February 20th, 2018

Killing goose that laid golden egg

By Lethbridge Herald Opinon on November 8, 2017.

Increasingly harsh government policies are killing jobs, making Canadians poorer

Mark Milke


With the cancellation of TransCanada’s proposed Energy East pipeline – after the company spent $1 billion trying to jump through ever-changing regulatory and political hoops – Canadians should remind themselves where much of our country’s recent economic uptick originated: in resource exploration and extraction.

This was illustrated again, just before the TransCanada announcement in early October, with Statistics Canada’s recent release of key census data.

The data revealed how median Canadian household income rose to $70,336 by 2015, up almost $6,900 from $63,457 in 2005 or nearly 11 per cent.

The provincial breakdowns are even more revealing. Median income went up by $20,161 in Saskatchewan (37 per cent), $18,151 in Alberta (20 per cent) and $15,068 in Newfoundland and Labrador (29 per cent).

As Statistics Canada noted, “An important factor in the economic story of Canada over the decade was high resource prices.” The agency further observed how “that drew investment and people to Alberta, Saskatchewan and Newfoundland and Labrador, boosted the construction sector, and more generally filtered through the economy as a whole.”

In contrast to these booming provinces, manufacturing in Central Canada took a hit. Incomes there barely rose: Quebec saw a modest $4,901 rise (8.9 per cent) and Ontario was a national laggard with incomes increasing by a paltry $2,753 between 2005 and 2015 (only 3.8 per cent higher).

And that’s where a caveat should be added to the Statistics Canada commentary that “high resource prices” explain significantly increased incomes. High resource prices – be they for oil, gas, lumber or minerals – help, but only if a province or region allows its resources to be explored, extracted and then shipped to market.

The Maritimes mostly sat out the boom in resource prices because, for example, Nova Scotia and New Brunswick banned onshore exploration and extraction of natural gas. That was unlike Saskatchewan, Alberta and British Columbia, in its northern region.

Unsurprising then, New Brunswick’s median income in 2015 was $59,347, the lowest among all provinces. It did record 15 per cent growth over the decade, but that looks less impressive given New Brunswick’s low point in 2005 and its still-lowest ranking today. New Brunswick’s median income in 2015 was almost $8,000 lower than in Newfoundland and Labrador, where incomes soared by almost double that of New Brunswick. A lack of private-sector investment in a profitable energy resource sector will do that.

Quebec provides other examples – of foregone opportunities and the lost potential for income growth – when governments say oui to Canada’s comparative advantage in resources instead of non.

Quebec missed much of the benefit of higher resource prices because of some local and political opposition to oil and gas development. But it’s notable that when the resource sector was allowed to thrive in Quebec, it did. As Statistics Canada observed, “several metropolitan areas in resource-rich areas had relatively higher income growth.” They include Rouyn-Noranda (up 20.4 per cent), Val D’or (up 18.0 per cent) and Sept-Ă«les (up 13.4 per cent).

The lesson should be obvious: One comparative economic advantage for Canada is in natural resources. And this matters not just for faster-growing median incomes but also for drops in poverty. For example, resource-friendly Newfoundland saw the St. John’s low-income rate fall to 12 per cent from 16 per cent. Saskatoon’s low-income rate fell to 11.7 per cent from 15.2 per cent.

In contrast, Ontario, affected by the loss of 300,000 manufacturing jobs, recorded dramatic increases in poverty rates. That includes London (where low-income rates rose to 17 per cent by 2015 from 13.3 per cent in 2005) and Windsor (up to 17.5 per cent from 14 per cent).

Some people would still respond to all this with the old line that Canadians should seek to be more than hewers of wood and drawers of water (a phrase that wrongly depicts the forestry and hydro sectors as backward).

That notion makes little sense because Canadians can and do invent, run and expand businesses in every sector, from high-tech, to green industries to tourism and finance, in addition to responsible resource development. But it’s clear from the data that resources are a critical driver of employment and incomes in Canada.

Insofar as politicians overlook resource advantages and hobble the sector with endless, ever-changing regulation, they ignore how what’s in the ground helped produce a dramatic increase in Canada’s living standards over the last decade.

To belittle or even attack Canada’s comparative advantage in resources is to neglect the positive effect this sector has on Canadian living standards. Snubbing opportunities in developing natural resources comes at the expense of additional jobs and better incomes for the poor and the middle class.

Mark Milke is an author, energy analyst and contributing writer to Canadians for Affordable Energy. Distributed by Troy Media.

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3 Responses to “Killing goose that laid golden egg”

  1. Blue says:

    Seems that Mark Milke has his head in the sand; refuses to see that burning fossil fuel is killing all living things. That’s why we need to move quickly to renewable energy which is the real Golden Egg. https://news.nationalgeographic.com/2017/03/climate-change-global-warming-history-health/

    • zulu1 says:

      Rubbish. If you read history you would realize that much of human progress happened during periods of a warming climate, and that ten times as many humans died of disease and starvation during periods of global cooling.
      As far as renewable energy is concerned, it will never provide a complete and reliable alternative to fossil fuels. For example , solar and wind provide no power when the sun doesn’t shine and the wind doesn’t blow, and must be 100% backed by fossil fuels. Perhaps that will change with time as new battery technology comes on stream, but, that won’t be anytime soon.

  2. already extinct says:

    Milke doesn’t have his” head in the sand”.

    He draws material from reliable sources based on truthful study showing the importance of resource extraction in the Canadian economy. Milkes’ the messenger.

    There’s no technology known that will remotely keep pace with population growth, consumption, and the resultant pollution, especially within poorer nations of the world.

    When Computational Science researcher Stephen Emmott wrote “Ten Billion” in 2013, he explained in clear layman’s terms our dilemma, now and into the future!

    In the book he states at the present rate of energy demand and usage, driven by surreal population growth (the later out of control – eg – according to the United Nations the population of Nigeria “is projected to increase by 349% – to 730 million people by 2100) humans by the end of the century will need to triple energy production to meet demand.

    To accomplish this using current known technology’s, we’ll need 1,800 more of the worlds largest dams, 23,00 more nuclear power generators, 14 million more wind turbines, then to all that, add 36 billion more solar panels. None of this is humanly possible, even with coal and petroleum full on in the play.

    If Emmott and hundreds like him studying this plague of humanity got the figures wrong by 50% I still see no successful outcome plausible if humans on this planet cannot stop breeding, polluting & consuming themselves to extinction.

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