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‘The Revenge of the Old Economy’

Logboom on the Fraser River 2008. (Flickr image courtesy of Gord McKenna.)

Canada largely owes its economic development to natural resources, the vast and (theoretically) sustainable resources like lumber, fish, minerals, agriculture and energy in the form of oil and natural gas. Borrowing liberally from Harold Innis’s iconic The Fur Trade in Canada, hewers of wood and drawers of water we were, and in many ways, we remain.

We’re just getting much more sophisticated – at both hewing that wood (we call it sustainable forestry, now) and drawing that water (mostly for hydroelectric and agricultural purposes these days, and oilsands oil production).

The latest report from the Canadian International Council picks up on that theme, arguing that Canada cannot become a resource superpower by accident, but only through careful planning, according to author Madelaine Drohan, Canadian correspondent for The Economist.

However, the main thrust of the report can be summed up by a prominent quote by former Industry Minister Jim Prentice: “There’s no shame hewing wood and drawing water as long as you are the best in the world at it.”

Before 2003, it appeared Canada was ashamed of its past, as it didn’t appear as if Canadians wanted to wander down that resource path any longer, having spent centuries doing so already. The heady dot com years of the late 1990s promised if Canada followed in America’s footsteps, it too could develop technology and communications industries as the best and brightest paths to prosperity.

“Pumping oil, cutting wood, and extracting minerals were largely regarded as part of an economy best left behind as Canada raced toward a glittery high-tech future,” Drohan wrote.

But growing demand from India and China for what Canada has in abundance – the natural resources that stretch across 5,500 km of land from sea to sea to sea – put resources back in the spotlight, coinciding with a ramping up in production of the Alberta oilsands. Or what Statistics Canada so aptly called “the revenge of the old economy” in 2006.

Just how dependent is Canada on its natural resources for economic success? Extremely, it would seem. Drohan provides the details, saying “last year, the top Canadian merchandise export to every one of its major trading partners was a natural resource.”

Top Exports from Canada to its largest trading partners:

  • United States – crude petroleum;
  • China – wood pulp;
  • Japan and South Korea – coal; and
  • Europe (as a whole) – precious metals and alloys.

“As far as the rest of the world is concerned, Canada has returned to its resource roots,” she writes.

Yet in another way the reliance on resource extraction has not had the immediate impact on jobs one might expect. Drohan points out that only 337,000 of Canada’s 17 million jobs are in resource sectors (according to Statistics Canada), a mere 1.98 per cent of total jobs available. Yet this number rises when you factor in the people employed in sectors built around resource production.

The report can be distilled into nine key recommendations for movers and shakers in Ottawa and beyond informing Canadian resource policy, including calls for a revenue-neutral carbon tax; greater collaboration between industry, government and academe; treating natural resources as capital to be invested rather than income to be spent; diversify its export markets; and developing a national resource plan.

That plan, Drohan adds, should be convened and led by the federal government who must take pains to avoid dominating the conversation.

“The sky will not fall if Canada continues its current ad hoc approach to resource development policy in its broadest sense,” Drohan concludes. “But without strong leadership and collaboration we risk losing an opportunity to become a real resource superpower, one capable of responsible and efficient stewardship that Canadians can be proud of and other countries will want to emulate.”

Try as we might to move beyond the resource-rich past that defines Canadians, we can’t seem to let it go. Manufacturing sectors and technical innovations hubs take time to build, for government to provide the right incentives for business, to attract investors and find clients in a global marketplace. But in some respects, however we may try and move on, resources remain a fall back in tougher economic times, and a stable venture when things are going well.

Moreover, we have long memories when things go wrong. Just ask Justin Trudeau, crisscrossing the country as he seeks the Liberal Party of Canada leadership. In Calgary recently, Trudeau had to remind his audience he was ten years old when his father introduced the much hated (at least in the West) National Energy Program (1980-1985) that gave the federal government control over energy prices, among other stipulations.

(‘Let the Eastern bastards freeze,’ came the reply from the West.)

But in a move to separate himself from his father’s contentious plan, the younger Trudeau told crowds that “It is wrong to use our natural wealth to divide Canadians against one another,” he said. “It was the wrong way to govern Canada in the past. It is wrong today. And it will be wrong in the future.”

Drohan might agree. But moving beyond the historic divisions that still cast a long political shadow in this country and towards the new national resource plan she calls for is easier said than done.

About awreeves

Editor-in-chief at Alternatives Journal. Author of 'Overrun: Dispatches from the Asian carp Crisis'.


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