Special interest groups erode Canada’s prosperity
Gwyn MorganEconomy General Government Manufacturing economics Government investment Morgan
Projects meet strident opposition from powerful special interest groups.
It’s been 30 years since Mancur Olson, the late American economist, wrote Rise and Decline of Nations. The premise of his widely- acclaimed book is the longer a society enjoys political stability, the more likely it is to develop powerful special interest groups that erode economic prosperity.
His words have proven prescient as we witness Europe’s debt-burdened stagnation and degeneration of the US Congress into fractious ideological gridlock.
Canada weathered the 2008 economic crisis better than other countries, emerging as one of the world’s most financially sound and prosperous nations. The cornerstone that distinguishes Canada’s prosperity is our rich resource endowment, which generates some 2 million jobs, more than half of all merchandise exports and one third of all capital investment. Resource companies are planning capital investment of more than $600 billion over the next decade, creating hundreds of thousands more new jobs each year.
But a new dynamic has emerged that threatens to stymie these investments. Each project must pass examination by regulatory agencies staffed with highly qualified experts applying environmental standards ranked among the world’s best. But now almost every project meets strident opposition from what Olson terms “powerful special interest groups,” including environmental activists who use scientifically baseless, fear-instilling propaganda to foment local, national and even international opposition.
The length and cost of regulatory hearings have grown exponentially as regulatory authorities strive to ensure all voices are heard. But being heard is never enough for zealots ideologically opposed to almost every pipeline, mine or hydroelectric project. Hence, the number of anti-project court filings has mushroomed.
With the new year, multiple such court cases have been filed across the country. In BC alone, opponents have filed cases against two oil export pipelines, two metals mines, a major hydroelectric project and a coal transfer dock. Oil pipelines that would carry oil east from Alberta are also meeting strident opposition, mainly from anti-oil sands activists.
In Ontario, regulatory hearings of a proposal to simply reverse the flow of an existing pipeline previously moving imported oil east became so rancorous that authorities were forced to shut down the hearing due to what a National Energy Board spokesperson termed, “elevated security risk”. Another proposal that would carry Alberta oil to an export terminal in New Brunswick also faces opposition from activists with the same anti-oil sands agenda.
A second and potentially even more serious barrier to our country’s resource dependent economy came on June 26, 2014 when the Supreme Court of Canada, after a 24 year litigation process, awarded Aboriginal Title to a huge tract of British Columbia’s interior to the T’silqot’in First Nation. Paradoxically, the impact on resource development isn’t the transfer of title to the lands in question, but rather the investment-chilling uncertainty the decision creates around access to other lands claimed by First Nations.
The decision states, “The level of consultation and accommodation required varies with the strength of the Aboriginal Group’s claim to the land.”
But how could the “strength” of any specific land claim be established without further lengthy development-freezing court proceedings? In BC, where almost all Crown lands are subject to overlapping land claims by hundreds of aboriginal groups, this lack of clarity has fostered precipitous action by some First Nations bands. For example, Chiefs of the Gitxsan First Nation served an “eviction notice” to logging companies, sports fishing lodges and the CNR giving them just four weeks to vacate the huge Skeena River region.
There’s one vital factor that could bring First nations and resource companies together. Most First Nations leaders understand that Aboriginal Title will not improve the lives of their people without job and revenue creating development on these lands. Resource industry leaders understand that the level of consultation and accommodation required is basically the same whether traditional lands are under claim or Aboriginal Title. This provides a bridge for visionary leaders from both sides to accomplish resource developments that not only benefit each another, but also the entire country.
Canadians living and working in resource producing regions don’t need to be told of the vital importance of new project developments. But how many others are aware that, without a thriving resource sector, the living standard of virtually every Canadian would decline?
One of the key messages in Olson’s Rise and Decline of Nations is that societies that don’t understand how their wealth is generated are destined to lose it.