January 23, 2012 – In today’s Hill Times column, I discuss how to restore the Canadian consensus in favour of natural resource development. The full column is below:
Canada’s monumental economic challenge: Our increasingly schizophrenic attitude to natural resource development
The provinces may control natural resources, but Ottawa controls enough of the jurisdictional, legal, tax, environmental and regulatory levers that it can set the tone and get provincial buy-in for a cooperative national framework equal to the opportunity Canada faces.
By Brian Lee Crowley, The Hill Times, January 23, 2012
One of the best Canadian politicians of his generation, Macdonald left behind him an enduring and powerful legacy. No, no, not Sir John A. The other one: Donald S. Macdonald. A Trudeau-era Cabinet minister, Macdonald is best remembered for his job post-politics. At Trudeau’s behest he headed the eponymous Macdonald Royal Commission, which reported in 1985. Dry-as-dust history? Hardly. A quarter of a century later we forget how Macdonald’s report led us out of a historical cul-de-sac and revolutionized our economy. It is a feat we need to repeat today, so Macdonald’s triumph deserves our attention.
By the early 1980s, the inadequacy of the old protectionist National Policy was plain. Inefficient domestic industry sheltered behind tariff and other barriers. To that inward-looking policy bequeathed us by Sir John A. Macdonald the 1970s had added restrictions on foreign investment, aimed chiefly at U.S. multinationals.
Yet, Canada was hugely dependent on America being willing to absorb our exports. The old strategy had become a Rube Goldberg confection unworthy of a great nation.
But it was deeply rooted in our politics and our neuroses, and particularly our fear of American domination. No government wanted to seize the nettle and say what experts had long since concluded: that a formal free trade agreement with the United States was the only sensible way to promote Canada’s national interest.
Enter Don Macdonald. His royal commission launched a truly comprehensive national conversation about what Canada needed to do to prosper. His fellow commissioners came from different parties, regions and language groups.
Academic papers were commissioned, experts consulted, and hearings held in every corner of the country.
After this impressive national pulse-taking, Macdonald duly reported, among many other things, that Canada’s national interest lay in free trade with the United States. By the next election, in 1988, the deal was done and Canada has never looked back. Macdonald’s massive work of careful, thoughtful and non-political national psychotherapy allowed us to let go of old emotions and prejudices.
Today’s Macdonald will be called upon to unravel a different but equally monumental economic challenge: our increasingly schizophrenic attitude to natural resource development.
Make no mistake: Canada is on the brink of massive development fuelled by our increasingly sought-after natural resources. It isn’t just the oil sands. Potash, natural gas, conventional and non-conventional oil, minerals and rare earths, and more in almost every province and territory all presage investments of tens of billions of dollars, year after year, for many years to come.
Far from being limited to Western Canada and the North, these opportunities can indisputably be harnessed to put Canadians to work in every part of the country. Steel, vehicles, and equipment as well as engineering and other high value services from Central Canada will be required, port facilities and processing terminals will be built on both coasts, unemployed workers will be put to work in high wage occupations, trade schools and universities in our communities will buzz with energy training people for these opportunities. Canadian workers’ pensions will be invested profitably in the companies doing the work, and our financial institutions will scour the globe for the capital needed. And despite globalization, most of the resource extraction work cannot be sent to other countries, because the resources are here.
Our challenge, however, is that the old consensus that properly regulated natural resource development is good for Canada is breaking down.
We see that in the debate over the Northern Gateway pipeline and Quebec’s shale gas today, just as America’s decision on the Keystone pipeline shows that next door the consensus in favour of resource development has collapsed. Aboriginal land and other claims add a further dimension of complexity and uncertainty to project prospects. All this adds up to investors being increasingly skittish about risking their money on projects that may become interminably mired in vexatious and acrimonious approvals processes that are increasingly hijacked by special interests for whom emotion defeats evidence every time.
The consensus can be rescued, but only if Canadians can be convinced that development will go ahead under the most demanding conditions, including responsible environmental standards and fair dealing for Aboriginals. We could then free up technical tribunals like the National Energy Board to return to their original mandate, which is not to be some kind of giant opinion poll dominated by emotive opponents, but to be a place where projects are examined quickly but thoroughly on their objective merits, ensuring they live up to Canada’s high standards.
The provinces may control natural resources, but Ottawa controls enough of the jurisdictional, legal, tax, environmental and regulatory levers that it can set the tone and get provincial buy-in for a co-operative national framework equal to the opportunity Canada faces. But where is this generation’s Don Macdonald? And where is the prime minister who will put him to work?
Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.
The Hill Times
