Stepping Back from the Brink – Maybe

Gwyn Morgan
August 29, 2020
“You don’t know what you’ve got ’till it’s gone” was penned long ago as an environmentalist, anti-establishment lament. These days, the environmentalists are the establishment, industry is the underdog, and the federal Liberals have come close to destroying the nation’s foremost generator of wealth and tax revenues. Some recent pronouncements by certain federal ministers, however, have Gwyn Morgan seeing glimmerings of reason, or at least pragmatism. If they do suspend their scorched-earth campaign against oil and gas, though, it won’t be for any love of the resource sector, let alone of Alberta. It will simply be because they need the money desperately. If that’s what it takes, writes Morgan, so be it.

Stepping Back from the Brink – Maybe

Gwyn Morgan
August 29, 2020
“You don’t know what you’ve got ’till it’s gone” was penned long ago as an environmentalist, anti-establishment lament. These days, the environmentalists are the establishment, industry is the underdog, and the federal Liberals have come close to destroying the nation’s foremost generator of wealth and tax revenues. Some recent pronouncements by certain federal ministers, however, have Gwyn Morgan seeing glimmerings of reason, or at least pragmatism. If they do suspend their scorched-earth campaign against oil and gas, though, it won’t be for any love of the resource sector, let alone of Alberta. It will simply be because they need the money desperately. If that’s what it takes, writes Morgan, so be it.
Share on facebook
Share on Facebook
Share on twitter
Share on Twitter

After five years of suffering in eco-zealot purgatory under the Trudeau Liberals, the half-million or so Canadians whose livelihood depends on the oil and natural gas industry finally got some good news: The oil sands are now part of the federal government’s green energy agenda! As Natural Resources Minister Seamus O’Regan told the Financial Times’ Derek Brower earlier this month, “There’s no way we are reaching [Canada’s 2050 greenhouse gas emissions target of] net-zero without Alberta.” O’Regan even went on to express support for new pipelines that would allow Western Canada’s crude oil output – and exports – to grow by over 1 million barrels per day next year and continue to rise after that. In stark contrast to the Liberal government’s previous vilification of the industry, O’Regan lauded the ingenuity of Albertans in finding ways to “draw oil out of sand”.

A glimmer of reality breaking through: Federal Natural Resources Minister Seamus O’Regan, seen here at the Prospectors & Developers Association of Canada conference in March, admits the oil and natural gas industry will be crucial to Canada’s future growth.

This is a stunning reversal from a government whose leader infamously mused about “phasing out the oil sands”. It could hardly have been imagined prior to the coronavirus crisis. Why now? The answer came in the minister’s own words: “Our prosperity and our economy are still highly dependent on [oil and natural gas production].” How dependent? This industry is by far the largest contributor to both Canada’s overall GDP and the nation’s net export revenue – each totalling over $100 billion per year. And Alberta has long been the largest net contributor to Ottawa’s coffers (meaning monies collected in Alberta minus federal funding dispersed in Alberta or to Albertans). The disparity amounted to a cumulative $95 billion from 2014-2018 – greater than that for all other provinces put together. And, keep in mind, Alberta was enduring a brutal economic downturn in all but the first of those five years.  

The Covid-induced economic recession has brought about a projected decline of $83 billion in federal revenue in the current fiscal year, according to former Finance Minister Bill Morneau’s July 8 “fiscal snapshot”. This shows why reversing course and once again growing Ottawa’s most important revenue source is so critical. The snapshot projected an astonishing $343 billion federal deficit this year. Two days later, the government announced changes to the employment insurance system that will cost a further $37 billion, taking the deficit to $380 billion.

A very favourable balance of trade: Between 2014 and 2018 Alberta contributed a net $95 billion to Ottawa’s coffers, thanks in large part to the resource sector.

Further spending escalation is certain, including help for stretched provincial health care budgets, cities unable to fund public transportation and aid to hard-hit business sectors. Indeed on August 26, Justin Trudeau announced that “Canada” would “give” the provinces $2 billion to help with the reopening of schools. It is now clear that by next year our national debt will exceed $1.2 trillion. This is twice the amount when the Liberals came to power in 2015 and will represent well over 50 percent of the country’s Covid-battered GDP. 

The last time Canada faced such an enormous financial challenge was after the Second World War. Back then, demographics came to the rescue: the post-war “baby boom”, combined with soldiers returning home to help produce desperately needed consumer goods, transformed the economic picture. Today, we have the complete reverse. Decades of deteriorating birth rates have created a baby-bust while those same baby-boomers are leaving the workforce and driving increased public spending for old-age security payments and eldercare.

The future of Alberta, and Canada's, social and welfare sectors is under threat from the increase in expenses from the pandemic.
The increase in public expenditures presents a risk for the future of Alberta, and Canada's, welfare system.
Massive new public expenditures in education and health care are occurring simultaneous with a dramatic reduction in private sector activity, particularly across the retail and real estate sectors. (Above Image source: Reuters)

And yet, as the song goes, “You ain’t seen nothin’ yet”. Covid-19 portends a massive restructuring of vital business sectors. Retail, which employs millions and occupies vast amounts of real estate from street-side shops to malls, faces profound uncertainty from the pandemic-driven shift to online shopping. The various lockdowns and near-lockdowns facilitated an array of new communication tools that allow many more to work remotely with reasonable efficiency and productivity, emptying office towers. It thus seems reasonable to expect the number of displaced workers to increase.

The potential impacts are staggering, including mass unemployment and devaluation of commercial real estate assets that represent key holdings for hundreds of companies as well as retirement nest-eggs for thousands of small businesspeople and that also, among other things, underlie public and private pension funds. The full effects of these and other post-Covid structural shifts are yet to be known, but it’s clear they will be broad, deep and in many cases devastating. Government tax revenues will fall, while the need for support and training will add still more costs.

A ‘green restructuring of the economy?’ Ask Ontario Hydro customers how that worked out.

It is an alarming picture, yet it seems the coronavirus has fostered escape to an ephemeral state in which reality is magically replaced by an imagined world that is whatever one wishes it to be. It is incomprehensible to hear our government declare the pandemic has created an “opportunity for public investment in green restructuring of the economy”, which translates into subsidizing windmill and solar power companies while further hobbling the proven traditional drivers of wealth. How will that work out? Ask Ontarians, who’ve seen residential and business electricity rates skyrocket to produce very expensive and completely unreliable power.

Navigating these shoal-riddled waters would be difficult enough if our economic outlook had been strong before the crisis. But alas, that wasn’t the case. Statistics Canada data shows that, since the election of the Trudeau government in 2015, investment in 10 of the 15 major business sectors has dropped by 17 percent as both Canadian and foreign investors fled. Over $185 billion in capital left the country as investors sold out and redeployed their funds. This mirrored a precipitous drop for Canada’s position in both the World Bank’s Ease of Doing Business ranking and the World Economic Forum Competitive Index. In reality, Canada’s strong employment rate over that period was driven by unsustainable deficit spending and not by private-sector investment and genuine economic performance.

The future of Alberta depends on what federal politicians decide to be their energy policy in the coming months.
What will be the future of Alberta? Depends on if federal politicians continue the scorched-earth campaign against Alberta's oil and gas sector.
Fuel for the economy: If Canada wants to recover quickly from the Covid-recession, Ottawa needs to support private sector job creation, and in particular the resource sector.

Reigniting private-sector investment that will generate rather than consume government revenues will require a profound and clear reversal of both attitude and action by the Trudeau Liberals. Minister O’Regan’s comments about the oil and natural gas industry are positive, but so far they are just talk. They must be followed by clear and prompt federal government action. Similar encouragement and action are needed for other natural resource sectors, including in mining where, for example, an Alberta coal mine expansion proposal has suffered recent federal action to stop it. 

Here’s a note to our new federal Finance Minister, Chrystia Freeland: Restarting private-sector investment and job creation is the only hope for keeping the good ship Canada from smashing on the post-Covid rocks and sinking a nation with such great potential. Dial back the ideology, tone down the woke attitude and focus on the national interest.

Gwyn Morgan is the retired founding CEO of EnCana Corp., formerly Canada’s largest producer of natural gas.

Love C2C Journal? Here's how you can help us grow.

More for you

The Unbearable Wokeness of Being in Stratford

Among 2020’s many unfortunate pandemic casualties was the Stratford Festival. Today it’s anybody’s guess how, when or whether the beloved cultural institution, held annually in the Ontario town named for the hometown of William Shakespeare, can restart. But, writes Grant A. Brown, serious wounds were already being inflicted upon the festival – from within. A Stratford resident and business owner, Brown brings a lifelong Shakespeare lover’s perspective to his dissection of the progressive degradation of the great playwright’s greatest works and the garbling of his eternally revealing insights into human nature.

Portrait black and white shot of Sir John A. Macdonald.

Sir John A. Macdonald Saved More Native Lives Than Any Other Prime Minister

Were he alive today, Sir John A. Macdonald would make short work of his many present-day critics through his legendarily quick wit, disarming personality and mastery of the facts. Unfortunately, he isn’t around to defend himself against horrifying claims he committed genocide against Canada’s Indigenous people. To take on this calumny, Greg Piasetzki goes back to the source. Using Macdonald’s own words and other contemporary voices, Piasetzki brings alive our Founding Father’s determination to save native lives and protect their interests throughout his time in office.

Black women is pictured against mural, begging questions of political correctness in the history of slavery in Quebec.

Angélique – The Politically Correct Rewrite of Quebec Slavery

Slavery is an outrage, pure and simple, truly one where it is accurate to say “even one is too many”. But even slavery requires context. Out of the more than 12 million Africans captured and shipped across the Atlantic, by the year 1700 precisely six were held in what would later become Quebec. So how and why did La Belle Province decide to upend the truth of its past? In this version of an essay that appeared originally in the Dorchester Review, Frédéric Bastien chronicles Quebec’s bizarre orgy of “historical correctness” and the damage it is doing to memory, truth and perspective.

More from this author

The Economics of Green Energy Ideology

Solar panels filling fields in cloudy northern countries. Wind turbines manufactured for export by the world’s largest builder of coal-fired power and worst emitter of greenhouse gases. Governments deliberately demolishing their country’s most valuable industry. It is increasingly clear that so-called green energy isn’t just another instance of youthful idealism going a little too far, much less a practical way to a clean future, but a nasty utopian ideology bent on impoverishing entire countries. Gwyn Morgan examines a slice of this destructive landscape and warns of the severe risk to Canada’s economic well-being.

Will WE be the same after this Trudeau ethics scandal?

The Biggest Question Mark in Trudeau’s Latest Ethics Scandal

We are now onto Prime Minister Justin Trudeau’s third official ethics imbroglio. Mr. “blind spot”, as a previous ethics commissioner termed him, is back at it, once more trailing cabinet ministers and political flunkies. The blind leading the blind, as it were. This time around it’s a close to billion-dollar sweetheart deal offered to WE Charity – an organization with close ties to Trudeau and cabinet ministers. As the Opposition and media focus on the mechanics and legalities of the growing scandal, Gwyn Morgan probes the deeper question of why anyone would think shovelling vast sums into yet another summer jobs program for students was a good idea. The possible answer is downright diabolical.

Stone statue wearing masks during the government lockdown

The Lockdown Contrarians Were Right

The days are at their longest, everything’s blooming, summer is nigh and Canadians are increasingly going about their regular lives. Spirits are lifting. And serious questions are being asked. Like Plato’s cave-dwellers emerging out of the darkness, we are blinking in the dazzling light of our 5 am northern dawns. What just happened? Do the claimed but unprovable benefits of the pandemic response stack up against the staggering quantifiable damage? Could we have done better? Gwyn Morgan takes a clear-headed look at these questions and prescribes some principles to dig our way out and avoid a needless repeat.

Share This Story

Share on facebook
Share on twitter
Share on print

Donate

Subscribe to the C2C Weekly
It's Free!

* indicates required
Interests
By providing your email you consent to receive news and updates from C2C Journal. You may unsubscribe at any time.