Monday Morning Links

Miscellaneous material for your Monday reading.

- Jim Stanford neatly sums up how the Cons' obsession with selling off both natural resources and natural resource producers affects other industries:

There is no doubting the statistical correlation between oil prices and the loonie. Econometric analysis indicates that since the turn of the century, oil prices explain 86 per cent of the dollar’s rise. The precise reasons for this correlation are unclear. It certainly is not due to a strong trade balance. In fact, Canada has experienced a deepening international payments deficit in recent years, because non-petroleum exports are falling faster than our energy exports surge (see graph). My own research suggests it is foreign takeovers of petroleum companies and reserves, not current production and export of the stuff, that is driving the loonie up.

It is equally clear that the Canadian dollar is overvalued, relative to both historical averages and economic fundamentals. According to the Organization for Economic Cooperation and Development, the current “fair value” for the Canadian dollar (based on purchasing power parity analysis) is about 81 cents U.S. Anything higher and Canadian-made products and services look disproportionately expensive (including manufacturing, services, tourism — and even Big Macs, according to the Economist’s famous hamburger index).

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In my books, the best way to short-circuit the damaging link between oil prices and the loonie would be to carefully regulate foreign takeovers of resource companies. That’s a worthwhile policy to consider for many reasons (not just for avoiding Dutch Disease). And this hardly implies bombing Alberta’s economy back to the stone age; if anything, a more careful and strategic approach to managing this non-renewable resource would allow Albertans, too, to capture more lasting benefits than the current what-me-worry strategy can ever deliver.

Methinks the bitumen boosters doth protest too much, with their loud attempt to suppress any debate over the potential downsides of Canada’s current energy strategy — which consists of scraping as much bitumen, as quickly as possible, and exporting it raw. Are there important national spinoff benefits generated by the petroleum boom in Alberta? Absolutely. But are there also important costs and risks associated with this economic strategy based on the unregulated extraction and export of a non-renewable resource? Certainly. Could we do a better job of managing those costs and risks? Undoubtedly … unless we continue pretending they don’t exist.

Stanford then decries the tar-sands McCarthyism of the Cons and their petro-state allies. And Erin points out Michael Den Tandt as an example of a commentator completely contradicting himself from one column to the next in order to try to attack Thomas Mulcair.

- Meanwhile, Bea Vongdouangchanh reports on the Cons' abdication of any responsibility for Canada's environment. And Tim Harper suggests that as a result, Alison Redford may have to be the one to implement an environmental plan covering the oil sands.

- Barrie McKenna unloads on the Cons' secrecy and misdirection in trying to make it as difficult as possible for anybody to figure out exactly what's being cut in their budget:

Last week, Mr. Clement’s office released its annual “reports on plans and priorities,” which converts the estimates into detailed spending plans for all 97 federal departments and agencies. Typically, these also reflect changes in the budget.

Not this year. Mr. Clement, the Prince of Darkness, specifically directed departments to exclude the budget cuts, even though they have been known for more than a month.
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Is the department shrinking or growing? Damned if anyone outside government knows. And that, in the bizarro world of federal accounting, just might be the intent.

If Ottawa Inc. were a public company, regulators would probably delist its shares.

Federal financial reporting has become so murky, inconsistent and retrospective that no outsider has a clear picture of what is actually being spent, or cut. Multiple and overlapping reports are produced using different accounting methodologies. Money not spent in one year is quietly shifted into another, conveniently creating moveable baselines for advertised “cuts.”

- And Don Lenihan points out yet another ruling from Andrew Scheer which will serve to insulate the Cons from any accountability whatsoever for lying to Parliament and the public - this one a requirement that anybody seeking to challenge a false statement be able to prove a direct intention to mislead. As Lenihan notes, that ruling fits nicely into the Cons' general preference for one-way "comms" over meaningful debate.

- Finally, Bruce Cheadle reports on the growing doubt about Senate elections from many of the parties and figures who previously pushed the model. But the point most worth highlighting (particularly given the prospect of a Con Senate majority holding at least theoretical power to utterly stymie the efforts of an NDP government in 2015) is the recognition that the Senate can't legitimately interfere with the decisions of elected representatives now.

[Edit: fixed formatting.]