Mulcair’s politically deft oilsands critique is right (sort of)

There are three noteworthy elements to New Democratic Party leader Tom Mulcair’s critique of the oilsands. The first is that he’s right — more or less. The second is that the Western premiers know he’s right.

The third is that, for the NDP, criticizing the Alberta tar sands is good politics.

Mulcair has been savaged by Stephen Harper’s ruling Conservatives — and the premiers of Alberta, Saskatchewan and British Columbia — for suggesting there is a downside to the oilsands.

In fact, Mulcair’s argument is neither new nor odd. He says the high loonie, by making Canadian exports pricier in foreign markets, has hurt Ontario manufacturers. And he says the dollar is high, in large part, because Canada’s booming oil economy has boosted worldwide demand for this country’s currency.

Most analysts would agree on both counts. The real debate is over the degree of hurt.

Mulcair has been attacked for comparing Canada’s situation to that of the Netherlands in the 1970s, when a similar petroleum boom sandbagged that country’s manufacturing exports.

The obvious question is whether Canada is currently suffering some version of this so-called Dutch disease. The answer is a qualified yes.

I say qualified because most studies I’ve seen conclude that the oil sands don’t bear sole responsibility for Canadian manufacturing woes. One released this month by the Institute for Research on Public Policy looked at 80 industries and concluded that the high dollar hurt 25 of them, representing a quarter of the country’s manufacturing output.

“Canada suffers a mild case of the Dutch disease,” that study concluded.

Another, published in 2009, estimated that only 42 per cent of Canadian job losses attributable to the high loonie were the result of Dutch disease.

According to that study, the weakness of the U.S. greenback — a weakness unrelated to the oil sands — accounted for the remaining 58 per cent of currency-related job losses.

Both the leftish Pembina Institute and the right-of-centre Macdonald-Laurier Institute issued reports Wednesday essentially saying things are complicated.

Macdonald-Laurier, using research financed by the oil industry, concluded — no surprise here — the tar sands are of net benefit.

So, does Canada have some version of the Dutch disease? The answer, it seems, is yes. But we won’t die from it.

Mulcair’s solution is hardly radical. He argues that the petroleum industry currently does not have to cover the full environmental cost of extracting heavy oil. If it were forced to cover these costs, he says, oilsands development would slow and the dollar would come down.

An expert panel of the Royal Society of Canada came to much the same conclusion in December, 2010. It pooh-poohed those who describe the tar sands in apocalyptic terms. But it did find that the environmental costs of oilsands development were not being taken into account.

Incidentally, this is much the same critique that former Alberta premier Peter Lougheed made when he urged oilsands developers to move more slowly.

The western premiers may attack Mulcair. But they know he’s right. That’s one reason why they’re trying to forge a new national energy policy that could mollify provinces like Ontario.

Politically, Mulcair’s oilsands riff is deftly machiavellian. It takes advantage of the Conservatives’ real environmental weaknesses. But unlike former Liberal leader Stephane Dion’s plan for a broadly-based carbon tax, it focuses any penalties on just one province — Alberta — which doesn’t vote NDP.

And it could well win New Democrats votes where they do stand a chance — in Quebec, environment-mad B.C. and struggling Ontario.

Original Article
Source: the star
Author: Thomas Walkom