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Trudeau Lacks Understanding of Western Economy

by Murray Mandryk

I recently ran across a post on the Facebook page of my niece (a proud agriculture degree grad) on the modern farmer. The American-based post noted that few think of farming in “aspirational terms”, but 1.5 per cent of the U.S. population feeds 300 million people. And they do so while encountering real estate, environmental protection and energy challenges other businesses wouldn’t dare take on.

If one is being objectively fair, one might take umbrage with the notion that farmers – especially here in Canada – are as badly portrayed. That said, the video makes an important point about the way others – especially Eastern Canadians – don’t necessarily think about the Western economy.

Certainly, that’s one of the problems with the Federal Liberal government’s proposed income changes that are somewhat tone deaf to issues like intergenerational transfer of capital assets in farming families or the need for farmers to incorporate. It’s easy to characterize this entire issue as a tax dodge, but it’s far more complex than that.

Similarly, few in urban – and especially eastern urban – Canada grasp that the oil sector contains a lot of smaller businesses and individual workers massively impacted by even slight regulatory changes. Again, not every beef you hear from the oil industry is reasonable. As was suggested in this space recently, the way the oil industry reacts to issues like the problems of sour gas suggests it, too, can be a little overly sensitive to criticism, but if those in oil, agriculture or anyone else in the West are feel of late that they are not being heard by the federal Liberal government, it’s more than just paranoia.

Prime Minister Justin Trudeau has been presented with the opportunity to bridge the country’s East-West gap and like his predecessors, he failed to show the necessary vision. The latest example comes in the wake of TransCanada’s cancellation of the Energy East pipeline that would have moved 1.1 million barrels a day of Western oil to Eastern refi neries. Let us be clear that cancellation of Energy East was, ultimately, TransCanada’s business decision.

The economics of a national pipeline worked better when the differential between light crude and heavy crude (just $9.58 US a barrel as of August) was close to the $30 US a barrel. Also, U.S. President Donald Trump’s approval of the Keystone XL pipeline may make the need for Energy East less pressing when it comes to getting Western Canadian oil to tidewater.

With Kinder Morgan’s TransMountain pipeline through B.C. and with Enbridge Line 3 replacement, there will be other added pipeline capacity in this country.

Finally, an increased demand in Eastern Canada for Western natural gas and a more accommodating pricing deal for natural gas though National Energy Board changed the dynamics of what was being proposed. Approximately 70 per cent of the Energy East pipeline would have involved already-existing natural gas pipeline converted for this particular proposal.

Let’s be realistic here. A huge factor in the demise of Energy East was the absence of federal government will and commitment to a true national policy of energy self-suffi ciency. As it stands now, Eastern Canada will remain dependent on Middle East oil. And Western Canada loses a chance to be sold into European market.

One would be rather naïve not to think that the lack of federal support for Energy East and energy self-sufficiency had much to do with Trudeau’s eagerness to cater to both the environmental lobby and Quebec voters who opposed Energy East.

In fairness, the Conservative Stephen Harper government didn’t show much commitment to this pipeline or vision, either, but when it comes to not understanding the West and its economy, the biggest problem lies with the federal Liberals.

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