuel future growth.”

In fact, they’ve ground their teeth to nubs because Harper consistently repeats the message that Canada’s ambition is to supply fossil fuels, minerals and lumber for others to turn into finished goods. To back it, his government has cut corporate costs and streamlined environmental reviews, unwaveringly supported oil sands and pipelines, and demonized their foes.

Critics say this policy is overturning the effort, since Confederation, to create a diversified industrial, and now high-tech, economy. It’s hauling Canadians back to being menial “hewers of wood and drawers of water.”

“Traditionally, Canadian policy-makers were preoccupied with escaping our status as a supplier of natural resources and commodities,” says Canadian Auto Workers economist Jim Stanford, in research done for the Canadian Centre for Policy Alternatives. “That historic trend was reversed, however, beginning around the turn of the century … profoundly remaking Canada’s economy, our role in the world, and indeed our very federation.”

This, it’s argued, makes Canada vulnerable to boom and bust cycles in commodities, threatens our environment and kills manufacturing jobs.
Sovereignty might be at stake, too, with China an ever-larger resource investor and customer. “Canada has often been referred to in jest as the 51st state,” Phillip Colmar, a Montreal-based partner with investment consultants Macro Research Board, wrote last year. “However, it is becoming more accurate to regard Canada as another Province of China.”

Harper’s defenders insist that in a world of open trade, each country must focus on what it does best.

“Canada’s success in exporting natural resource-based products … does not reflect a failure on the part of the Canadian economy or policy-makers,” says Michael Burt, an associate director of the Conference Board of Canada. “Rather, it is a reflection of our endowment of resources and what we are good at doing relative to other countries.… Rather than trying to break away from our past, we should leverage this strength to expand the list of things for which Canada is regarded as a global leader.”

Denigrating resource industries “ignores the reality that there are always going to be better ways to hew wood and draw water – that high-skilled, high-paying jobs and advanced products, processes and systems are fundamental to success in resource industries,” the Ottawa-based Public Policy Forum states in its report, “Towards a More Innovative Future.” “There is as much economic potential for innovation in the natural resources sector as in any other.”

Furthermore, politicians of all stripes join Harper as resource cheerleaders.
Even Ontario, the manufacturing heartland, wants to fast-track the massive deposits of chromite and other minerals in its “Ring of Fire” region in the far north. “We've got emerging economies with an insatiable hunger for resources,” Premier Dalton McGuinty, a Liberal, said in a June speech extolling potential jobs and export sales. “Failure is not an option; success is mandatory.”

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