Adieu, Dalton McGuinty. The Ontario premier announced his resignation earlier this week, leaving behind a modest record of accomplishment after nine years at the helm of Canada’s most populous province.
Alison Redford had the grace to offer some kind words about her fellow premier – never speak ill of the dead – but the cold truth is that Dalton McGuinty was no friend of Alberta.
Earlier this year, in an attempt to deflect attention from Ontario’s economic woes, for which he was partly responsible, McGuinty claimed the strong demand for Alberta energy had driven up the value of the dollar which in turn made exports more expensive and ultimately hurt Ontario’s manufacturing sector.
(The shorthand for this phenomenon of strong commodity demand, higher currency and weaker manufacturing is known as Dutch disease.)
Said McGuinty: “As a result, if I had my preferences as to whether we had a rapidly growing oil and gas sector in the West, or a lower dollar benefitting Ontario, I can tell you where I stand – with a lower dollar.”
Nowhere did he mention that a higher dollar also spells trouble for Western exporters or that there were plenty of economic spinoffs for Ontario in oilsands development or that a higher dollar reduces the cost of imports like industrial equipment, which would help Ontario manufacturers.
He continued on this path roughly until he was put in his place by Mark Carney, the Governor of the Bank of Canada.
Speaking to a Calgary business audience in September, Carney said it was indeed the case that high prices for crude oil drive up the value of the dollar. But overall, he added, high prices for oil and other commodities are good for Canada. The overall impact, said the governor, is a net rise in “income, wealth and GDP in Canada.”
Coincidentally perhaps, a couple of weeks after Carney’s remarks, Ontario Finance Minister Dwight Duncan was also in Calgary where he spoke glowingly of the economic benefits of oilsands development in his province. “Thank you, Alberta,” he exclaimed.
Two weeks after Duncan, Ontario Economic Development Minister Brad Duguid was in Alberta with the same upbeat message about jobs and prosperity flowing from West to East.
Of course, no such soothing words were heard from McGuinty, who is being touted in some quarters as a possible contender for the leadership of the federal Liberals.
This is an unlikely scenario, but if it happens McGuinty should know that Albertans will greet him with the same keen enthusiasm they reserved for Pierre Trudeau, who also had a shaky grasp on economics.
Alas, even if McGuinty heads into quiet retirement, his anti-Alberta bilge is likely to live on through federal NDP leader Thomas Mulcair, who was also heard this year muttering darkly about petro-dollars, risky oilsands, high energy prices and Dutch disease.
Here again it is worth noting the comments from Carney, who warned of the dangers of trying to cure Dutch disease by fiddling with the value of the dollar.
“The logic of Dutch disease requires us to undo our successes in order to depreciate our currency,” he said. Carried to “its natural conclusion, this logic dictates that we shut down the oilsands, abandon our resource wealth, have high and variable inflation, run large fiscal deficits and diminish our financial sector.” All of which, he added, would “weaken Canada.”
Thank you, Mr. Carney. Goodbye, Mr. McGuinty.
