A version of this letter appeared today (Sunday, May 27, 2012) in the Lethbridge Herald finally. I submitted it on May 18th.
Editor: Re: "NDP Leader continues to bash oilsands" (Herald, May 17, p. A1). Thomas Mulcair is definitely NOT advocating shutting down the oil sands, only developing them in a slower, more intelligent, and more environmentally responsible fashion, similar to Peter Lougheed and the Mayor of Ft. MacMurray.
We're all becoming familiar with the term "Dutch Disease"--when the manufacturing exports of a country decline because the international value of a country's currency has skyrocketed due to raw resource exports. It happened in the Netherlands in the 1970s due to their massive exports of natural gas. Mulcair says Dutch Disease is happening in Canada right now because of resource exports by mainly Alberta and Saskatchewan. Attacks have come from the premiers of BC, Alberta, and Saskatchewan.
But let's step back a moment and examine the situation. There have been 500,000 job losses. A report by the Institute for Research on Public Policy (IRPP) says, in an unfortunate choice of words, "“On balance, the evidence indicates that Canada suffers from a mild case of the Dutch disease." They go on to say that about 25% of the job losses are due to the high value of the loonie. I say unfortunate choice of words because 25% of 500,000 is 125,000 jobs. That's approximately the working population of Lethbridge, Medicine Hat, and Red Deer combined! This is mild?
You'd think a government, noticing large job losses, due in part to its policies, would consider what they could change. Indeed, the IRPP suggests in the same report some things the federal government should do: They should put tax revenues into infrastructure projects that improve the competitiveness of manufacturers. The IRPP also suggests that the resource-rich provinces could also help “neutralize” the upward pressure on the loonie by investing resource revenues offshore through sovereign wealth funds. One thing about the rising loonie that is being ignored is that, for every $.01 the dollar rises, the Alberta treasury looses $247,000,000 ((http://www.finance.alberta.ca/publications/budget/budget2012/fiscal-plan-revenue.pdf See page 62. If the dollar were at 81 cents instead of at par, the Alberta treasury would be ahead by about $4.5 billion per year.). This is because oil is sold in American dollars. So it's to Alberta's advantage to take prudent steps to keep the loonie closer to its real value. According to the OECD, the current “fair value” for the Canadian dollar (based on purchasing power parity analysis) is about 81 cents US.
So, rather than ganging up on Tom Mulcair, Harper and company might consider a national industrial strategy that does not penalize one region of the country at the expense of others.
