Canadian Non-Energy Exports Fizzle: Dutch Disease, U.S. Weakness, Chinese Slowdown To Blame?

This week saw the arrival of two more reports denying that Canada is suffering from Dutch Disease, that condition in which a country’s manufacturing export base hollows out because of a high currency linked to oil exports.

But a new analysis from BMO Capital Markets illustrates just how intensely Canada’s non-energy export sector has collapsed in recent years. And yes, the economist behind it does put some — just some — of the blame on a rising dollar.

Bitumen bubble gives Alberta the vapours: Greenspon

Alberta Premier Alison Redford brought her sad tale of budgetary woe to Ontario last week. Her province isn’t collecting enough money for its oil. It suffers from overreliance on a single export market. That market is not as needy as it once was. And so Alberta is headed for a $6-billion surge in its deficit. Her finance minister described the situation as a perfect storm.

Cry me a Bitumen Bubble.

15 Factory Jobs Lost For Every One Created In Resources

Canadian Prime Minister Stephen Harper has staked the future of the world’s 11th largest economy on natural resource wealth spreading across the country. Brandy Damm, a welder who lost her job from a locomotive factory in London, Ontario, last year, isn’t seeing the benefit.

Damm was one of about 465 unionized workers fired after Caterpillar Inc.’s Electro-Motive Canada unit said it would close its London plant following a labor dispute. Now, many of the jobs in her field are paying far less than the C$20 ($20.24) to C$30 per hour common at the factory -- some just above Ontario’s C$10.25 per hour minimum wage.

Raw deal: The Canadian resource economy -- Part 2

In Failing grades: The Canadian resource economy -- Part 1 I embarked on an exploration of Canada's resource economy. My motivation was the publication of The nine habits of highly effective resource economies: Lessons for Canada. Issued by the Canadian International Council (CIC) and written by Madeline Drohan, the Canadian correspondent for The Economist, it is a detailed inquiry into where Canada should go if we wish to make intelligent use of the natural assets with which our country is endowed.

The first important determinant of a wise resource economy strategy involves saving the windfall profits in sovereign wealth funds, not only to avoid the pitfalls of the "resource curse" and the attendant Dutch Disease it brings on its coattails, but also to build a multi-generational nest egg for the future when non-renewable resources run out. Salting away royalties in a stability fund can also insulate against the vicissitudes of commodity price fluctuations. On this measure, the policies of provincial governments and the Harper Conservatives clearly warrant a failing grade. In Part 2, I examine Habit # 2: Don't stand still. Add, extract, and build value.

Failing grades: The Canadian resource economy -- Part 1

Many Canadians understandably chafe under the designation of "hewers of wood and drawers of water." Yet geography it what it is and our country is blessed with energy resources, minerals, forests, arable land, and fisheries. This richness of natural resources should and does not constrain the developmental vision of Canada. For instance, counter to any expectation or intuition, the Canadian based Cirque du Soleil has become one of the world's foremost exemplars of nouveau cirque, almost single-handedly transforming the fast-vanishing circus tradition from a fading and tawdry showcase to a leading vehicle for the imaginative performing arts -- who would have imagined it? Properly employed natural resources can not only be an enormous asset, but can also pave the way for a robust, diverse, and resilient Canadian economy.

Canada's Economic Diversity Takes A Hit: Oil, Gas And Mining Now Nearly As Big As All Of Manufacturing

A new report from Bank of Montreal predicts that oil-rich Alberta will lead the country in economic growth this year, yet another confirmation of Canada’s growing dependence on natural resources to fuel its economy.

Most Canadians understand how the country’s industrial mix has shifted over the last decade to become increasingly weighted toward oil, gas and mining, for better or worse.

Canada's Economic Diversity Fading, Economist Says

Canada’s economic diversity is fading, according to a commentary released Wednesday.

“It’s likely that the early days of Confederation were one of the only periods where the percentage of investment dedicated to natural resource extraction was as high, or higher, than it is today,” Will van‘t Veld, an economist with Edmonton-based bank ATB Financial.

Moiling for gold: Harper spends second day in the North at area mine

WHITEHORSE - As the classic Canadian poem says, the Yukon is where people moil for gold.

And today Stephen Harper is off to see what a more modern day version of that work looks like.

On his first full day in the North, Harper was to tour Captstone's copper gold Minto mine, about 240 kilometres north of Whitehorse.

Northern resources could turn Canada into economic powerhouse: Stephen Harper

WHITEHORSE — Prime Minister Stephen Harper suggested Monday the pace of oil and gas development in the North could increase exponentially in the coming years and that could feed money into the local and national economies.

The untapped oil, natural gas and mining resources in the North could bring billions in revenues and investment, according to some estimates, and Harper went so far as to predict that cash could turn Canada into an economic powerhouse.

Stephen Harper: Canada’s future lies in its northern resource riches

CARCROSS, YUKON—Prime Minister Stephen says Canada’s future lies in the exploitation of the nation’s northern resource riches, branding it as a “great national dream.”

Harper kicked off his annual tour of northern Canada here Monday with a bullish vision that sees the country’s prosperity fuelled by the untapped Arctic resources.

“Those who want to see the future of this country should look north,” the prime minister told a gathering of Conservative supporters.

Canada: Land of mines and banks

Just in time for Canada Day, the Globe and Mail's Report on Business issued its annual Top 1000 rankings of the thousand largest publicly traded companies (by assets) in Canada (ranked by profit). I blogged about this last year as well. It's such an interesting snapshot of Canadian business it's worth perusing.

Once again, this listing reveals the extent to which Canada's economic base is being steadily narrowed in the face of globalization and financialization.

New report backs up Mulcair's claim Canada's economy suffers from Dutch Disease

OTTAWA - On the eve of NDP Leader Tom Mulcair's visit to Alberta's oilsands, a new report backs his claim that Canada's economy suffers from a form of Dutch Disease.

A study released Wednesday by the Pembina Institute says Canada has come down with a unique strain of the phenomenon, dubbed "oilsands fever," that is producing near-term economic benefits that are often overstated.

The report says these benefits are spread unevenly across the country and could be hiding economic turmoil down the road.

Mulcair picks his battle

A fracas unfolding on Parliament Hill almost always follows a predictable path. One side, either the government or the opposition, seeks partisan advantage by pushing some issue onto the agenda. Then the other tries to squelch it. If a cabinet minister is discovered overspending on orange juice, for instance, the opposition aims to prolong her misery, while the government strives to change the channel. But the extended, bitter contretemps over Thomas Mulcair’s assertion that Alberta’s oil sands development hurts Canada’s manufacturing exports by pumping up the value of the loonie didn’t follow that well-worn course. When Conservatives accused him of dividing the country by begrudging western Canada its economic success, Mulcair—far from trying to sidestep their attacks—met them head on and even seemed to relish throwing fuel on the fire.

An excellent debate about resource revenues

In an interesting and well-argued column in the Calgary Herald recently, Mark Milke from the Fraser Institute took issue with my last post here. I can't resist replying to one of his points.

Mr. Milke paraphrases me this way: “Brian Topp wants sovereign resource funds to invest in uneconomic projects too expensive for the private sector – this instead of shipping 'raw unprocessed resources to Texas and to China.' Topp mentions Norway's resource fund as an example.”

I don't know about “uneconomic” but otherwise so far, so good. Mr. Milke then argues this is a “bad suggestion.” Why?

Raw resources: remembering our history in order not to repeat it

Just about at the same time that people in the province of Quebec decided, in overwhelming majority, that decisive action was required by their provincial government to protect the French language, people in western Canada decided that equally decisive action was required by their provincial governments to ensure control of their own natural resources.

The federal government of the day (led by Prime Minister Pierre Trudeau) more-or-less accepted the Quebec National Assembly's right to address the language issue. But the same government waged a battle of sumo-like proportions to try to wrestle control over oil, potash, uranium and other resources from western Canadian provinces.

Which didn't go over very well.

As an industrial nation, Canada is divided against itself

In the decades prior to 2000, Canada made progress in moving away from being an economy of resource extraction. By that year, as labour economist Jim Stanford has pointed out in an analysis for the Centre for Policy Alternatives, well over half of Canada’s exports consisted of an increasingly sophisticated portfolio of value-added products in areas such as automotive assembly, telecommunications, aerospace technology and more.

But in the past decade, the clock has been turned back. Because of a boom in the oil and gas sector and a range of other factors, the economy has reverted toward being a staples-driven enterprise. “In July, 2011, unprocessed and semi-processed resource exports accounted for two-thirds of Canada’s total exports, the highest in decades,” Mr. Stanford wrote. “Compare that to 1999, when finished goods made up almost 60 per cent of our exports.”

Mulcair and energy McCarthyism

The high-and-mighty vitriol which greeted Tom Mulcair's comments last week about the downside of oil-powered currency appreciation is lamentable (repeating the over-the-top reaction to Dalton McGuinty's similar comments a few weeks ago). Mulcair made two modest and empirically substantiated statements: the loonie is sky-high as a result of the oil boom in Alberta's bitumen sands (I doubt you'd find a single currency trader on Bay Street who would disagree with that), and that overvaluation is causing negative side-effects on other industries and regions in Canada.

Following up on Erin Weir's most excellent interventions, here is my column in yesterday's Ottawa Citizen on this issue. And here is a graph that went with the column in the print edition. It shows that in the last decade, Canadian petroleum exports grew by close to 2 percentage points of GDP -- fairly impressive. But Canada's exports of everything else (manufacturing, services and tourism) declined by several times as much -- and the two offsetting trends are not unrelated. No wonder Canada is mired in a large, chronic international payments deficit, even as we scrape the stuff out of the ground faster than ever.

These diatribes against anyone who even acknowledges potential downsides or side effects of the bitumen boom seem to herald a new, dangerous tendency in Canada's political culture. Opposing a bitumen-exporting pipeline in Canada these days makes you a foreign-financed subversive. And it seems that questioning the economic effects of the bitumen export strategy makes you equally seditious. I call this "energy McCarthyism," and it should be rejected forcefully not just by those concerned with Canada's de-industrialization and staples dependency, but by those worried about the quality of our democracy.

Original Article
Source: rabble.ca
Author: Jim Stanford 

B.C. premier rejects Mulcair's oilsands comments

B.C. Premier Christy Clark is firing back at federal NDP Leader Tom Mulcair, calling his stance on the oilsands "goofy."

Clark told CBC Radio's The House that Mulcair's comments about the negative economic impact of Western Canada's resource sector on provinces that rely heavily on manufacturing don't make sense.

"I really thought that type of thinking was discredited and it had been discredited for a long time. It's so backwards," Clark said. "I think that's just goofy."

Clark was responding to an interview with the NDP leader on CBC Radio's The House last week. Mulcair told host Evan Solomon that the resource sector in Western Canada is driving up the dollar artificially and straining the manufacturing sector in Ontario, Quebec and New Brunswick.

On climate change, the Tories generate heat without light

If there is one thing on which all federal parties and all national political leaders are agreed, it is that they "believe the science" on climate change. They believe that the earth is warming, they believe its effects are on balance malign, and they believe it is caused by human activity. As such they believe it can and should be mitigated by human action, namely by reducing greenhouse gas emissions.

There isn't any dispute between them over this. Every party agrees there's a problem, every party agrees on its cause, and every party agrees on its solution. And no party (or none with any chance of governing) has anything resembling a serious policy to achieve it.

More than two decades have passed since the Second World Climate Conference in 1990, at which Canada committed to stabilize its emissions of greenhouse gases at then-current levels within a decade. Since that time we have had a succession of different federal "strategies" and "processes" — Action Plan 2000, Project Green, Turning the Corner, on and on — with emissions reductions commitments to match. The current federal climate plan lists more than 20 different programs aimed explicitly at reducing GHG emissions, from the Pulp and Paper Green Transformation Program to the Marine Shore Power Program to the various ecoENERGY schemes.