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.
It was a rare case of both sides seizing on the same acrimonious argument as a potential political winner. If they continue to see it that way, this regionally sensitive clash over economic and environmental policies could be a defining factor in framing the choice between continued Conservative rule and the NDP alternative. So get ready for “Dutch disease” to claim a key place in the vernacular of federal politics. The term was coined back in the 1970s to describe Holland’s dilemma when offshore gas discoveries boosted the Dutch currency’s value, making the country’s exports more costly, thus hurting its manufacturers. Mulcair blames Canada’s case of Dutch disease for about half of 500,000 manufacturing jobs lost, mostly in Quebec and Ontario, after Stephen Harper’s Tories won power in 2006. He charges the Conservatives with sacrificing the entire manufacturing sector. “Their priority,” he says, “is the unbridled development of the oil sands.”
Conservative strategists—forced to play defence for much of this year over issues ranging from the potential cost of F-35 jet fighters to the so-called robocalls scandal—pounced on Mulcair’s remarks as a chance to mount a Tory front-bench offensive. Heritage Minister James Moore led the charge. “He attacks western Canada, he attacks our energy industry, he attacks all of the West and the great work that is being done by western Canadians to contribute to Canada’s national unity,” Moore said in the House. The B.C. minister even suggested the Liberals were enjoying a “resuscitation” thanks to Mulcair’s “meltdown.” In the heat of a volatile question period, Moore went so far as to boast of how the West’s current fortunes and prospects put it ahead of the rest of the country. “The fact is western Canada is driving the Canadian economy,” he said. “We are the future.”
Beneath the rhetoric from both camps are plausible assessments of voter opinion by Tory and NDP strategists. A recent Ipsos poll conducted for the Canadian Chamber of Commerce found that big majorities in the western provinces think the positives of oil sands development outweigh the negatives, including, not surprisingly, 80 per cent in Tory-stronghold Alberta. But that positive view of the oil sands slips to about 60 per cent in Ontario and the Atlantic provinces, and plummets to a mere 37 per cent in Quebec—where Mulcair is one of the 58 NDP MPs who make up the crucial core of his party’s 101-seat caucus. Opinion also divides along age lines: among Canadians older than 55, who tend to vote Tory, 69 per cent nationally hold a positive view of the oil sands, compared with only 42 per cent in the 18-to-34 bracket, the younger voters from which the NDP draws a disproportionate share of its support.
If public opinion is a strategic factor, the oil sands issue also touches on the self-images of the two principal players on the federal stage today, Mulcair and Harper. The Prime Minister traces his earliest serious engagement in partisan politics, back when he was studying economics in Calgary in the early 1980s, to his intense sympathy with the angry Alberta backlash against Pierre Trudeau’s National Energy Program. Much more recently, last fall’s decision by President Barack Obama to delay approval of the Keystone XL pipeline, which would take oil sands bitumen to U.S. refineries, prompted a new phase in Harper’s quest to make diversifying energy exports his key economic priority. This spring’s federal budget included measures to streamline environmental assessments of energy and other resource projects—notably Enbridge’s proposed Northern Gateway pipeline, which would link the oil sands to Asian markets through the port at Kitimat, B.C.
But Mulcair is arguably just as personally invested in the issue. He often stresses his three-year stint as Quebec’s environment minister, in Jean Charest’s Liberal government, as the key political experience on his path to becoming NDP leader earlier this year. Charest reputedly planned to shuffle him out of the portfolio in 2007, over his refusal to allow private development in a provincial park. But Mulcair quit rather than accept Charest’s assignment change, lending his dramatic exit to join the federal NDP the glow of a principled move. While running for the NDP leadership, he staked out his position on the country’s highest profile environmental issue by penning a preface to the French-language edition of Tar Sands: Dirty Oil and the Future of a Continent, author Andrew Nikiforuk’s indictment of the massive strip-mining of northern Alberta’s oil sands.
So as the Tories tried to turn up the heat on Mulcair over his oil sands comments for four straight days last week, he showed no sign of sweating. One senior NDP official said he welcomed the chance to demonstrate how, unlike the last two Liberal leaders, Stéphane Dion and Michael Ignatieff, he wouldn’t be intimidated by any Conservative onslaught. The only part of his pugnacious reaction to the Tory bombardment that NDP strategists were hesitant to defend was his description of the three westernmost premiers as Harper’s “messengers” in the dispute. B.C.’s Christy Clark called Mulcair’s position “goofy,” Alberta’s Alison Redford tweeted that he was “divisive,” and Saskatchewan’s Brad Wall called him, among other things, “facile.”
Eager to avoid a feud with provincial leaders, Mulcair tried to bluntly frame the issue in terms of running to unseat Harper in 2015. “We see this as a defining element of the next election campaign in Canada,” he said on Global’s The West Block, describing it as “a fight we’ve been looking for.” That battle begins against a backdrop of recent polls showing the Conservatives and New Democrats in a tight contest. Based on a survey conducted before the Dutch disease issue exploded, Abacus Data pegged Tory support at 37 per cent support nationally, flat so far this year, with the NDP at 35 per cent and on an upward trend. The poll showed the Liberals languishing at a dismal 17 per cent.
Political harangues left little room for debate about the finer points of economic policy, but economists studying the issue find ample room for nuance. A report by the Institute for Research on Public Policy, released just as the issue was boiling over in Ottawa, concluded Canada “suffers from a mild case of the Dutch disease,” but pointed to poor productivity growth as the more serious issue than a high Canadian dollar. A study called “Does the Canadian economy suffer from Dutch disease?” slated to be published in the journal Resource and Energy Economics, attributes about a third of manufacturing employment shed in Canada from 2002 to 2007—around 200,000 lost jobs—to the Canadian dollar’s commodity-fuelled rise. One of the study’s authors, University of Ottawa economics professor Serge Coulombe, suggested the “petro dollar” problem could be offset by offering tax advantages for investment in manufacturing.
Mulcair calls for a quite different policy response—a crackdown on water and air pollution that would boost the upfront costs for companies developing the oil sands. He says the Conservatives are failing to enforce several existing federal laws, including the Fisheries Act, the Migratory Birds Act, and the Navigable Waters Act. If the habitat protection rules in those laws were strictly applied, Mulcair says, export profits from the oil sands would shrink, easing the upward pressure on the Canadian dollar. “We are allowing these companies to use the air, the soil and the water as an unlimited, free dumping ground,” he says. It’s an anti-pollution message the Conservatives are evidently confident they can cast as anti-West, in a fight both Harper and Mulcair appear ready to wage for as long as the other guy is willing, maybe even until the next election day.