The Dutch, oil and Thomas Mulcair

Stephen Gordon considers the question of Dutch Disease.

The appreciating Canadian dollar has little to do with the decline in manufacturing; employment has been declining worldwide for decades. Changes in relative prices are more important. Producer prices for manufactured goods have increased by about 15 per cent since 2002, while the Bank of Canada’s commodity price index has more than doubled. Any attempt to promote manufacturing exports by depreciating the dollar is doomed to fail, since a lower Canadian dollar will also benefit resource exporters. Capital and labour will always move from sectors where prices are soft to sectors where demand is strong, regardless of what the exchange rate is doing.

The NDP leader was asked after QP yesterday about his comments on the oil industry and the reaction of Saskatchewan Premier Brad Wall.

Reporter: Brad Wall has taken exception to your comments on the weekend, saying that they’re divisive to claim that the energy sector is the problem in Canada.  How do you respond to Mr. Wall?

Mulcair: Well, you’d have to find anywhere where I’ve ever said that. What I have been saying for months and indeed years is that you have to take the sustainable development approach and it has to apply to all sectors. This is not just a question of the oil sands. This is as equally applicable with regard to the export of raw logs. We have this sad tendency in Canada not to add the value here so we export the bitumen in its rawest form to the Texas Gulf Coast at WTI, West Texas Intermediate prices while the East Coast is buying at brent crude prices, quite a bit higher, paying a premium for all their gas and all their other products, instead of shipping some of that east where we could have the jobs in Canada. Just Keystone XL, to name one of the pipelines, would export 40,000 upgrading and refining jobs to the United States. That’s the tragedy of the choices that the Conservatives are making, all the while subsidizing that industry.  So it has had an effect of hollowing out the manufacturing sector. It’s demonstrable. It’s measurable. And it’s been proven. 

The Conservatives can send out different people to say different things. Our argument is with this Conservative government in that House with the priorities that they have. Continuing to subsidize the oil companies that are operating in the oil sands right now makes no economic sense. We have to make sure that they assume the costs in this generation. We’re living on the backs of future generations, a massive ecological, economic and social debt—the largest in our history. Indeed, we will become the first generation in Canadian history to leave less to the next generation than what we ourselves received. To me, that’s just unacceptable…

I think that if anybody reads what I’m saying it applies to all regions and all aspects of the economy. The basic rules of sustainable development—internalization of costs over the life cycle of a product, polluter pay, user pay—applies as much in the case of raw logs being shipped out from one province or the way we’re exploiting the oil sands in another. It’s not specific to one region of the country so there’s nothing divisive about it. It’s a vision that opposes that of the Conservatives which is hell-bent-for-leather to develop as quickly as we can, irrespective of the environmental degradation and the cleanup that we’re going to leave to future generations.  They’re going to be stuck with the bill for the cleanup of the air, the soil and the water that we’re fouling now. Look at the price tag in today’s report to get an idea of the price tag we’re leaving to future generations. You’ll understand why this cuts across provincial and sectoral boundaries. This is not specific to one province or to one area of activity. That’s what they would like to make the debate about. But the debate is actually about sustainable development, one vision for the country, that of the Conservatives which is take whatever you can right now, let tomorrow take care of itself. Our vision which is let’s leave something to future generations, we want to put in place a system of green renewable energy across the country, that’s our type of vision instead of continuing to exploit the way we’re doing it now. Those two visions will continue to be confronted and I’ll take them on one step at a time.