Canadian Manufacturing

New report backs up Mulcair’s claim Canada’s economy suffers from Dutch Disease


Manufacturing Energy Oil & Gas Alberta oilsands Canadian economy Dutch disease high Canadian dollar NDP oilsands oilsands fever pembina institute tom mulcair

Pembina Institute: "Oilsands fever" resulting in overstated economic benefits.

OTTAWA— On the eve of NDP Leader Tom Mulcair’s visit to Alberta’s oilsands, a new report backs his claim that Canada’s economy suffers from a form of Dutch Disease.

A study released Wednesday by the Pembina Institute says Canada has come down with a unique strain of the phenomenon, dubbed “oilsands fever,” that is producing near-term economic benefits that are often overstated.

The report says these benefits are spread unevenly across the country and could be hiding economic turmoil down the road.

But another report by a different group says Canada’s oil and gas industry is spreading the wealth by using the money earned from booming exports to buy goods and services from the rest of the country.


The two reports were simultaneously as Mulcair embarked on his first tour of the oilsands.

The NDP chief has been lambasted by western premiers and the federal Conservatives for suggesting oil exports raise the value of the Canadian dollar, which in turn hurts the economy in other parts of the country.

The phenomenon is dubbed the “Dutch Disease” in reference to the manufacturing decline that occurred in the Netherlands after a boom in natural gas exports in the 1970s.

The Pembina study says the Dutch Disease label may be too simplistic.

“It seems clear that Canada is undergoing changes, both positive and negative, that are unique to both the nature of its domestic economy and Canada’s role in a shifting global economy,” the report says.

“The result appears to be a uniquely Canadian strain of the Dutch Disease that could be called ‘oilsands fever’ —a strain that is beginning to create clear winners and losers in Canada’s economy and could pose a significant risk to Canada’s competitiveness in the emerging, clean energy economy.”

The report urges the federal government to create a rainy-day savings fund for oil and gas revenues, get rid of tax breaks for oil and gas companies, convene an expert panel on the oilsands and the economy, study regional competitiveness in an era of a high loonie and work on a national energy strategy.

A separate report also released Wednesday by the Macdonald-Laurier Institute came to a different conclusion.

The Macdonald-Laurier study found all provinces will enjoy benefits from oil- and gas-rich western provinces that far outweigh any ill-effects from a higher Canadian dollar.

“While the so-called ‘Dutch Disease’ mechanism may operate, in practice it is partially (perhaps more than fully) offset by the gains to the overall Canadian economy documented by these studies,” the report says.

The two reports came out the day before Mulcair is scheduled to tour Suncor’s oilsands project near Fort McMurray.

Alberta Premier Alison Redford has said she won’t meet the NDP leader until he visits the Fort McMurray region to educate himself about the oilsands and Saskatchewan Premier Brad Wall has also weighed in with harsh words.

Before departing on his western tour, Mulcair insisted he’s not against development, he’s only advocating sustainable development. And he stressed that applies not just to the oilsands but to natural resource projects all across the country.


Stories continue below