Bank of Canada Gov. Mark Carney said the Canadian economy depends on two areas of potential future growth — trade diversification into markets other than the United States and productivity investments by cash-rich Canadian corporations.
Without getting into specifics, the head of Canada’s central bank — the rough equivalent of the U.S. Federal Reserve — came as close as his mandate permits to endorsing plans to export oil sands crude and liquefied natural gas to Asia.
And just to bolster that view, a spokesman for the Bank of Canada confirmed that Enbridge’s controversial C$5.5 billion, 525,000-barrels-per-day Northern Gateway pipeline from the oil sands to a tanker terminal on the British Columbia coast is the type of investment Carney had in mind when he discussed Canada’s response to the mounting debt crises in the U.S. and Europe.
He said strong commodity demands by the world’s major emerging economies, especially China, have resulted in “elevated” prices for the “foreseeable future” for commodities such as base and precious metals as well as energy resources.
“That provides in our opinion a degree of confidence in terms of further investments in that sector … which could include pipelines, geographic diversification, other aspects that are being looked at very intensively,” Carney told the House of Commons Finance Committee.
Tax revenue benefit
James Rajotte, a government Member of Parliament from Alberta, said he “certainly” viewed Carney’s remarks as support for Northern Gateway.
Even the Bank of Canada spokesman said the project, currently before a joint review panel, would be “consistent” with what Carney intended.
Rajotte said Northern Gateway makes sense for Alberta and Canada as a whole because of the “enormous” tax revenues it would generate.
“In my view the pipeline is of national historic interest,” he said. “It just makes eminent sense for us to have more than one buyer” for Canada’s crude production.
Nathan Cullen, a Member of Parliament from the New Democratic Party, said the public in his region of British Columbia believes the regulatory review is already biased in favor of the Enbridge proposal because of the government’s stance.
But he opposed the plan because of the environmental risks, First Nations opposition, and the “export of jobs” given that the pipeline will transport raw rather than refined bitumen.
Cullen said Carney is a “very respected voice in our economy and I’ve always noticed that he’s been very prudent and cautious. I think it’s a bit imprudent (for him) to start favoring one industrial project over another. It puts him into a place that’s outside the realm of his mandate and expertise.”
—Gary Park
