A plugged-up economy

A plugged-up economy
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Finance Minister Jim Flaherty released Canada’s 2013-2014 budget yesterday, and my, what a conservative document it is.

Just not in the ideological sense.

With expenditures totalling over $250 billion, federal spending remains as high as, well, the previous six years of Conservative rule, and even with a much-vaunted decrease in the growth of spending (now .7%, the lowest since the 1990s) Ottawa is still poised to keep spending more in absolute terms than ever before. Canada’s unprecedented post-2008 spending spree, initially an ideological deviation excused by the emergency need for of recession-battlin’ stimulus, will now become a permanent part of what Minister Flaherty calls a 10-year “Building Canada Plan” where the government embraces a permanent role as a subsidizer-in-chief of infrastructure investments and make-work projects across the nation.

A few Tory principles did sneak their way into the thing, to be fair. There are $4 billion in vague, though overdue cuts to that most abused of budgetary categories, “discretionary spending,” and all revenue gains will be obtained solely through closing tax loopholes and cracking down on deadbeats. In two more years Canada’s deficit will be wiped out and a surplus will be restored, which is great because that’s when the next federal election is coincidentally scheduled.

Overall, however, Flaherty‘s was a budget liberal enough to make it hard for liberals to criticize. Watching Canadian reporters prowl the halls of parliament yesterday looking for anti-budget commentary from the various left-wing opposition parties, it was striking how mild and unideological their critiques were. Sure, the Harper government was accused of being “deceptive” and “dishonest” with some of their figures, and “gimmicky” and “superficial” with some of their cuts and kickbacks (particularly a cut-heard-round-the-world to lower the tariff on imported hockey equipment, this year’s abolished penny), but overall, one didn’t get the impression a Liberal, NDP, or even —lord help us — Green Party government would do things that differently, had they been asked.

Perhaps the most insightful commentary came from Thomas Mulcair, the NDP boss.

“There is nothing in this budget to prepare Canada for a 21st-century economy,” he fumed. “The Conservatives are leaving a huge environmental, social and fiscal debt to our children.”

Canadians need a budget that stimulates the growth of a diversified economy with a medley of industries, he continued, as opposed to Mr. Harper’s plan to keep “all our eggs in the [oil] extraction basket.”

Mulcair is a bit of a Johnny one-note on this topic. In his mind, almost everything that’s wrong with this country’s economic situation, from unemployment figures to the decline of the manufacturing sector to a shrinking base of federal revenue, can be traced back to the Albertan oil industry in one way or another. It’s an elegantly inclusive pander to the various factions of his left-wing coalition; urban yuppie greens are appeased by his hard line against the grimy “tar sands” while working class union-types in the eastern provinces are impressed by his single-cause thesis for their suffering.

As energy development steadily envelops a larger and larger chunk of the Canadian GDP, the Tories have been quick to brand such critiques as evidence that Mulcair simply hates the Canadian economy and can’t be trusted to run it, but I’m starting wonder if he might be on to something. One should always be curious about the sort of questions politicians have the least interest in answering.

A couple days before the big budget release party, Harper’s resource minister, Joe Oliver, traveled to British Columbia to announce a bold new federal initiative in the exciting realm of offshore tanker surveillance. A special fleet of spill-watching planes will constantly monitor the coast of B.C., tanker inspections will be toughened up, and you better believe there’ll be a lot more buoys.

The declaration was born more from desperation than anything else. Oil’s useless without someone to sell it to, and the Harper administration badly wants the government of British Columbia to approve a trans-provincial pipeline, known by the codename “Northern Gateway,” to flow Albertan oil to the Canadian west coast for easy export to hungry markets in Asia.

Virtually no one in the B.C. political establishment is down with this plan. The environmental risks are too high, the economic benefits to B.C. are too low, and the partisan gains practically non-existent. Last July, Christy Clark, the Liberal premier of British Columbia, created a rather absurd checklist of preconditions for approving the thing, with demands ranging from the vague (aboriginal Canadians must be “provided with the opportunities to benefit from these projects”) to the patently unconstitutional (B.C. must be given a “fair share” of Albertan royalties). Oliver’s oil tanker scheme was an admitted sop to Clark’s second precondition — “world-leading marine oil spill response, prevention and recovery systems” — but she’s yet to declare it sufficient.

Not that it even matters what she thinks, mind you. Clark is an enormously unpopular woman, and she will almost certainly lose this spring’s provincial election to the head of the provincial NDP, whose pipeline intolerance is intense and unapologetic, as is his opposition to tankers on the B.C. coast, period.

Good time for a Plan B — but unfortunately that’s exactly what Northern Gateway is. Exporting oil to Asia via British Columbia was supposed to be an alternative to sending it to the States, a prospect that’s looking steadily more dubious as the Obama administration continues to waffle on the fate of the Alberta-to-Texas Keystone XL pipeline. As we discussed previously, the President’s been giving continuous signals that he intends to make combatting climate change one of the signature causes of his second term; vetoing Keystone may be his single biggest opportunity.

Should he make that decision, one imagines Obama will emphasize recent studies claiming that oil production within the United States is advancing so quickly the nation may be energy independent by the mid-2o30s. This is one of the unsettling secrets of the burgeoning Canada petro-state; though we enjoy proudly reminding oblivious Americans that our country, and not Saudi Arabia or wherever, is Uncle Sam’s largest source of foreign oil, there’s no guarantee that’s destined to remain an impressive title.

Minister Flaherty‘s 2013-2014 budget predicts Canada’s rate of GDP growth, which has been rather low recently, will make a dramatic one-point jump in the coming year, then rise steadily at about 2.5% annually ’till at least 2017. Obviously it’s a supremely political prediction that presumes all the subsidies and job training initiatives and infrastructure investments that the finance minister says will work, will work, and that nothing big or economically destabilizing — like, say, the back-to-back rejection of two enormous trade and construction initiatives — will happen between now and the red-to-black year of 2015.

Talk about conservative.

13 Comments; - Discuss on Facebook - Discuss on the Forums (11)



^ 13 Comments...

  1. Zak

    I've had about enough of everyone claiming that things carry on just hunky-dory with conservative budgets (particularly you, jj), and lately the opposition parties have been letting us down. In all:

    Stats-Can gutted, food inspectors more than halved, EVERY scientific position's independence destroyed with an all-incapsulating muzzle, and nearly all environmental protection of our fresh water (we need that to drink, just fyi) eliminated.

    How is that not enough to get upset over? Why are you always determined to view the conservatives as some reasonable, sensible party that governs squarely in the centre of the political spectrum, when the reality is nothing but? Your ideologically-tinted glasses seem pretty thick JJ, and you obviously have no intention of taking them off.

  2. JohnR

    While indeed the Conservatives are committed to 'fiscal management', the party refuses to abide by its own Parliamentry Budget Officer's desire for actual facts and figures to back up its claims, and reduces Stats Canada's effectiveness just as it detrmines that the Conservative line on 'getting tough on crime' is neither nessisary, and in fact backwards compared to even the US.

    http://thechronicleherald.ca/canada/1076708-justihttp://www.theglobeandmail.com/news/politics/just

    I can completely appreciate a conservative argument for lower taxes, increased independence for individuals and less reliance on state programs, but not at the cost of blatant lies, manipulation and other attempts at ensuring the party line is the only line that is out there..

  3. @Cristiona

    Seems almost everyone in the opposition parties were okay with the budget too. I guess the Liberals, NDP, and Greens are just a bunch of rightwing cranks too.

  4. Simon

    The State Department released a pro-Keystone report a couple of weeks ago that was widely interpreted as a signal of Obama's intentions.

  5. J.J. McCullough

    It wasn't pro, it was at best neutral. And the White House has been downplaying it.

  6. John R

    @Christiona, I’m not excusing the opposition either; if a budget is based on figures that are not accurate because the government refuses to allow the figures to be checked independently, then there’s something wrong with the situation entirely.,

  7. Jake_Ackers

    We need jobs. Plain and simple. This is just typical of this entire administration. Just build it. It can be built. It needs to be built. It must be will built. Then why not just announce the intention to do it but say the details in terms of environmental safety are yet to be decided. At least there would be some progress. Or just use that "All-Star" team of advisers and find a safe route. Just seems like more political stalling. You can't make everyone happy. So much for change.

    If Obama wants to fight "global warming" then he should build the pipeline. Way safer and clean than shipping tons of fuels of oil overseas. As I have always said. Get all the oil out now and use that time to find a true direct alternative to oil, like algae. But no we rather complain about the pipeline, that maybe, if, might, could be built. And spend dozens on loans and tax credits to garbage alternative energy projects. Than just have one big green Manhattan Project and be done and over with this once and for all.

  8. Hentgen

    "EVERY scientific position's independence destroyed with an all-[e]ncapsulating muzzle."
    Um, except for researchers at the country's universities, which the Federal government has provided tax breaks to (scholarships are now completely tax-free) and increased funding overall.

    As a member of the academic community, I can tell you that the Federal government hasn't "muzzled" anyone in the university sphere and has worked with the provinces to improve conditions for research (even if some of the implemented policies are wrong-headed by my judgement.)

    And, as a member of the academic community, I can tell that you don't really understand the issue when it comes to "muzzling" government scientists that work for government departments or agencies. The main issue is over whether or not government scientists that produce research for government use can publish and present their findings as if they were members of the academic-wing of the scientific community.

    The issue here is complicated. Obviously scientists in the private sector cannot publish their findings without the consent of their bosses, since they do not entirely "own" their findings. It is not obvious why the same logic doesn't apply to public sector research at government agencies. In addition, many government scientists may wish to use their work, mostly directed by government issues and funded by the government, to get publications that would allow them to leave the government sector and gain a post at a university. So, we're not really talking about altruistic motives on the part of government researchers.

    The choice has very little practical relevance, and is more correctly viewed as a simple policy decision that is driven by any particular government's taste for information disclosure or having their scientific posts being used as a springboard into academia.

  9. Hentgen

    Am I wrong to find it ridiculous that it's unconstitutional for BC to want a share of the oil royalties that Alberta will get from the construction of a pipeline through BC? After all, it is the BC government that is taking on a great deal of environmental risk and they lack a constitutional right to the upside? It really sounds like there's no good reason for BC to cater to Alberta. If I were a politician there, I'd oppose pipelines and oil tankers simply on that principle.

    And who's moronic idea was it to let provinces have control of natural resources anyway? Having oil, potash, minerals, abundant groundwater, or whatever, is essentially a lottery. What's the point of a federation if one region gets to horde all of the proceeds of winning it?

  10. Guest

    Because it's their land and the folks there have to deal with the environmental consequences for exploitation of those resources? What, you don't think it's essentially the same story of change about where people decided to found major cities hundreds of years ago?

    It's generally thought of as a problem when enormous mineral wealth is taken from people in a sparse area of a country and they're left holding the bag of environmental destruction while other people elsewhere in the country are enriched, but I guess you don't think that's an issue.

    I'd rather that governments lean towards the way Canada goes with Alberta than how Iran/Pakistan treat their portions of Balochistan or how Mali and Niger treat their Tuareg lands.

  11. drs

    "Obviously scientists in the private sector cannot publish their findings without the consent of their bosses, since they do not entirely "own" their findings. It is not obvious why the same logic doesn't apply to public sector research at government agencies"

    Are the bosses of public scientists the taxpayers, who paid for it, or the politicians, who use their control to suppress results they don't like?

    Private bosses control what they pay for. What's the public interest in keeping public research quiet? I see none.

  12. Shannon

    It's a majority government. They weren't hunky-dory with it, they just didn't have a choice in the matter.

  13. Shannon

    Hey, JJ. Here's a good reason to be wary of Keystone.
    http://ca.news.yahoo.com/blogs/dailybrew/thick-cr

    Guess you didn't see that huh?

    I suppose you're now going to tell us that global warming doesn't exist, either.

    The fact is we don't need a pipeline. We need refineries. Pumping crude oil south is like exporting raw logs – you're essentially exporting jobs. We shouldn't be selling the Americans oil, we should be selling them gasoline.

    I suppose you're going to tell us now that global warming doesn't exist, right?

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