In Newfoundland and Labrador, the economy is always a major issue. As Lori Lee Oates writes, ‘it has become increasingly obvious that our leaders are still very focused on development of natural resources.’ (Submitted by Lori Lee Oates)
“The economy, stupid” — political strategist James Carville coined the phrase during Bill Clinton’s first run at the White House in 1992.
The phrase was intended to keep Clinton’s staff focused on the economy as one of the major issues of the campaign. Although more often cited as “It’s the economy, stupid” — it is still considered one of the best political strategies of all time.
Here in Newfoundland and Labrador, the economy is always a major issue.
However, it has becomeembrace bold new economic that our leaders are still very focused on development of natural resources, at a time when:
Oil companies are telling us to get serious about addressing climate change.
Business analysts are increasingly telling us that oil royalties will not be there in the same way in the future.
Scientists tell us daily that we need to decarbonize at even greater levels than have been done to date.
The jurisdictions that are thriving internationally are developing service sectors rather than natural resources sectors.
Clearly, our history has shown us that dependence on oil royalties is a risky strategy.
It is also a strategy that continues to miss the point that the most lucrative products in the contemporary global economy are in service and knowledge-based sectors.
Furthermore, our province is once again missing the next big economic turn by failing to prepare for the coming green economy, in any kind of way that matters.
Hibernia is one of Newfoundland and Labrador’s producing oil fields. (CBC)
An imperial economy
Newfoundland and Labrador — and in many ways Canada — have never moved past the old-style imperial economy.
This is particularly true in rural Canada. An imperial economy is one which focuses on extracting natural resources for royalty revenues.
It is an economic model that worked well for elites at the time when steamships, telegraphs, and railroads were in their heyday. Indigenous populations and colonists provided a cheap source of labour. (Notably, it did not work so well for either Indigenous persons or colonists.)
That was also the heyday of industrialization.
The global economy has now moved well into the technological revolution and a period of hyper-globalization. Newfoundland and Labrador has missed out on taking advantage of the opportunities available to us in an increasingly technologically-driven global economy.
To this day, in rural areas with natural resources projects, the locals provide a cheap source of labour in high-risk environments, while companies and governments profit.
The new economy
Major shifts occurred in the global economy in the 1970s such as global wiring of financial markets and the American move off the gold standard. Visual products and experiences became more valuable. This was followed by extensive growth in microchip technology and the flourishing of the internet in the 1990s.
For decades now we have lived in a world in which the most lucrative products have either moved digitally or come from providing high-end services. This trend will only continue into the future.
For once in our history, it does not matter that Newfoundland and Labrador is an island, with a small population, far from the world’s major markets. This is something our leaders have neither seen coming nor effectively taken advantage of.
The Way Forward, the much-touted economic plan of the current Liberal government, reads like the post-1970s globalization never happened. It is time for our leadership to embrace bold new economic solutions and get us away from the imperial economy once and for all.
It is a plan that largely focuses on natural resource sectors with a little bit of tourism and the arts thrown in. It mentions neither the green economy nor the service economy nor globalization. With a new premier coming in we have an opportunity to revisit this.
It is time for our leadership to embrace bold new economic solutions and get us away from the imperial economy once and for all.
In 2019, the provincial budget finally announced an extra $1 million for developing the arts and cultural sectors. Later, in a campaign announcement, the Liberal Party promised to have arts funding at $5 million within three years. Other provinces have been at $5 million or more for many years.
The tourism industry in this province has long complained that the provincial government does not market our industry in a competitive way.
This prevents us from capitalizing on the notoriety and positive public relations gained from opportunities like the Tony-winning musical, Come From Away.
Actors take part in a rehearsal for the Broadway hit musical, Come from Away, in this undated handout photo. (Handout/Canadian Press)
There is excellent growth in our technology sector, but the companies are experiencing a shortage of workers. The provincial government reports that they are working with post-secondary institutions to address this. One might wonder why this was not done 30 years ago and continued on a regular basis.
Certainly, the research was clear in the 1990s that the economy of the future would be increasingly technical.
Why has there not been an effective and ongoing conversation with our academic institutions on how to prepare our workforce for the technical boom?
It is noteworthy that Memorial University has lost $40 million in funding since the 2012-13 fiscal year (and seems to be slated to lose more) at a time when the healthiest economies all have strong universities and global academic networks. Approximately 200 faculty positions have been cut at the university. There have also been cuts to College of the North Atlantic.
Academics are innovators in the knowledge economy and universities are one of the best ways to attract young people to our aging population. There is no way for our province to thrive in the modern knowledge-based economy without well-resourced academic institutions.
This is penny-wise and pound foolish at best. It also belies the point that our province is not investing in strategic sectors that are growing rapidly.
The provincial government has asked Memorial University to save $2.7 million each year for the next two years. (Terry Roberts/CBC)
We cannot depend on oil royalties
As far back as 2015, Steve Williams, the president and CEO of Suncor Energy Inc. was quoted as saying, “Climate change is happening. Doing nothing is not an option we can choose.”
Suncor has released commercials promoting “Canada’s Electric Highway” because they see the writing on the wall. Many former oil and gas companies are now pursuing green energy options and calling themselves energy — not oil — companies.
Some sources anticipate that by 2025 electric cars will be the same price as gasoline powered cars. The U.S. had 60,000 electric charging stations by 2018. Canada has approximately 6,000.
Economists have developed economic models for how the green economy can work and the cost of renewable energy is falling. However, there continues to be a policy failure on the part of all levels of government in Canada to address these shifts.
Our provincial government continues to rely on fossil fuels as if the price of oil may not fail dramatically in the coming years.
According to Service NL, less than one percent of the vehicles registered in the province are electric. (Pierre Fournier/CBC News )
Notable commentators such as the Economist magazine, Forbes magazine, Bank of England governor Mark Carney and corporate leaders have warned that long-term investors in fossil fuels must beware.
Unfortunately, the federal equalization formula forces provinces with oil and gas to develop it, at the same time that the Government of Canada is imposing a carbon tax. This is a deeply flawed system that harms national unity.
Prime Minister Justin Trudeau’s response to Saskatchewan Premier Scott Moe on this issue was that he will change the formula if all the premiers agree to it. It’s wrong for the PM to put that onus on the provinces.
The federal government must show more leadership and build an equalization formula that supports decarbonization if they are serious about addressing climate change and moving Canada into the green economy.
Climate change is having a profound effect in Greenland, where over the last several decades summers have become longer and the rate that glaciers and the Greenland ice cap are melting has accelerated. (Sean Gallup/Getty Images)
Doubling down on what they know
Now that times are tough, political elites are doubling down on what they know rather than reading the writing on the wall for where the economy is going. Again.
They are also failing to prevent costly climate emergencies.
Elites and governments like imperial economics because resource royalties give them all the control over revenue. However, in the words of Einstein, “We cannot solve our problems with the same level of thinking that created them.”
When your revenue comes from oil companies rather than taxpayers, you are more inclined to listen to powerful corporate interests, rather than citizens. Seeing large companies and mega-projects as potential saviours will never make this province all that we can be.
At this point, “It’s the planet, stupid!” We cannot approach global economics in the same way during the 2020s, as we did in the 2010s. The research on this is clear.
It is time for our leadership to embrace bold new economic solutions and get us away from the imperial economy once and for all. We must let go of colonial and post-colonial patterns — and that includes corporate colonialism.
Our citizens have deserved as much for at least the last three decades — if not the last three centuries.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
