Why is NDP leader Thomas Mulcair being denounced so vehemently for talking about Dutch disease?

The term simply describes the effects of a resource boom. And there is no real debate as to whether or not the tar sands boom has driven up the value of the Canadian dollar, or that this negatively affects other export industries such as manufacturing.

Greenpeace's Keith Stewart debates Jamie Ellerton from Ethical Oil on CBC's Power and Politics on May 30 2012.

The important questions are: how big is this effect, and is it necessarily a bad thing?

A study commissioned by the Harper government found that at least a third of recent job losses in manufacturing can be attributed to Dutch disease, vindicating Mulcair.

Nevertheless, some observers will argue that this shift isn’t a problem because we’re making more money from oil than we were from manufacturing. In most countries, Dutch disease only becomes a problem once the resource boom ends and there is no manufacturing sector left for workers to return to.

In Canada, however, the new jobs in the tar sands are created far from where the manufacturing jobs are lost. This real-world impact creates regional tensions. So we can debate the merits of the federal government’s support for the rapid expansion of the tar sands, but we shouldn’t pretend that it doesn’t create regional winners and losers.

To understand the vehemence of the attacks from the Harper government and its oil industry allies, however, we need to examine his proposed solution.

The leader of the opposition has proposed that we inoculate our economy against the worst effects of the Dutch disease by requiring all corporate polluters (not just oil companies) to pay for their greenhouse gas emissions.

In the short term, this would help level the playing field between the highly-polluting tar sands companies and less-polluting sectors. After all, oil companies currently benefit disproportionately from being able to use the air we breathe as a free dumping ground.

In the longer term, this polluter-pay principle would better prepare the Canadian economy for the end of the tar sands boom by promoting investments in green energy, for example.

Some believe such planning is unnecessary, for the boom will never end. However, climate scientists have pointed out that such a belief is premised on an acceptance of devastating levels of global warming.

No one will be surprised to learn that Greenpeace considers such an approach to be unwise or that we advocate moving even further and faster than the NDP to green our energy system.

But you may be surprised to see who else thinks that gambling on the world failing to stop global warming is a bad idea.  The Alberta Premier’s Council on Economic Strategy was appointed by Ed Stelmach and included Stephen Harper’s former Industry Minister David Emerson along with Clive Mather, the former CEO of Shell Canada. Their May 2011 report on how to best ensure the province’s long-term prosperity concluded that “we must plan for the eventuality that oil sands production will almost certainly be displaced at some point in the future by lower cost and/or lower-emission alternatives. We may have heavy oil to sell, but few or no profitable markets wishing to buy.”

This advice was unwelcome and hence quickly forgotten. Since then, federal cabinet ministers have labeled anyone who advances such ideas as “radicals”, “extremists” and “treacherous”, while the budget bill includes draconian provisions to both fast-track tar sands projects and silence the industry’s critics.

No one who cares about the health of our democracy should stand by while this happens.

A full and open debate on the future of the tar sands – of which Dutch disease is only one part – is simply too important to Canada’s future to be dodged as inconvenient or for one side to be bullied into silence. 

 

For an interesting assessment of Dutch disease in Canada, see the Pembina Institute report In the Shadow of the Boom.