Alberta's own budget backs 'Dutch disease' theory: NDP

OTTAWA — The federal New Democratic Party is citing information in Alberta's 2012 budget to support leader Tom Mulcair's argument that a high dollar caused by booming natural resource exports is hurting Canadian manufacturers.

A section of the provincial government's spring budget, titled Risks to Alberta's Economic Outlook, refers positively to the importance of the oilsands to Alberta's economy.

But the report notes that the province's manufacturing sector is challenged by the high Canadian dollar, which in turn is linked to natural resource exports.

"The Canadian dollar remains elevated, buoyed by high commodity prices. An appreciation of the Canadian dollar could hurt exporters," it states.

In another section the authors noted that "manufacturing companies will continue to be challenged by a strong Canadian dollar and moderate external demand," though it added that "they should benefit from growth in energy and agricultural sectors."

B.C. New Democrat MP Peter Julian, who accompanied Mulcair to Alberta this week, said the statements support Mulcair's notions about the so-called Dutch disease.

The term first was coined by the Economist magazine in the 1970s to describe the problems then experienced by the Netherlands, where offshore gas sales pumped up the currency and hurt manufacturers.

Mulcair has maintained that the Canadian dollar, artificially inflated by oilsands exports by companies that don't pay the full cost of their pollution, have caused the loss of 250,000 manufacturing jobs in recent years.

Many critics have ridiculed Mulcair's argument and suggested he's deliberately dividing Western Canada from the rest of the country in order to win votes in Ontario and Quebec.

Alberta Premier Alison Redford didn't meet with Mulcair during the NDP leader's visit, suggesting prior to his arrival that a meeting would be premature.

"Once he's actually seen the oilsands, once he's actually been briefed, then I'm prepared to try to have a constructive conversation with him," she said.

"So we'll see how it goes, but I think he's got some work to do first."

While academic studies on the Dutch disease have resulted in conflicting results, Julian said Mulcair is supported by studies such as those by the Pembina Institute and the Institute for Research on Public Policy.

Both recent reports say the Canadian economy is experiencing milder versions of the Dutch disease, though neither embraced Mulcair's estimate about 250,000 jobs lost.

"It reinforces what we've been hearing," said Julian, his party's natural resources critic.

But the Macdonald Laurier Institute came out with a report this week saying the oilsands is a net winner for Canada.

While Alberta is known for its oil and gas industry it also has a robust manufacturing sector, dominated by petroleum products, food, chemicals, machinery and fabricated metal products, according to Statistics Canada.

The natural resources sector employed 187,000 Albertans in April of 2012 compared to 137,000 employed in manufacturing. By far the biggest employer, according to StatsCan, was the service sector, with roughly 1.5 million workers, many servicing the oil and gas sector.

Original Article
Source: canada.com
Author: Peter O'Neil