Category Archives: Economy

Jan 22 2015
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Democracy, Economy

Whose money is it anyway?

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When attempting to embarrass the filthy rich into parting with a few ducats from their dragon hordes, timing – which is, itself, the fount of all great wealth – is everything.

Oxfam knows this, which is why, on the eve of the annual World Economic Forum in Davos, Switzerland (a swank soiree for the world’s movers and shakers, or, depending on one’s political leanings, satanic masters of the dark arts), the international anti-poverty organization has released its most recent research paper on the unequal distribution of mammon across the planet. And the tale it tells might curl a philanthropically inclined billionaire’s toes.

As the summary document, Woking for the Few, plainly states, “Almost half of the world’s wealth is now owned by just one per cent of the population. The wealth of the one per cent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.”

Meanwhile, “The bottom half of the world’s population owns the same as the richest 85 people in the world. Seven out of ten people live in countries where economic inequality has increased in the last 30 years. The richest one per cent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012. In the US, the wealthiest one per cent captured 95 percent of post-financial crisis

growth since 2009, while the bottom 90 percent became poorer.”

Oxfam allows that some inequality can be a good thing, as it tends to “drive growth and progress, rewarding those with talent, hard earned skills, and the ambition to innovate and take entrepreneurial risks.”

Overall, though, that’s not how the world is working.

“Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table,” Oxfam’s Executive Director Winnie Byanyima told the Guardian this week. “In developed and developing countries alike we are increasingly living in a world where the lowest tax rates, the best health and education and the opportunity to influence are being given not just to the rich but also to their children.”

As the report points out, runaway economic inequality creates permanent upper and lower classes, which constrain the flow of capital to deserving and innovative programs and projects. That, in turn, dampens overall growth and exacerbates poverty and homelessness. It also tends to widen existing gulfs in opportunities, particularly those between women and men.

What’s more, the research reports, “In many countries, extreme economic inequality is worrying because of the pernicious impact that wealth concentrations can have on equal political representation. When wealth captures government policymaking, the rules bend to favor the rich, often to the detriment of everyone else. The consequences include the erosion of democratic governance, the pulling apart of social cohesion, and the vanishing of equal opportunities for all.

“Unless bold political solutions are instituted to curb the influence of wealth on politics, governments will work for the interests of the rich, while economic and political inequalities continue to rise. As US Supreme Court Justice Louis Brandeis famously said, ‘We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.’”

The question, of course, is: How much more concentrated can the world’s wealth become before any notions of democracy or, for that matter, market capitalism – which theoretically, at least, encourages fair and open competition – become quaintly invalid.

Still, many who perch at the right end of the political spectrum prefer to propagate the specious argument that fortune favours, by and large, the talented, hard-working, well-educated, and courageous, (not, as is more often the case, the entitled, corrupt and protected).

The rest of us shouldn’t envy hordes of wealth, but celebrate them as beacons of hope and inspiration: There, but for the failure of our own character, go we.

If only that were true. And Oxfam is not the only, or even most influential, voice pointing out the patently obvious on this subject.

“Through the tax code, there has been class warfare waged, and my class has won,” Warren Buffett ruefully observed in 2011 It’s been a rout.”

Of course, as the third-richest man on the planet, he can afford to be embarrassed.

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Jan 20 2015
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Economy, Politics

Walking the low wire in fine and familiar balance

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A first-term premier in this corner of Canada can sometimes thrill the thralls, who newly elected him, by successfully negotiating the tightrope of regional politics, with or without a net.

To this end, New Brunswick’s young and inarguably energetic Brian Gallant practiced his equipoise in St. John’s earlier this week, alongside his counterparts at the annual Council of Atlantic “elected-men-in-suits”.

Did our fearless leader make it to the end of the line – strung merely inches above the ground, and, therefore, posing little risk to future career opportunities – or did he fall awkwardly to his knees?

As usual, this yearly gabfest among East Coast premiers promised more photo opportunity than perspicacity.

Still, it was incumbent on this bunch to, at least, appear effective. Hence, we are obliged to observe the Council’s official policy statement, issued Monday (helpfully provided by the Prince Edward Island government’s official website, among others):

“Atlantic Premiers are working together to improve the competitiveness of the region’s economy through actions to strengthen our workforce, harmonize and streamline regulations, ensure open transmission and transportation of energy, and provide more efficient and cost-effective services to Atlantic Canadians.

“The private sector is a key driver of job creation and economic growth across the region. Premiers announced today the Atlantic Red Tape Reduction Partnership. This partnership will identify business regulations and administrative processes that can be harmonized and streamlined to create a more competitive economic environment across Atlantic Canada.

“A competitive Atlantic economy depends on people having the right skills for the right job. Premiers extended the successful Atlantic Workforce Partnership for a further three years to continue harmonizing apprenticeship certification in 10 trades, and strengthen immigrant recruitment and retention in Atlantic Canada. This focus on demographic growth and skills enhancement builds on Atlantic Premiers’ commitment to increase the competitiveness of the region.

“Atlantic Premiers confirmed common priorities, including stable, adequate and predictable fiscal arrangements, Labour Market Development Agreements, immigration and energy.”

Etcetera, etcetera, etcetera.

It’s not as if any of this is invigorating or even novel.

For at least a generation, Atlantic Canada’s premiers have barked madly about “closer cooperation” on what should be shared initiatives in the region – immigration, trade and labour mobility, procurement, social transfers from Ottawa, and federal-provincial protocols governing natural resources development.

And, this year they came together long enough to, as the St. John’s Telegram reported, “support the Government of Newfoundland and Labrador in pursuing a resolution to the ongoing dispute with the federal government over a proposed. . .package of fisheries-sector funding, tied to the Canada-European Comprehensive Economic and Trade Agreement (CETA).”

Still, as the newspaper noted, “taking questions on the heels of the latest meeting of the Council of Atlantic Premiers, Stephen McNeil (N.S.) Robert Ghiz (P.E.I.) and Brian Gallant – with Newfoundland and Labrador premier Paul Davis beside them – stopped short. . .of offering full and unfettered support for the province’s position in the dispute.

The premiers generally restricted themselves to expressing support for the province’s ability to seek a correction to perceived wrongs.”

But, of course, what would we expect them to say?

Historically, as group, the Atlantic premiers’ collective interest in forging closer economic ties among them, as a bulwark against Ottawa’s policy of regional divide-and-conquer since Confederation, has evolved only glacially.

Each province has nourished its own, private interests with the feds even as each has nurtured its own, private grievances.

That’s how our rooked system has worked and continues to work in the second decade of the 21st Century. This is our fine and familiar balance – one to which all parts of the country have become inured.

And yet, at least, Mr. Gallant – who apparently enjoys being quoted – told the Saint John Telegraph-Journal, prior to the Council’s assembly, “It is a very good time to focus on our priorities vis a vis the federal government. Certainly, we hope that not only the federal government will take note but all of the political parties that will be vying for the support of Canadians during the next few months will listen as well.”

All of which is to say that New Brunswick’s premier can properly step off that tightrope without fear of bruising his knees – for now.

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Jan 18 2015
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Business, Economy, Energy, Oil and Gas

Oh, what a messy slick we spill

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Oil has a nasty way of sticking to everything it touches, including the best-laid plans of men, governments and hired gunslingers in the spin-rooms of the nation.

Not so long ago, black gold was Canada’s economic salvation. It was better than  manufacturing, technological innovation in the non-resource sector, and even financial services at generating long-term jobs and huge dividends for high-flying investors.

Indeed, so went the fairy tale, oil was the last, best hope to power these industries and aspirations and return the country to its always mythological status as the world’s next, big superpower of opportunity.

Oh well. Easy come, easy go – which has become, in New Brunswick, our preferred provincial slogan, beating out such bromides as “Be in this place” and (my personal favorite) “Hell, it could be worse, though we don’t possibly see how”.

Still, Alberta’s blackened, big sky country may want to rip a page from the picture-perfect province’s sloganeering songbook as it begins to send thousands of expat Maritimers back home to their sea-bound coasts.

With oil hovering below $50 a barrel – down more than 100 per cent since mid-October – and no discernible bottom to the price plunge, the West’s formerly gilded streets are about to be lined with foreclosure notices, each prettily packaged in recyclable envelopes, courtesy of your friendly, neighbourhood big, Bay-Street bank.

Oh, how the ironies abound.

To Stephen Harper’s Conservatives, oil meant certain reelection in October. That’s because royalties from this resource enabled their utterly fantastical predictions of surplus, their wholly irresponsible promise to permit income splitting among families that could well afford to pay the tax man that which is properly due to him, and their cynically calculated (and needlessly costly) diversions regarding the Child Tax Credit.

Now, they’ll be lucky to muster enough cash to cover the cost of the laces for the finance minister’s new shoes come budget time some months away.

As it is, they can’t work fast enough to fit themselves for boots of clay.

According to a Globe and Mail report last Thursday, “The Conservative government will not release the federal budget until at least April, a delay meant to give Finance Minister Joe Oliver more time to assess the impact of plunging oil prices on the Canadian economy.”

As Mr. Oliver told a press conference in Ottawa, “Given the current market instability, I will not bring forward our budget earlier than April. We need all the information we can obtain before finalizing our decisions. . .“This new reality poses a great, though not entirely unprecedented challenge. . .It represents the third largest price decline in the last four decades, exceeded only by the 1986 OPEC collapse and the sharp decline and rapid recovery we saw during the Great Recession. . .Given the current volatility, there is no consensus about how low will prices fall and how long they stay there. Nevertheless, every knowledgeable person I have spoken to believes, and history tells us, that prices will eventually move well above (the) current level.”

In fact, though oil’s price may not have yet bottomed, there is, evidently, a point at which the Canadian economy’s ability to compensate for its clear and utter dependence on the stuff simply fails.

Only a week ago, Ontario Premier Kathleen Wynne all-but bragged about the coming resurgence in her province’s manufacturing sector. Low petroleum prices, she noted, meant a lower valuation of the Canadian dollar against its U.S. counterpart. Since south of the border is where more than $300-billion of this country’s good wind up each and ever year, logically the boon to exporting ought to be commensurately marvelous. Read: Who needs oil?

Well, apparently, we do; and the sticky, messy stuff is not cooperating.

Says former finance department deputy minister Scott Clark, in a separate Globe piece last week, “If the government tries too hard to show a surplus, in other words twists and turns in the wind and does everything to show a surplus, I think you lose political and professional creditability. . .The reality is a lot has changed and if I were the Conservative government, I’d be saying ‘that’s the fact.’ Things have changed and we should just realize that and deal with it.”

Of course, that makes just too much sense for this country’s leadership, almost more enamoured of its own talking points on oil than it is with the sticky stuff, itself – if that’s even possible.

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Jan 16 2015
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Culture, Economy, Media

For a prominent prognosticator, no easy answers in the year ahead

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Reading The Economist’s redoubtable annual turn as Nostradamus, we will be forgiven if we emerge shocked, appalled and fundamentally confused.

After all, this is what the western world’s leading print pundit of fair-market capitalism does best: perplex.

“The World in 2015” imparts much the same wisdom as the various “Worlds” the magazine has published since big-picture, 30,000-foot views became both the sage and financially responsible way to board-up the bottom lines of publications heading into the otherwise preoccupied end-of-year times, just around the Christian holidays.

In the early 1980s, at the Globe and Mail’s Report on Business, these annual numbers were considered essential reading for cub reporters – just as important, for example, as the Canadian Securities Institute’s textbooks for aspiring investment, dealers, brokers and floor traders.

And as metro and national beat scribblers might have tucked into Charles Dickens, while the snow fell gently on the gritty curbs of downtown Toronto, we trenchers at the ROB studiously perused the writings of Walter Bagehot, The Economist’s preeminent editor (between 1860 and 1877) for clarity about the how the world’s financial systems worked then, and perhaps now, to sadly little avail.

Complexity is, of course, the essential nature of modernity. And accepting intricacy – nay, embracing it – in the affairs of men and women of good conscience is, arguably, what The Economist does best (hence, the name of the publication). In this regard, the 2015 outlook edition does not disappoint.

In his piece, the magazine’s editor-in-chief, John Micklethwait, writes, “Of all the predictions to be made in 2015, none seems safer than the idea that across the great democracies people will feel deeply let down by those who lead them. In Britain, Spain and Canada, elections will give voters a chance to unleash some of those frustrations.”

Are you listening Messrs. Harper, Mulcair and Trudeau? How about you, Barack Obama, one-time savior of the disavowed?

“The levels of unpopularity and disengagement in the West have now risen to staggering levels,” Micklethwait continues. “Since 2004 a clear majority of Americans have told Gallup that they are dissatisfied with the way they are governed, with the numbers of those fed-up several times climbing above 80 per cent (higher than during Watergate. Britain’s Conservative Party, one of the West’s most successful political machines had three million members in the 1950s; it will fight the (general) election in May with fewer than 200,000.”

So, then, we may reasonably assume, democracy is on the run.

But, wait, here’s what The Economist’s foreign editor, Edward Carr, writes in the same issue:

“Look on the bright side. . .Armed with more realistic expectations, optimists can point to three reasons for hoping for something better in 2015. The first is that democracies take time to respond to new threats and dangers, but when they do they tend to be committed to their new policies. . .The second reason to temper pessimism is adaptation. . .In 2015, China and Japan will begin to put aside their differences. Not because either is willing to give ground on their in their long-running territorial dispute over some rocky outcrops in the East China Sea, but because both need the economic boost from sustained trade and investment between them. . .The third reason concerns America. . .(Some have said) that (Barack Obama) is weak and distracted, and others (have said) that the United States is falling into decline. The charges distort Mr. Obama’s thinking and vastly overstate America’s loss of power.”

In fact, it’s hard to argue with a five-year recovery that has returned five million jobs to the biggest economy on the planet, reduced unemployment to below 5.6 per cent, and goosed annual GDP growth (in that country) to between three and 3.5 per cent over the next 15 months.

Perplexing, indeed.

Are we going to hell in a hand basket; or are we at the cusp of a new age of fair-market capitalism, powered by democracy movements that fully appreciate the role that healthy public institutions play in realizing their peaceful, common goals?

Let us dust off our crystal balls, for all the good they will do us.

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Jan 12 2015
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Economy, Government

New Brunswick’s future: an axe, a prayer and good wireless

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Asking the hoi polloi what the political elites must do to keep the status quo from dissolving before the eyes of the common man and woman is standard strategy for first-term governments in the early stages of what they dread will be a crushing disappointment to everyone, including themselves.

Still, New Brunswick Premier Brian Gallant (four months old in electoral years) does it with such earnest panache, you can almost believe the words that issue from his  near-perfect mouth.

Almost.

“We need all New Brunswickers to participate with their ideas, suggestions and concerns so we can have a dialogue about how we are going to get our finances in order in this province,” he told a press conference in Fredericton last week.

“In the next few months, we will have a very open dialogue that will be fruitful. . .I am asking all New Brunswickers to give us their two cents, to give us their ideas, suggestions and concerns so we can come up with the best policies to help us get our finances in shape. . .Everything is on the table.”

Oh really, Mr. Gallant?

How do you feel about the HST?

A two-percentage-point hike in the consumption tax of this province would reap roughly $65 million a year for New Brunswick’s public coffers. Over your four-year mandate, that would amount to $260 million – plenty of good scratch to justify a moratorium (a word with which I am sure you are familiar) on hikes to personal, business, corporate and property taxes.

And yet, messing with the HST has proven to be political suicide across this great, self-aware, enlightened country of ours, ever since Paul Martin proved it could be done at great expense to his own and his party’s career. Sure, he managed to balance the national accounts in the mid-1990s – a feat for which Canadians never forgave him – but not before “reform-minded” barracudas from the west successfully labelled him a card-carrying “tax-and-spender”. The mud stuck and, of course, the rest is history.

So, then, if not the HST, how about highway tolls?

As you, yourself, have said, New Brunswick is fairly brimming with roads and thoroughfares – from the southeast to the southwest, from the north to the netherlands of moose country, where anyone who owns an ATV or snowmobile happily careens to his or her little parcel of pastoral heaven at whim.

Meanwhile, Mainers, Quebecers, Prince Edward Islanders, and Nova Scotians merrily trundle along our corridors, paid with local tax dollars, to points beyond our borders with nary a concern for such esoterica as infrastructure, stopping only to take in a view, gobble a piece of homemade blueberry pie, belch, and be on their way.

But just try to raise the possibility of tolling these folks.

It looks good on paper, sure. Still, remember what happened the last time this option carried serious weight in government.

“Finance Minister Blaine Higgs is acknowledging that putting tolls on provincial highways is an idea he is examining as the New Brunswick government tries to dig itself out of an $820-million deficit,” the CBC reported back in 2011.

“Higgs was urged to consider the imposition of highway tolls at a pre-budget meeting in Fredericton. . .The finance minister said many people have indicated during the pre-budget consultations and surveys that they are willing to pay highway tolls as a way to whittle down the province’s substantial deficit. And he conceded the policy is ‘something that is of interest.’”

What happened to Higgs? What happened to his boss, David Alward?

Enough said.

Perhaps, then, the solution to New Brunswick’s fiscal problem lies squarely on the cutting edge of the agenda.

Eliminate hospital services; curtail educational programs; fire the province’s civil servants; give everyone who remains an axe, a cord of wood, a holy bible, and a prayer, and send them off into the fine woodlands they so evidently cherish, there to build new, pioneer lives for themselves, all over again.

And when the hoi polloi, crushingly disappointed by Mr. Gallant’s earnestly failed efforts to keep their status quo plumply intact, come mewling, perhaps the besieged premier might finally say:

“Yeah. . .log cabins don’t come equipped with Netflix. Read your damn social contract, for a change.”

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Jan 08 2015
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Economy, Education

The A-B-Cs of solving poverty in our time

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New Brunswick’s Common Front for Social Justice is consistently well-meaning, invariably courageous and occasionally relevant.

So, why, then, in its recently released, roundly critical review of the David Alward and Brian Gallant governments (though, the latter’s has held the reins of office for all of four months), does the anti-poverty organization skirt any meaningful discussion of publicly subsidized, coordinated and integrated early childhood education as a crucial salve for the issues that concern it most?

The group states it wants minimum wage laws, employment insurance structures and pay-equity frameworks improved, enhanced and expanded. Fair enough.

It also demands that social assistance benefits rise; housing costs for the poor drop; the stock of public accommodations available to the economically disenfranchised enlarge; and that the controversial New Brunswick drug plan be reviewed for broad fairness and equitability. Again, well said.

As for “professional artists”, the Front states in its year-end report card, “The Alward government increased the budget for arts, culture and heritage. The Gallant government said it will put more money in its 2015 budget. The Alward government adopted a new cultural policy, put in place the Premier’s Task Force on the Status of the Artist and adopted a Linguistic and Cultural Development Policy for the French Schools.”

In fact, recognizing official support for professional artists is about the only cap this organization is willing to doff to either the former Tory or current Grit governments of New Brunswick. As to the rest, circumstances are, indeed, desperate:

“There is certainly a real deep financial cost to poverty,” the Front’s report writers acknowledge. “More importantly, there is a human cost that even if it is sometime(s) difficult to measure in dollars and cents is not less real.”

There is, for example, “the worry of parents who are not able to properly feed themselves and their children and have to rely on food banks in order not to go to bed hungry.” There is “the anguish of living in inadequate housing. . .the desperation of knowing that you are sick because you are poor. . .the hopelessness of teenagers knowing they have a lot less (sic) chance(s) of having a better life than their neighbour(s). . .the look of others because you are poor.”

Still, if any of this is true – and most of it is – why is there no concomitant mention, in this finely intentioned diatribe, of the exorbitant day-care costs most working Canadians face as they struggle to avoid poverty even as they slide inexorably into it?

A report, published late last year by the Canadian Centre for Policy Alternatives, makes a compelling point. To wit:

“While Canada spends less on early childhood education and care than most OECD countries, Canadian parents are among the most likely to be employed. As Canadian parents are working parents, child care fees can play a major role in decision-making and labour force participation, particularly for women.

“Torontonians pay the most for infant child care at $1,676 a month. Parents in St. Johns pay the second most at $1,394 a month. The lowest feesare found in the Quebec cities of Gatineau, Laval, Montreal, Longueuil and Quebec City, where infant care costs $152 a month thanks to Quebec’s $7-a-day child care policy (increased to $7.30-a-day in October 2014). The second-lowest infant fees are found in Winnipeg ($651 a month) where a provincial fee cap is also in place.

“There are roughly twice as many toddler spaces (1.5–3 years) as infant spaces and fees are lower. Toronto has the highest toddler fees at $1,324 a month. Vancouver, Burnaby, London, Brampton and Mississauga all have median toddler fees over $1,000 a month.”

And that doesn’t even scratch the surface of the systemic inequity that two-income families with children endure every day. Those who do not qualify for subsidized spots in the sketchy day-care system across this country can pay anywhere from $3,000 to $4,000 per kid, per month.

The circumstance is not only bizarrely unfair; it’s a recipe for economic perfidy; a calculus for ruining national prospects in an increasingly competitive, technologically treacherous world.

Give all kids an early start on the state’s dime and they will return that investment a thousand times over – in critical thinking, empathy, intellectual courage and great, learned humour.

Watch the evils of poverty dissolve before them.

That’s a common front we should all get behind.

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Jan 07 2015
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Economy, Oil and Gas

The economic pendulum swings again

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The grand expanse that is Canada guarantees that one of the iconic realities of our national character remains our ability and willingness, when necessary, to pull up stakes and head for wherever the pastures grow greenest.

Rarely, of course, has that been Atlantic Canada.

Most often – at least since Confederation made honest European invaders of some of us – the Elysian fields of our economy have been located in Ontario, the country’s traditional manufacturing hub. That’s where, as the late, great Stompin’ Tom Connors once famously wrote, “the Maritimers all go.” 

Or, they did.

Over the past decade, or so, the big employment draws have been the tar sands of Alberta and the surrounding support industries of the oil and gas sector in Saskatchewan and British Columbia. That’s where, lately, my friends and former neighbours sojourn – driving trucks, working back-office jobs and otherwise punching gilded time clocks.

Or, again, they did.

Now, the shift – as inevitable as the ebb and flow of an ocean tide – begins again, and one of Canada’s leading financial institutions, the Royal Bank, is sounding almost chipper.

“There has been considerable discussion about the negative impact of falling oil

prices on the Canadian economy,” Bank economists Paul Ferley, Nathan Janzen and Gerard Walsh write in a recent monograph. “This has been reinforced by anecdotal reports about oil-producing companies cutting back on investment spending particularly within the oil sands. However, as we have emphasized in earlier commentaries, there are offsetting positive outcomes from lower oil prices.”

The first, and most obvious one, they note, is the concurrent boost to the U.S. economy, on which Canada depends for much of its export business (some $300-billion a year). “A stronger U.S. economy implies a growing market for Canadian exports. This is the case despite the recent expansion of oil production in that economy reflecting greater utilization of shale oil reserves. Though the U.S. oil and gas sector is likely to see reduced investment activity, its share of overall capital spending is relatively small.”

Secondly, falling oil prices depresses the value of the Canadian dollar relative to its American counterpart. Again, that’s good for domestic manufacturers and exporters, whose wares suddenly cost less to American buyers.

“The third key offset,” the economists report, “is that Canadian consumers will also be looking at lower gasoline prices that will provide an attendant boost to consumer spending domestically. It is of note that while business investment is a sizable 13 per cent of nominal GDP (including investment in intellectual property products), consumer spending is a massive 54.3 per cent. Thus, a small rise in consumer spending can go a long way to offsetting a marked drop in investment.”

All of which has Ontario Premier Kathleen Wynne fairly salivating. And why not?

For years, that once-mighty, supremely confident, magisterially self-important province, has suffered the indignities that $100-per-barrel oil has wrought on its manufacturing-export economy, including an ignominious slump into have-not status in the federal equalization formula. Now that the price of benchmark West Texas Intermediate oil has settled below $53 a barrel, Ms. Wynne is doing her level best to appear generous.

“Ontario’s economy can be a buffer,” she told the Globe and Mail last week. “We have a diverse economy and it can be a buffer in a time like this, against some of that volatility. I don’t wish for low oil prices and a low dollar for Alberta. But at the same time, we want our manufacturing sector to rebound. So if that (low oil price) helps, then that’s a good thing.”

In reality, though, as long as Canada’s value to the world is predominantly measured by the oil and gas it extracts and the pipelines its builds – which has been the common hymn, soulfully trilled by the western caucus of the reigning Conservative Government in Ottawa – volatility, and all that this implies, is likely to be the national economy’s organizing principle for years, even decades, to come.

Shall we now expect a new wave of pink-slip-bearing, prodigal Maritimers returning to their roots down home, where the pastures are, if not exactly green, a little less brown than they seemed not so long ago?

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Jan 06 2015
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Climate, Economy, Energy, Oil and Gas

Juicing up the conversation about oil

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It may be a necessary evil with a preternatural tendency to warm the atmosphere, but it sure tanks at cocktail parties. Face it, after more than 100 years of reshaping the world in its own oily image, fossil fuel is, fundamentally, a crashing bore.

Almost no conversation about the stuff begins with, “Hey, here’s something I bet you didn’t know about oil and gas. . .” or “A funny thing happened on my way to the refinery the other day. . .”

Even those snippets about petroleum with the greatest potential to inspire mild surprise are rarely discussed in polite company, most likely because we know that, these days, such discussions lead to nowhere good and nothing ennobling.

Of course, that doesn’t stop the spin-meisters of Big Oil from doing their level best to remind consumers of the western world that without them, and the resource they plunder as a matter of quotidian purpose, we’d all come well and truly undone.

“Life without oil? Impossible!,” declares a web page from the corporate site of Wintershall, a subsidiary of the many-tentacled mega-squid from Germany, BASF. “Within our daily lives oil is used almost everywhere: Every year, 18 million tonnes of crude oil are processed into synthetic materials in Germany. Oil within our materials: 40 percent of all textiles contain oil; for functional clothing this may be as much as 100 percent. Oil within our leisure activities: 40 billion liters of oil a year are used to make CDs and DVDs. Oil helps us relax: A single sofa contains 60 liters of oil. Modern life is inconceivable without crude oil. . . the most important natural resource of industrialized nations. The world consumes almost 14 billion liters of oil each day. This affects us all.”

Yada yada. So does oxygen, but you don’t hear me go on about the stuff.

Besides, just because we use oil in, and for, everything, except maybe coffee creamer (and the jury’s still out on that), doesn’t mean we should or even must. I seem to recall a rather successful series of pre-oil civilizations – beginning with ancient Sumerian and ending with early Victorian – that did rather well for themselves without benefit of plastic water bottles and nylon thread.

Still, there might yet be a way to make fossil fuel more interesting and, therefore, less repugnant to the chattering classes.

How many products, for example, that contribute to a cleaner, greener world actually involve oil at some level?

Now that’s a question worthy of any late-night salon.

A link to a page of the Pembina Institute’s website (helpfully provided by a reader last week) begins the quest.

“Only a few tidal energy sites are in operation around the world,” the clean-energy think tank reports. “Larger sites include the White Sea in Russia and the Rance River in France (the largest site in the world). Smaller tidal power plant have been built in Canada, such as the site at Annapolis Royal in Nova Scotia, and several in Norway. Together they have a total capacity of less than 250 MW. However, the potential for tidal energy is immense; potential global tidal power exceeds 450 terawatts, most of it in Asia and North America.”

Meanwhile, according to the Canadian Wind Energy Association’s web site, “wind energy is more cost-competitive than new sources of energy supplied by coal with carbon capture and storage, small hydro or nuclear power. The fuel that turns wind turbine blades is free and the price of electricity it produces is set for the entire life of the wind farm. Long-term cost certainty of wind farms have a stabilizing effect on electricity rates, providing important protection for consumers. Unlike other energy supply alternatives, the cost of building wind energy continues to decline, with dramatic drops over the past three years. Wind projects have very short construction periods and can be deployed quickly with many benefits delivered to local communities.”

What does any of this have to do with fossil fuel?

It is as Wintershall claims: Oil’s in just about everything, including the plastic components that comprise tidal generating arrays and wind turbines.

Now, if we could deploy our marvelous primate minds to the front lines of innovation for a change, and determine how best to limit fossil fuel’s uses solely to meritorious ends, we might actually start a conversation worth having.

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Jan 02 2015
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Economy, Energy, Politics

Shale gas greets new catchwords in 2015

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There is, as Ecclesiastics declares, nothing new under the sun; there is only the same, old trend, fashion or fad, freshly washed, dried, dressed, shod and shoved, once again, onto the super-highway of human history and told to survive if, indeed, it dares.

And, so, welcome to 2015 my dear “social licence to operate”. May we call you “social licence”? It’s shorter and that might be good for your image. Lord knows you’re going to need all the help you can get this year.

Actually, as shibboleths go, this is not a bad one. It’s not especially jargony. It seems reasonably comprehensible. In fact, New Brunswick Premier Brian Gallant is confident enough in his own understanding of the term, he’s started to deploy it as invocation whenever he talks about the on-again, off-again shale gas industry in the province (which is now off again).

“There shall be no drilling,” he says (or in words to that effect) until the companies responsible for hydraulic fracturing obtain the appropriate amount of social licence to proceed.

To which Corridor Resources’ CEO Steve Moran recently shrugged: “Huh?”

His actual words to CBC News were: “Even the premier when he was asked didn’t really have an answer in terms of what that means.”

Tory Opposition Leader Bruce Fitch concurred, as Premier Gallant attempted to clarify his position, telling the CBC, “We’ll certainly do the best we can to get the pulse, and the sense of New Brunswickers on whether any of these operations. . .have a social license.”

In fact, though, there’s no great mystery around the meaning of “social licence”. The mining industry has plumbed the nuances of its definition for years, or so says the Fraser Institute, an economic and public policy think tank with offices in Vancouver, Calgary, Toronto and Montreal:

“The  social licence to operate (SLO) refers to the level of acceptance or approval by local communities and stakeholders of mining companies and their operations. The concept has evolved fairly recently from the broader and more established notion of ‘Corporate Social Responsibility’ and is based on the idea that mining companies need not only government permission [or permits] but also ‘social permission’ to conduct their business.

Indeed, the Institute states, “Increasingly, having an SLO is an essential part of operating within democratic jurisdictions, as without sufficient popular support it is unlikely that agencies from elected governments will willingly grant operational permits or licences. However, the need for and ultimate success of achieving an SLO relies to a large extent on functioning government and sound institutions. . .Many mining companies now consider gaining an SLO as an appropriate business expense that ultimately adds to the bottom line.”

If all this seems broadly familiar – just another way to renovate good, old “corporate social responsibility” (or CSR) and slap a “priced-to-sell” sticker on the front door – experts in these matters beg to differ (naturally).

“CSR is often too peripheral to the core business model, too much of a side-show, too far from providing real ‘shared value’,” writes John Morrison, executive director of the Institute for human rights and business, in a recent issue of the Guardian online. “Even more fundamental are the false dichotomies that CSR has set up. There’s the voluntary versus mandatory debate, companies that are ‘good at CSR’ are valued regardless of the impact of their core operations.”

What’s more, Morrison insists, “Social licence can never be self-awarded, it requires that an activity enjoys sufficient trust and legitimacy, and has the consent of those affected. Business cannot determine how much prevention or mitigation it should engage in to meet environmental or social risk – stakeholders and rights-holders have to be involved for thresholds of due diligence to be legitimate (sometimes even if these are clearly determined in law).”

Herein, of course, lies the rub.

Like its predecessor and memetic forebear CSR, social license, as a concept, is not especially difficult to comprehend or articulate.

What challenges policy makers, politicians, community representatives and industrial players, themselves, is making it work well or long enough to produce sufficient benefits to satisfy all competing competing interests at the table.

This is rendered all the more complicated by the fundamentally revokable nature of social licences. A company that meets its obligations in one area on any given day may not be deemed to have done the same elsewhere at another time.

Then what?

Under such circumstances, Premier Gallant’s shale-gas moratorium may be the lesser of two evils facing the industry in New Brunswick.

Then again, what else is new?

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Dec 23 2014
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Economy, Government

Fun and games with fanciful figures

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David Chaundy of the Atlantic Provinces Economic Council (APEC) asks a question of such thoughtful irrelevance, it’s stunning that no other professional numbers-cruncher has, to my knowledge, raised it.

If you had $56 billion what, would you do with it?

Mr. Chaundy’s challenge to readers of one of his recent commentaries for APEC is equal parts whimsy and gravitas; it stems from a metaphorical gauntlet he threw down to delegates to a recent business outlook conference.

The context, he writes, is the federal government’s Fall Fiscal Update of November 12, in which the finance department “revealed a projected $56 billion in surpluses over the next five years, beginning in 2015/2016. . .Since the government is not going to make you and your friends into overnight billionaires, how would you use these projected surpluses to advance Atlantic Canada’s economy?”

There is, of course, a catch. The feds have already committed to spending $26 billion over five years by introducing the Family Tax Cut, or income splitting ($10.3 billion); increasing the family child care benefit ($13.4 billion); raising the limit on tax-free savings account contributions ($2.3 billion); and investing in infrastructure ($1.3 billion).

That leaves you with a mere $30 billion with which to go to Hawaii and, as the accountants say, get permanently lost or, in the alternative, save the Atlantic Canadian economy for Queen and country.

The honourable route is not as easy as it looks, but Mr. Chaundy embarks jauntily, nonetheless . “Adjust transfers to the provinces,” he advises. “Ensure sufficient infrastructure funding (and) focus on globally competitive innovation.”

Regarding his first prescription, he notes astutely, “By tying the size of transfer programs such as Equalization and the Canada Health Transfer to the growth in the overall economy, the federal government has provided itself with greater fiscal certainty and largely insulated itself from the fiscal impacts of population aging. This is not the case at the provincial level.”

Mr. Chaundy endorses the Parliamentary Budget Office’s recommendation to restore the Canada Health Transfer growth rate to six per cent and factor a sliding scale of regional benefits based on provincial age demographics. Such moves could mean an addition $500-600 million to the Atlantic provinces over the next five years.

As for infrastructure, he writes “The Canadian Centre for Policy Alternatives estimated that underinvestment in infrastructure in Canada amounted to a gap of $145 billion: Canada needs to spend $20-30 billion a year for ten years on top of current spending to return infrastructure spending to historic levels.”

Atlantic Canada’s portion could amount to some $670 million annually if the funding formula was a per-capita calculation. “But if distributed according to need, the Atlantic provinces would receive proportionately more due to the region’s older infrastructure.”

Finally, on the subject of innovation, Mr. Chaundy is as clear as every other economist in the developed world: No amount of spending on social services or, indeed, infrastructure will actually goose a jurisdiction’s earned incomes and overall net worth. “What is critical for the region’s growth are firms that are export oriented and that have differentiated their products and services in the global market through their proprietary technology, specialized competencies or superior quality of their products or services.”

Mr. Chaundy suggests the federal government ponies up an additional $1 billion a year. (That’s not, in fact, a heck-of-a-lot when you consider the several, different diverse economies functioning within individual provinces. Does Newfoundland and Labrador’s offshore oil and gas industry resemble, either in the skills it requires or the technology it deploys, anything remotely comparable on Prince Edward Island?)

The new money could be used to help businesses leverage private sources of funding for innovation, technology commercialization, strategic alliances, mergers, and expansions.

All of which makes eminently good sense and, in fact, always has.

For several decades, two of Atlantic Canada’s great fiscal burdens have been the cost of providing for its disproportionately older workforce and comparatively ancient infrastructure. Both have siphoned off public money that might otherwise have been spend on economic capacity-building exercises of the type Mr. Chaundy describes.

Still, these mind experiments always remind me of those times when, in weak and weary moments, I daydream about winning the lottery.

Let’s see. . .If I had a million dollars, $10 million, $50 million. . .what would I do?

Something or someone always arrives to shake me out of my reverie.

This time, it’ll be falling oil prices.

Hello resource economy.

Goodbye surplus city.

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