Category Archives: Economy

Nov 28 2014
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Economy, Education

Why Quebec must hold the line on childcare programs

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When, in 1997, the Quebec government introduced publicly subsidized, universally accessible childcare for just $5 a day, regardless of the socio-economic conditions of its subscribers, a great hosannah arose from the province’s hoi polloi and advantaged, alike.

And for good reason.

One of the early thought-runners of this grand experiment was University of Montreal  psychology professor Camil Bouchard who concluded, in the early 1990s, that anything governments can do to produce an atmosphere in which children feel loved, wanted and cherished can only benefit society’s clear-eyed goals for longterm economic development.

To be sure, this was, by no means an original observation. After four decades, beginning in the 1950s, Sweden, Finland, Norway and Germany were only just beginning to see, in the 1990s, durable results from their respective early childhood education programs.

But, by 2008, nine years after it launched its provincial childcare agenda, Quebec had become the envy of, and the model for, the developed world.

“Based on earlier studies, we estimate that in 2008 universal access to low-fee childcare in Quebec induced nearly 70,000 more mothers to hold jobs than if no such program had existed – an increase of 3.8 per cent in women employment. By our calculation, Quebec’s domestic income was higher by about 1.7 per cent, or $5 billion, as a result.”

That came from Montreal economist Pierre Fortin, who was commissioned by provincial bureaucrats to dispassionately conduct a cost-benefit analysis of the Quebec program.

He continued: “We ran a simulation of the impact of the childcare program on government own-source revenues and family transfers and found that the tax-transfer return the federal and Quebec governments got from the program significantly exceeded its cost.”

Or, indeed, as Clement Gignac – a senior vice-president and the chief economist at Quebec-based Industrial Alliance Insurance and Financial Services stated in the Globe and Mail earlier this year, “It may seem counterintuitive to talk about a social program as a means of wealth creation. . .but it can also raise the standard of living.”

And how.

Consider the oft-repeated observations of T-D Bank’s chief economist Craig Alexander last fall: “Raising investment in early childhood education would bring long-term benefits. Most studies show that a one-dollar investment reaps a long-term reward return of 1.5-to-3 dollars. . .It is true that raising Canada to the average level of investment in other advanced economies would cost $3- to $4-billion, but that is evidence of the magnitude of underinvestment at the moment.”

All of which makes the Government of Quebec’s recent decision to cut back (or raise fees on) its demonstrably successful, universal childcare program downright bizarre. That province’s budgeting process is, unfortunately, falling prey to bureaucratic thinkers who perceive that all line items on an expenditure sheet can support equal measures of tolerance and  intolerance. For these factotums, a spread sheet is just a spread sheet.

The truth is, or should be, patently obvious: The social and economic advantages of a universally accessible system of early childhood education are far more compelling than the outright waste, patronage and bizarrely partisan schemes of most sitting governments.

Millions go to roads that are never built. Millions more go to favoured constituencies for special “ceremonial” events that produce nothing but short-term jobs and, when strategically juxtaposed with political ambitions, votes for favoured sons and daughters of a fundamentally skewed political system.

Billions of dollars are cavalierly dedicated to industries whose bottom lines, without public injections of capital, most developing countries would envy.

And all the while, provinces like Quebec poor-mouth their circumstances; they say with straight faces and crocodile tears that they can no longer afford the few social programs that they actually do right, ones which actually generate the human capital that is, in fact, necessary to lifting themselves from the doldrums they, and only they, have engineered.

As Quebec Premier Philippe Couillard rose solemnly in the National Assembly to express his deep disappointment in the state of his province’s finances this week, his staff was taking note of the vast sums the publicly owned hydro utility generates each and every day through exports to the northeastern seaboard of the United States.

Yes, indeed, in this country, we make sure to look after our money.

We’d be richer, in the long run, if we learned how to look after our kids.

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Nov 27 2014
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Economy, Energy, Environment, Oil and Gas

Would fracking turn New Brunswick into North Dakota?

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For those of the anti-shale gas, “I-told-you-so” bent, a New York Times piece from last Sunday’s edition about the utter mess – both figurative and literal – North Dakota’s oil and gas regulators are making of their state provides for some delectable reading.

Some of us will peruse the weighty tome (it runs close to 5,000 words) with mock horror and secret delight as we study a jurisdiction so fascinated by the economic promise new, horizontal drilling technologies represent that it has, with few exceptions, thrown environmental caution to the wind of commerce.

As the Times article makes plain, “Since 2006, when advances in hydraulic fracturing. . .began unlocking a trove of sweet crude oil in the Bakken shale formation, North Dakota has shed its identity as an agricultural state in decline to become an oil powerhouse second only to Texas.”

But, according to the newspaper’s independent investigation, using “previously undisclosed” sources of information, “as the boom really exploded, the number of reported spills, leaks, fires and blowouts has soared with an increase in spillage that outpaces the increase in oil production,” partly because (or so the implication goes), “forgiveness remains embedded in the (North Dakota) Industrial Commission’s approach to an industry that has given (the state) the fastest-growing economy and lowest jobless rate in the country.”

When the Times says “forgiveness”, it’s not exaggerating. Its research indicates that, since 2006, the Industrial Commission has collected a little over $1 million in penalties against oil and gas companies found culpable in environmental accidents. That compared with $33 million in Texas – no state of tree-huggers, it – during the same  eight-year period.

In other words, writes the Times, North Dakota is a “small state that believes in small government. . .It took on oversight of a multi-billion-dollar industry with a slender regulatory system built on neighborly trust, verbal warning and second chances.”

Meanwhile, “over all, more than 18.4 million gallons of oils and chemicals spilled, leaked or misted into the air, soil and waters of North Dakota from 2006 through early October 2014. The spill numbers derive from estimates, and sometimes serious underestimates, reported to the state by the industry.”

This is, of course, just the kind of thing opponents of shale gas development in New Brunswick fear: The ready collusion (or, at least, the appearance of one) between those who would rape the good earth for its booty of fossil fuels and those who are empowered by law to protect the environment from such ritual violations.

After all, they insist as they point to their smudged copies of last week’s Times, if it can happen in North Dakota, it can just as easily happen here.

In fact, they’re not entirely wrong.

The slope to ecological perdition is, indeed, slippery, made all the more so by the oil and gas industry’s unquenchable thirst for growth. When a province, like New Brunswick, or a state, like North Dakota, believes it has few options to forestall economic collapse, it will, more often than not, sell out to the highest bidder with the fanciest drilling technologies and most accessible checkbooks.

Still, when a province or state has more things going for it, economically speaking, than simply its natural resources, there’s little temptation to relax regulations and oversight to buffoonish parodies of themselves.

The question is whether New Brunswick is anything like North Dakota?

In fact, there may exist some disturbing similarities between us. Over the years, we’ve both suffered from stubborn levels of underemployment, a perennial skills drain, a creeping fiscal morass, declining public revenue, and outmigration.

But our differences make a far more compelling argument that New Brunswick is better equipped than its American doppelganger to stick to its regulatory guns.

We have a history of protest against shale gas, especially hydraulic fracturing; North Dakota does not. We have a tradition of strong, involved central government; North Dakota likes to have its libertarian pie and eat it, too.

What’s more, New Brunswick already has, in place, a reasonably strong set of regulatory injunctions, starting with a moratorium (or, rather, the threat of one) on tight oil and gas drilling until the current Liberal government is satisfied about its safety.

All of which, perhaps, affords us the moral authority to tsk and cluck at our friends south of the border. They blew it.

But their bad examples should not lead us to assume that we are doomed to set our own, should we ever get around to believing in ourselves again.

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Nov 27 2014
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Economy, Energy, Oil and Gas

The perils of East Coast pipeline politics

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On the energy front, perhaps we should not have been so quick to assume that Maritime economic priorities neatly dovetail with those of Ontario and Quebec. After all, when have they ever?

Indeed, if there was a time when political leaders in New Brunswick considered  TransCanada’s eastbound pipeline project a slam-dunk, that time is over, which leaves the province’s new Liberal premier Brian Gallant with yet another post-election migraine.

According to a Globe and Mail report last Friday, “Quebec Environment Minister David Heurtel sent a letter to (TransCanada) chief executive officer Russ Girling laying down seven conditions (the company) must meet to win the province’s support for the (Energy East) project. With his letter, Mr. Heurtel established conditions similar to those adopted by British Columbia Premier Christy Clark for Enbridge Inc.’s controversial Northern Gateway pipeline that would deliver oil sands bitumen to Kitimat for export to Asia, though his tone was somewhat more agreeable than Ms. Clark’s has been”.

Specifically, “Mr. Heurtel’s conditions include the need for public acceptance of the project, for proper consultations with First Nations, and for clear economic and fiscal benefits for Quebec, as well as assurances to gas customers. Mr. Heurtel also cited a National Assembly resolution demanding the government assess the impacts of ‘upstream”’GHG emissions – those produced by extracting the oil – for the pipeline that would carry 1.1 million barrels a day of western crude to market. But he was vague on whether the government will assert the right to block the pipeline.”

Ontario, too, wants environmental assurances and pledges from TransCanada that its newfound interest in shipping western bitumen through its territory en route to Saint John’s refinery will not overwhelm priorities to make supplies natural gas available to central Canadian industry.

Meanwhile, Premier Gallant is scrambling to put the new developments in the best possible light. “I will meet with Quebec Premier Philippe Couillard to talk about the fact that we are certainly behind the project,” he told reporters on Friday. “For us, what’s important is to assure when we can do it in the most safe and secure way possible. It’s one of the reasons why I read about the project at length two years ago. When we put the project into motion, I was already aware that we can do this in a secure way.”

Of course we can. But that’s not really the point. These days, pipelines are symbols of industrial rapacity and environmental carelessness. As such, they are marvelous for galvanizing public opinion against any expansion of the fossil fuel industry, as Maude Barlow, no shrinking violet on the subject, demonstrated last year.    

Regarding the Energy East proposal, the national chairperson for the Council of Canadians, told her interviewer from the North Bay Nugget,  “I want to let communities know not to be pressured to make a decision or risk not getting the benefits of the pipeline. I can tell you there are no benefits. There’s no argument for this pipeline. It’s an export pipeline and we don’t need it. . .We get the risk and (oil companies) get the reward,” adding “I would like to know what are the big jobs, because this pipeline is for export. It’s about greed. They’re playing with a potential environmental catastrophe that environmentalists have been warning about. . .It’s so much more dangerous (than any other oil) and it’s crossing watersheds and many waterways around the Great Lake Region that are already being threatened. We certainly don’t need to add to that threat.”

Naturally, TrabsCanada couldn’t let that go. It responded with its own statement:

“Quebec and New Brunswick currently import more than 700,000 barrels of oil every day – or 86 per cent of their refinery needs – from countries such as Algeria, Iraq, Saudi Arabia and Nigeria. At current oil prices, this is over $75 million drained out of the Canadian economy – every single day. Energy East proposes to connect Western Canada’s resources to Eastern Canada’s needs. Greater supplies of domestic crude would improve the financial viability of eastern Canadian refineries by giving them access to less-expensive, stable domestic supplies.”

Of course, for Mr. Gallant, it could be worse. He could start talking enthusiastically about shale gas.

Let the protests commence.

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Nov 20 2014
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Economy, Government

New Brunswickers: It’s time to go big and stay home

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Recent research out of the University of New Brunswick suggests that time never courses backward but only and inexorably moves forward until time, itself, has nowhere else to go in the deep, dark, mournful realm of all creation.

Sort of like the New Brunswick economy, if you think about it.

Still, as they say, misery loves company.

Now look who’s entering the cosmic pity party: the Province of Ontario with its $12.5-billion annual deficit and its $300-billion debt. (Not for nothing, on Tuesday morning just after sunrise, the mercury in Toronto barely cracked 18 below).

So, then, what else is there for us on our sea-bound coast to do but welcome our fellow travellers in penury, paucity and poor fiscal management from the centre of the formally gilded universe? Indeed, let us sympathize with, not rejoice over, their plight (which, on the East Coast, would be a feat of saintly sentimentality).

Once upon a time, Ontario was the undisputed king, among Canadian provinces, of economic opportunity. It was the place, Stompin’ Tom Conners insisted, where the “Maritimers are told. . .They always get a pot full, but they never get a pot of gold.”

When I was but a mere pup growing up in the Yorkville neighbourhood of central Toronto, newspaper editorialists routinely derided the “windbreaker-and-mutton-chop” crowd (that is to say, under-employed Maritime men) who hung out down the road a piece by the railway lands, at Front and Spadina, hoping to score a few bucks worth of day labour before the shelters closed for the night.

Now, they’re at it again, except this time, 40 years later, there are no more railway lands and the ones who beg for tuppence are not Maritimers; they’re true, blue Ontarians at the corner of Yonge and King who haven’t yet managed to pull together enough large change to book their flights to Alberta, the new centre of Canada’s economic universe, where money, don’t you just know, flows as freely as oil in the streets of Fort Mac.

According to David Parkinson, the Globe and Mail’s economic reporter, writing in the Tuesday edition of that venerable publication, “In Ontario, the key takeaway (from Finance Minister, Charles Sousa’s fiscal update on Monday) was that the province’s struggle to rein in its chronic budget deficits is getting harder. (Mr. Sousa) reported that revenue for the 2014-2015 fiscal year, ending March 31, now looks to be more than $500-million short of what the province had budgeted last spring. The tepid provincial economy is growing even more slowly than the government had hoped, and that is slowing tax revenue.”

In fact, Ontario, economically speaking, has been a shadow of its former self since the 2008 recession all but eviscerated its once unassailable manufacturing base. Once, this sector accounted for 28 per cent of the province’s GDP growth; today it’s responsible for a paltry 11 per cent of annualized 1.4 per cent expansion. And that’s not likely to change in the near, even long-term future.

All of which inspires many economists to wonder whether Ontario will ever fully recover its economic mojo. Already, it has become a “have-not” equalization province, claiming $3 billion a year in domestic aid from Ottawa.

Sound familiar?

Here, in beautiful New Brunswick, we endure rolling, yearly deficits of between $300- and $500-million on a structural debt of $12 billion. Demographically (Ontario’s population is 15 million; ours is 750,000 on a good day) that actually puts us deeper in the fiscal soup than our cousins in Upper Canada.

Where Ontario’s manufactures have taken near-mortal blows, New Brunswick’s resource industries have suffered the death of a thousand cuts. In both places, exports – the lifeblood of the national economy – have been moribund for years.

None of this is fatal, of course. Imagination, innovation and hard work can, and does, reverse pernicious outcomes in the lives of people, communities, provinces, and even nations.

But as long as we insist on being bystanders to our fate – as long as we elect governments that propagandize the virtues of abandoning our homes to become vassals of other, more economically robust jurisdictions – we are forever doomed.

In this, at any rate, time does not progress or regress.

It simply stands still.

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Nov 14 2014
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Economy, Government, Politics

A financial tale of 14 solitudes

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Predicting years of fiscal health for the Canadian economy is like forecasting a warm winter for the customarily Great White North.

In some places across this vast country, conditions will be delightfully luscious; in others, downright lugubrious.

That said, according to news reports, the federal government is set to announce a trifecta, and maybe more, of solid annual surpluses totalling about $15 billion. If it manages to pull off such a feat, Harpertown will likely go down as one of the nation’s most prudent, careful administrators of other people’s money in modern times. And, indeed, bully for it.

“Strong job growth and tight spending will allow Finance Minister Joe Oliver to confirm Ottawa is poised for years of budget surpluses,” the Globe and Mail declared this week. “That scenario – which is the result of near historic lows in both government spending and revenues as a percentage of the economy – fits with Conservative pledges of low taxes and smaller government. It also presents a clear challenge for the opposition New Democrats and Liberals, both of whom have promised to increase spending in big-ticket areas.”

Still, the slow-and-steady expenditure strategy of the Tories, coupled with tax-rate moderation, are not without their perils.

For one thing, they depend on continued economic recovery over the period of promised surpluses. With a national unemployment rate of 6.3 per cent (substantially better than the predicted 6.6 percent for the last half of 2014), the Feds are happily confident that they’ve called labour market trends correctly.

But this assumes that the participation rate (the number of people actively looking for work) will remain robust overall. In some places, like Alberta, Saskatchewan and British Columbia, it will. In others, like New Brunswick, Nova Scotia, Ontario, and Quebec, the story is dramatically different, especially among young people – a cohort that is, increasingly, discovering that gainful work is harder to find than to actually perform.

Then there’s the hoary problem, once again looming on the horizon, of global economic uncertainty and weakening commodity prices for some of Canada’s most important resources – namely oil and gas. For about a year, this country’s petroleum producers have enjoyed a rare respite from OPEC pricing, thanks to steady demand from the United States and a low currency valuation, relative to the U.S. dollar.

Again, though, that could change if the Harper government’s recent trade deals with the European Union and, particularly, China, eliminate the advantageous export implications of the loonie’s float in world currency markets.

Apart from any of this macroeconomic mumbo-jumbo, though, there is the socio-economic stratification of Canada’s domestic economy to consider. Call it our 14 solitudes, one for each province, territory and, of course, Ottawa, itself.

It’s one thing for the Centre to judge itself well and fully solvent. It’s quite another to extend that merry conclusion to the circumstances that frame the provincial and territorial partners in Confederation.

The federal government’s success has come, in large part, due to its determination to hold the line on Constitutionally mandated spending on public health care, education and Employment Insurance. The burden of this approach on rich provinces has been negligible. The same can’t be said for those whose populations of ready, skilled workers are shrinking, even as their ranks of aging retirees are swelling.

As ever, the numbers tell the tale.

While Ottawa amasses enough lucre to predict three or five years of $2-5-billion annual surpluses, New Brunswick is facing, in all likelihood, three or five years of mounting annual deficits nearing $400-500-million in each fiscal period. Each pernicious term merely expands the provincial government’s already bloated $12-billion long-term debt, effectively crippling any meaningful, government-supported economic development (investments in innovation, higher education, even early childhood education).

The same pattern repeats in Nova Scotia, Ontario, Quebec and even, astonishingly, in oil and gas-rich Newfoundland and Labrador, which will lose its dubiously valuable “have” status  soon if it’s not careful.

So, yes, bully for Ottawa. It has managed to balance its books to the benefit of every Canadian.

It remains to be seen, however, which Canadians will benefit most from such probity – who will enjoy the warmth, and who will be left out in the cold.

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Nov 12 2014
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Economy, Government, Politics

In New Brunswick, all roads are leading to nowhere

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When we reach the end of our ropes, I wonder if we’ll ever look back and reckon the moments when we might have done something but, defiantly, didn’t.

Of course, looking back is what we do peerlessly well in this province.

If a sense of entitlement, broad anger, bold arrogance, and a slavish devotion to dead leaders is any indication, then sentimentality and nostalgia are our greatest market capitalizations – the ones we offer to the world.

The problem is, simply, that the world isn’t buying any of it.

In fact, the world is beginning to laugh its collective butt off at the spectacle of New Brunswick’s quasi-serious posturing to become anything but a welfare state in, paradoxically, one of the richest, most economically accomplished nations on Earth.

Here, in one corner, is a series of single-term governments vowing to balance their budgets and retire their long-term debts over periods in which they have no mandates.

They choose to do this by keeping one of the nation’s largest civil service rolls, relative to the general population, largely intact, and nibble around the edges of gold-plated public pensions, for fear of inspiring any more court challenges to their electoral credibility.

Here, in another corner, is the current Liberal government inveighing against a proven, effective, efficient and reliably responsible form of gas extraction in New Brunswick, even as it welcomes, arms open, the construction of a pipeline, carrying some of the dirtiest crude oil on the planet, from Alberta’s tar sands (yes, folks, not oil sands) to an East Coast refinery in Saint John. Throughout, the distinction fails to make any difference to public policy.

Look there, in another corner, and you’ll find one local burgermeister battling another for scraps from the federal government’s now-ancient Economic Action Plan.

One wants a hockey rink and will do anything to persuade Ottawa, and the provincial government, that he has the best interests of his community’s fat, bloated, Internet-addicted youngsters in mind (even as the federalistas do their level-best to keep the next generation of voters firmly planted in their cushy chairs with appeals to low-cost providers of full-spectrum, online infotainment).

The other wants a soccer pitch and will bend over backwards to convince Harpertown, and Freddy Beach, that his motives are pure, even though his ulterior angles have more to do with boosting his electoral prospects, year after year after unchanging year, than they do with true, durable, sustainable community development.

Meanwhile, the old people keep dying; and the young ones keep leaving.

Away, the youth cry, away. Maybe, they allow, they’ll come back when things get better, when life improves.

When, I wonder, will that great regeneration occur?

Now, we are reliably informed, New Brunswick’s unemployment rate has dropped for the first time in a very long while. That should be good news. But statistics can also be cruel mistresses. Read between her lines and you understand that fewer people in this part of the country are actually looking for work, so impoverished are the opportunities for gainful employment here.

Now, according to economic think tanks, this province’s major capital projects are in limbo, because if we can’t guarantee that we’ll capitalize on what is literally in our own backyard, we are unlikely to persuade anyone else to invest there.

Or, as Atlantic Provinces Economic Council President Elizabeth Beale said last week in Saint John, “The investment activity coming into (Newfoundland and Labrador) to develop the large oil and gas fields. . .has completely revolutionized their economy and it has driven up very strong wages. Consumer spending there is very high. Employment income has grown. Young families are moving into the province because there are jobs now where there weren’t in the past, so, obviously, if you don’t have that kind of investment, you are going to see things proceed on a much slower path. . .It doesn’t mean nothing is going to happen. . .Good things can still go on here (in New Brunswick), but it does mean you have lowered your horizon in terms of your expected growth in the province.”

And, in the process, we have lowered the horizon on our province’s future.

On that, too, we might someday look back in jaw-dropping wonder.

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Nov 07 2014
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Business, Economy, Education

Will work for nothing? You’re hired

Put this kid to work. . .for free

Put this kid to work. . .for free

It must be awfully nice up there in his big office, shuttered with gilded blinds that stop the stark light of reality from reaching impertinently to his leather chair. Perhaps that’s why Bank of Canada Governor Stephen Poloz likes to cheerfully blurt the odd absurdity from time to time.

Like this one to reporters in Ottawa on Monday:

“When I bump into youths, they ask me, you know, ‘What an I supposed to do in a situation?’ I say, ‘look, having something unpaid on your CV is very worth it because that’s the one thing you can do  to counteract this scarring effect. Get some real-life experience even though you are discouraged, even if it’s for free.”

Oh sure, I can just imagine Mr. Poloz bumping into “youths”. Why, it happens all the time, don’t you know. In fact, he must be plum tuckered out, what with all the questions about their futures Canada’s young people pose to him each and every day.

Why wouldn’t the $400,000-a-year fat cat throw up his hands in mock exasperation and, in effect, say: “Let ‘em eat cake”?

Or, more accurately, this to the House of Commons Finance Committee on Tuesday:

“Volunteer to do something that is at least somewhat related to your experience set, so it’s clear that you are gaining some learning experience during that period.”

Or this to Liberal MP Scott Brison (who worried that unpaid internships might favour kids from wealthier families, who could afford to stake their progency):

“There are issues like the ones you’re raising. . .but I still think when there are those opportunities, one should grab them because it will reduce the scarring effect, all other things equal.”

And while we’re about parsing Mr. Poloz’s recent ruminations, what is this “scarring effect” to which he refers?

Is it the humiliation of having to live in your parent’s basement because no one will give you a job that pays well enough to cover the monthly let on a cold-water flat down by the docks?

Or is it that empty feeling in the pit of your stomach that refuses to go away because you cant afford anything more nourishing than a tin of peanuts every other day?

Whatever it is, Mr. Poloz is, at least, on the bandwagon. Unpaid internships are all the rage these days.

A couple of years ago, the Daily Mail in the United Kingdom reported, “Firms across the country are increasingly relying on unpaid interns in a bid to cut costs in a tough economic climate, according to a new study. Bosses in the design and digital industry expect more work for less money, leading to fewer permanent staff members and more unpaid interns, according to think tank the Institute for Public Policy

Research, which carried out a survey of 500 agency workers.”

More recently, Susan Adams, a staff writer at Forbes, observed, “As the ranks of the unemployed have swelled and the surplus of jobless college students and grads has grown, increasing numbers of people young and old have been signing on for unpaid internships, wanting to make contacts and accumulate résumé lines that can help them get paying work.”

And according to a CBC report last March, “Unpaid internships are on the rise in Canada, with some organizations estimating there’s as many as 300,000 people currently working for free at some of the country’s biggest, and wealthiest, corporations.

The ranks of unpaid interns swelled in the aftermath of the 2008 economic recession, said Sean Geobey, a research associate with the Canadian Centre for Policy Alternatives and the author of a recent report entitled The Young and the Jobless.”

Still, a backlash does appear to be brewing. “This is not the sort of social contract that today’s kids saw their parents and grandparents grow up under,” Mr. Geobey said. “We’re starting to see Canadians – young people and their parents in particular – seriously question what exactly is going on here, and why are we apparently returning to 19th-century labour practices.”

I’ll make Mr. Poloz a deal. I’ll swap with him for a week. See how he likes it.

Mind you, my job’s not an unpaid internship.

Some days, it just feels that way.

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Nov 04 2014
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Business, Economy, Energy, Oil and Gas, Politics

It’s time to get clear on natural gas

Welcome to the energy big leagues, Mr. Premier.

Wheels upon wheels, gears upon gears, the squeeze play against Brian Gallant’s determination to impose a moratorium on hydraulic fracturing in New Brunswick – the preferred industry method for extracting natural gas, with water, sand and a proprietary soup of chemicals,  from sedimentary rock – has officially commenced.

Not that there’s anything especially surprising about Corridor Resources’ public insistence that 30 of its fracked gas wells supplies PotashCorp’s operations in the Sussex area of the province – to no ill effect on the water, soil and air – with a competitively priced, comparatively clean source of fuel with which to dry the fertilizer for market readiness.

Nor is their anything particularly shocking about PotashCorp’s addendum last week.

“Access to a secure, stable and sustainable gas supply is critical to our. . .longterm success,” New Brunswick General Manager Jean-Guy Leclair told the Telegraph-Journal. “While there are alternate fuel sources for our facility, they would have profound implications on our current and future operational costs.”

Read between the lines, Mr. Premier. That’s a palpable threat. By now, you must know this. What’s mystifying is why you apparently didn’t see it coming.

Or, perhaps, you did, and your hard line in the sand during the election campaign was merely a political gambit to win over some voters.

Maybe your strategists advised you to hold that line for as long as you could and then capitulate only when major industrial players left you no choice.

If I had been one of your back-room boys, I would not have counselled this: Stay true to your principles until such time as the oil and gas lobby intimates major job losses; then reverse course in the broader interests of economic development.

And, in the process, blame the big, bad bogey man of corporate Canada for forcing your hand. “The devil made me do it, folks,” you might plead. “What can I say?”

Whatever is the case, all of it has been poor politics, poorer public policy and a fundamentally bad start for a new government.

And it’s getting worse.

Cabinet solidarity is one of the rocks that grounds leadership in a parliamentary democracy. It tells the electorate that the men and women the premier has chosen has his or her back, and, in the process assures the great, voting unwashed that they haven’t made a colossal mistake at the ballot box.

So, under these circumstances, what are we to make of Mines and Energy Minister Donald Arseneault’s freelance, off-playbook commentary last week?

“I was the minister back in 2007 who struck the deal to attract that investment of $2.2 billion (PotashCorp’s expansion) to New Brunswick,” he told the Telegraph-Journal last week. “We do know that Corridor feeds gas to the potash mines, and for me that is a very important component. . .For me, PotashCorp is a major player in New Brunswick. . .The last thing we want to do is potentially put certain operations in jeopardy.”

Now, we cut to a Page 3 story in the same organ on the same day.

“No,” declared Premier Gallant, “for us, it is a hydraulic fracturing moratorium, and we’re certainly willing to meet with different operations, different businesses, all stakeholders and New Brunswickers to understand the best way to implement this moratorium.”

None of which actually clarifies anything, except that the young premier of this province understands practically nothing about energy politics and, far more troubling, he seems oblivious to the worries of at least one of his important lieutenants – the one in charge of, arguably, the most important economic portfolio.

What now shall we expect? Will a great muzzling commence?

There is a way, of course, to safely and responsibly frack for gas in New Brunswick. We’ve been doing it for years. As long as we adhere to the tightest regulations our democracy provides — with the most comprehensive environmental oversight common sense produces — we have an even chance to reduce our reliance on far dirtier forms of fossil fuel and maybe, just maybe, generate the economic incentive to fully transition into a renewable, sustainable society. There is nothing new in any of this.

What is new is that we, in this fine, elegant, innocent part of the world must face the fact that we need the hard, tough, clear leadership to get us where we need to be.

Welcome to the energy big leagues, New Brunswick.

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Oct 29 2014
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Economy, Energy, Oil and Gas

New Brunswick: Last stop on the trolly to the great hereafter

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And now for something completely obvious.

News flash: New Brunswick (Nova Scotia, too) is in the grip of its very own, made-in-the-Maritimes “death spiral”. The question, of course, is: what does the afterlife look like?

Former Premier and current Deputy Chairman of TD Bank in Toronto didn’t actually pronounce the time of this province’s passing – under the weight of its own inertia and all that sand that’s piled up around the hole into which its head has been stuck lo these many years – at a ballyhooed energy conference in Saint John last Friday. But he came darn close to pulling out the heart panels.

“Clear. . .zap. . .clear. . .again. . .clear. . .zap. . .clear.

In fact, Mr. McKenna said this: “Our regional economy is flatlining. We are depopulating. Our population is not just leaving; it’s getting older. It’s aging at twice the rate of Alberta’s. (Well, naturally it is, as that’s where capital markets and the current federal government encourage every mentally healthy, able-bodied young person in this country to go and become reliable, God-fearing taxpayers).

Here’s another snippet from Mr. McKenna’s all-too-familiar tirade against complacency:

“We are in an endless cycle of high deficits, declining population, higher interest rates and payments, a aging population, higher cost of services, less equalization, less personal income, higher taxes and consumption taxes. It’s a death spiral that we’re in if we don’t do something about it.”

Ah. . .and therein – as the Bard might have said, watching the surfer dudes ride the Pettitcodiac’s mighty tidal bore – lies the rub. What, indeed, is to be done?

We could eschew the costly histrionics surrounding shale gas development, based on a largely discredited “docu-drama” some years back, which featured (among other provocative absurdities) a guy lighting his tap water on fire (Reality check: the water table in upper Pennsylvania had been laced with trace amounts of methane long before fracking technology was the apple in the drilling industry’s eye).

We could concentrate on building the safest means – pipelines – of transporting crude oil from Alberta to Saint John and, in the process, create thousands of short-term, and hundreds of long-term, jobs for New Brunswick.

We might even work to leverage these energy opportunities to lure much-needed venture capital to the province for. . .oh, I don’t know. . .economic diversification away from natural resources and into educational centres of excellence that would pioneer commercially viable, sustainable, renewable, and exportable manufactures in the fields of wind, tidal and solar.

Or, we could go the other way.

We could put the province and all its lands and buildings up for sale to all those national and international bidders who boast the biggest coin in their pockets.

Dear China, the ad would read, “We, in New Brunswick, know how polluted your mega-cities are. Come on over to New Brunswick. We’ll treat you right fine. We’ll sell you our property, and we won’t even charge you minimum wage for the privilege of cleaning your kitchens and bathrooms – you know, the ones that used to be ours.”

Hey Alberta, we might exclaim, “We know you have our children in a ‘death-spiral’ of expanding expectations and blossoming debt. Someday, you know that bubble is going to burst. And when it does, you might like a safe haven to park your aging human capital.

“Consider New Brunswick as Canada’s preeminent retirement village. After all, as we never risked a damned thing on anything, including natural resources, our minds and hearts are clean. We are your last, best hope for a comfortable, easy death. . .Just bring your cheque books, because our B&Bs and private hospices are going to bruise those babies American-style.”

Indeed, given New Brunswick’s appalling fiscal condition, it’s dreadful demographic decline, its moribund economy, its listless and fearful political classes, it’s astonishing that this province has anything to offer the world or even its own people.

Of course, it is our own people – our entrepreneurs, in every shape, size, colour and stripe – who will (who must) save us from our collective inertia.

That, too, remains completely obvious.

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Oct 20 2014
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Economy, Energy, Oil and Gas

The perils of running a petro-economy

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Western oil magnates and their fellow travellers in government and media once crowed superciliously about their pride of economic place in Canada. They and they alone, they insisted, were responsible for the nation’s surging fortunes in global markets.

They still exult this way, though lately their gloating has become a tad muted thanks to the pounding the price of oil is taking on international commodity exchanges. West Texas Intermediate crude (WTI), the standard used to benchmark all grades, fell to $82 a barrel earlier this week. That was off by more than 10 per cent since the beginning of the month.

We wretched urchins on the East Coast may be tempted to indulge in a little schadenfreude when we witness the fear and loathing that cyclically descends on Alberta’s oil patch. Something about the best laid plans of mice and men rattle around in our brain pans as we watch yet another plane load of New Brunswickers abandon their unpromising, little towns for putatively greener pastures under big sky country.

But, in the broader context, when Alberta hiccups, all of us should worry.

For more than 30 years, economic planners and regulators at both the federal provincial levels have been slowly and deliberately transforming this country into an oil and gas giant. They have nurtured, with countless millions of dollars in publicly supported research and development and tax breaks, astonishing advances in drilling and extraction technologies. Now, we’re all dependent on this continued success, for without it, there’s precious little else to fall back on.

Today, Alberta companies employ nearly as many Maritimers between the ages of 18 and 35 – many of whom are the major breadwinners for their families back home – as do Atlantic firms. Over the past year, the bitumen-rich province generated all of the country’s net jobs growth, adding some 82,000 positions.

Currently, Alberta accounts for nearly a third of Canada’s GDP. According to Oil Sands Today, quoting figures compiled by the Canadian Energy Research Institute, “New oil sands development is expected to contribute over $2.1 trillion (2010 dollars) to the Canadian economy over the next 25 years – about $84 billion per year. According to Statistics Canada, $84 billion is enough to feed more than 90 per cent of Canadian households for a year.

What’s more, “The oil sands industry will pay an estimated $783 billion in provincial ($122 billion) and federal ($311 billion) taxes and provincial royalties ($350 billion) over the next 25 years.”

Meanwhile, “employment in Canada as a result of new oil sands investments is expected to grow from 75,000 jobs in 2010 to 905,000 jobs in 2035 with 126,000 jobs being sourced in provinces other than Alberta. . . .It is estimated the oil sands industry will purchase about $117 billion in supplies and services from Canadian provinces outside Alberta over the next 25 years – about $5 billion/year. For every direct job created in Alberta’s oil sands industry, approximately one indirect and one induced job will be created in the rest of Canada.”

All of which is swell, unless you’re an environmentalist worried about humanity’s rapacious ways with Mother Nature or, as the case may be in the current circumstance, an economist.

Although oil prices have been sliding globally for only a few weeks, the signs of steadily softer demand are everywhere, especially in emerging powerhouses such as China and India, where the pace of growth is slowing. And the causes of this bottoming trend are especially perplexing.

“Historical pricing has been affected by, and dependent upon, turmoil facing the Middle East,” writes Brigham McCown, a former government executive, attorney and public policy expert, in a recent commentary for Forbes. “In times of war and geopolitical instability, prices have historically increased rather quickly, often overnight. As turmoil eased, so too would oil and gas prices, albeit at a much slower pace. Based on historical data, one would expect prices to be dramatically spiking given current events in Syria, Iraq and Libya, yet for all of this instability, prices continue to drop.”

That they do suggests that something more systemic than routine price fluctuations is at work here.

Canada’s unequally booming industries may soon feel the brunt of a great, leveling downturn thanks entirely to Alberta’s outsized pride of economic place in this country.

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