Power Struggle
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Power Struggle
Snubbing Canada’s Nose at Trump | Election Special Ep.5
Donald Trump didn’t start the problem. But Jack Mintz knows how to fix it. In the latest episode of the Power Struggle special election series, Mintz tells host Stewart Muir that Canada’s declining productivity started long before the US President’s new tariff war. The solution isn’t slapping the United States with counter-tariffs. The solution is eliminating tariffs and non-trading barriers with as many other trading partners as possible.
Especially in the natural resource sector. That’s how we snub our noses at Trump. Canada needs to move forward on liberalizing trade with the European Union, the United Kingdom, Australia, and New Zealand to name a few. Mintz explains his strategy while citing his recent Financial Post article that argues for streamlined regulations, liberal trade policies, and a simpler tax system.
And in the Trump era, building stronger trade relations with other countries is how Canada fixes its trade relationship with the United States. North America remains one of the strongest trade regions in the world. Even with trade diversification, our best market is still the United States. It may even be after Trump leaves that the trade relationship gets repaired.
In case anyone missed it, Mintz reminds the Power Struggle audience that Canada depends on a natural resource export economy. This isn’t lost on our political leaders. Both Liberal Leader and Prime Minister Mark Carney and Conservative Leader Pierre Poilievre are pushing for the acceleration of energy projects. Mintz argues that neither may be prepared to go far enough. Find out why in this episode.
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Resources are still going to be needed, no matter how the world gets reordered after what Trump is doing, and we may want to trade with other countries. In fact, I had argued in my recent piece that not only should we look to try to trade with other countries, but we should actually go back to some of the trade agreements we've had like with Europe and Asian countries and even go further to reduce tariffs and non-trade barriers that we can, and I hope that we can actually work out something with the United States. Maybe it will be after Trump leaves.
Stewart Muir:Welcome to Power Struggle. I'm the host, Stewart Muir, and this is the sixth episode of a special federal election campaign series that we've been doing. We're tackling the big issues shaping the election and really Canada's future. We're looking particularly at issues related to energy. That's what we're all about at Power Struggle Today. I'm pleased to be at issues related to energy. That's what we're all about at Power Struggle Today. I'm pleased to be joined by Jack Mintz. Jack's an economist and he's also the President's Fellow in Public Policy at the University of Calgary's School of Public Policy. He's one of the most distinguished economists on the scene. I've had the chance to interview him and I always appreciate what he has to say. Welcome to the show, jack. Thank you, stuart, as an advisor on economic policy over your long career. Tell me, jack, what's the biggest win you've ever scored, so to speak, over your career? That one thing where your advice was taken and something happened.
Jack Mintz:Oh dear. There's probably a few good examples I can give of that, but probably one of the most important things I did was chair a panel on business tax reform for the Honorable Paul Martin when he was Minister of Finance, and we had a very good group of people. We made some very significant recommendations on business tax reform and initially the government was a bit slow in trying to move ahead, but then after a year they did, and there was very significant change done to the corporate tax system in Canada as a result of that report. The provinces actually followed along too and adopted a number of the recommendations and philosophy of the report, and so it certainly had its impact that I was very pleased with.
Stewart Muir:So that was the government of Paul Martin, who was a liberal prime minister of Canada. Have you advised prime ministers or governments from across the political spectrum in your time or?
Jack Mintz:governments from across the political spectrum in your time. Yes, I have. I also advised Stephen Harper and his government during his time. I've also worked earlier on at finance in the Department of Finance from 1984 to 86, when John Turner was just appointed as the prime minister and then went into election and lost it, and so the Mulroney government came in and I was at the Department of Finance working on corporate tax reform and in fact I wrote a document at that time that came out with Michael Wilson's 1985 budget on restructuring the corporate tax, and again a number of things were adopted out of that reform as well. So I had that experience.
Jack Mintz:I worked with the World Bank, the International Monetary Fund, the OECD and others on tax reform, sometimes on federal fiscal relations in some of the federal countries, sometimes on some aspects related to goods and services taxes or value-added taxes. You know a host of things that I've done over the years that involve governments of different stripes, and in Canada I worked with a number of the provinces, including even giving advice to whether it was the NDP in Saskatchewan or the liberals in Prince Edward Island or the conservatives in some of the other provinces as well. So I've had a varied background which I've enjoyed over the years.
Stewart Muir:So you're a great example of an impartial advisor on information that you validated as a PhD economist yes, I think I've always told people how I felt.
Jack Mintz:Yes, I think I've always told people how I felt, and some people liked the message, so they adopted it. Some other people maybe didn't like it and so they didn't want to have my advice. But that was fine. I told. No matter who was in power or who was seeking my advice, they would hear the same thing from me, no matter what.
Stewart Muir:This will sound like a dumb question, so I hope you will permit me, without mocking me what is the economy and how does it work?
Jack Mintz:Well, an economy, I guess, is defined as all the value of all the transactions that are made in an economy between households and firms. Among firms, they're buying and selling goods and services. Households are supplying labor and maybe capital to firms to produce things. It's a very circular picture in which money rolls around. In which money rolls around and, of course, the important thing about economics is that it tries to explain how decisions are made to optimize the value of things for households and for firms as a result of people just making their transactions in their best interest.
Stewart Muir:You're a PhD in economics. You're from Edmonton, Alberta. There's another PhD in economics from Edmonton, name of Mark Carney, who's in the news a lot, Probably why we're talking today. I mean, how many PhDs in economics come from Edmonton? Is it a thing up there?
Jack Mintz:Well of course there are PhDs. I didn't get my PhD from Alberta. I was born and raised in Edmonton. Right you come from Edmonton.
Stewart Muir:And.
Jack Mintz:I went to the University of Alberta for my undergraduate degree and then I went on and did a master's at Queen's University. I worked a year at the now-defunct Economic Council of Canada and then met my wife at the end of the year and we went off to England where I did my PhD for three years. And then I came back and I taught at Queen's for 11 years and University of Toronto for 18 years and then I went out to Calgary to start up the new school of public policy at University of Calgary. To start up the new school of public policy at University Calgary.
Stewart Muir:Now I heard that Mark Carney got the same scholarship as you to get his PhD in the UK.
Jack Mintz:I understand he got a Commonwealth fellowship and so did I. It was a very competitive process at that time. They awarded Commonwealth fellowships the UK government did did to a lot of the old colonies of the British Empire, now referred to as the Commonwealth. By that point Canada got 10 of them every year and so I was very lucky to get one. I was very pleased to get it and it was a tremendous support to have. In the first two years, in fact, I turned down a scholarship a Canada Council scholarship, because I did get the Commonwealth. But then in my third year I took the Canada Council one because Commonwealth was good for two years.
Stewart Muir:Jack, I must say you come across as calm and rational, the epitome of a scholar in economics. But in seeing your writings of late and some of the things that when we were on a stage together in Vancouver, I detected a man frustrated by circumstances that are around us in the Canadian economy, can you tell me about this frustration you're experiencing?
Jack Mintz:Well, I think it really goes back to, I think, the past 10 years. As I mentioned, I worked back in 1984 in my sixth year at Queen's University. I spent two years at the Department of Finance. I saw the operation of government at that time. The Mulroney government came in. They had some big ideas, including tax reform, of which the goods and services tax was one of the pillars that later came into being. But also there was the free trade agreement with the United States. That was done. I think that was a tremendous move forward. Marwini also tried to deal with Canada's constitutional problems and particularly tried to get through the Meech Lake, a cord that didn't go through, and so he got two out of three things done. But uh, but you know, he, he certainly had some success as a prime minister and the government at that time had success. And then I was around, uh, as a clifford clark visiting economist at finance in 96, in 1997.
Stewart Muir:so jean chien, prime minister at that time.
Jack Mintz:Yes, Chrétien was the prime minister and Paul Martin was the minister of finance.
Stewart Muir:Waiting in the wings.
Jack Mintz:And I was brought in at a very high level to deal with both budget issues as well as chairing a business tax reform panel that I mentioned earlier on, and there were a lot of good things done during that period, particularly dealing with the terrible deficit that we had. Tremendous progress that was made. Tax reform was also done. There were a number of very good decisions that were made by the government at that time, and so I was very pleased to see that kind of progress. And then when Stephen Harper got elected in 2004, and he as a minority government, then later on as a majority in 2011, but he also did some very good things. I was on the Economic Advisory Council that Jim Flaherty appointed when he was Minister of Finance in 2008 to deal with the financial crisis. I saw firsthand the work that was done, especially by the Department of Finance, in dealing with the financial crisis, and also the Harvard government made a number of very good decisions, including some movement on taxation. Even further movement he got rid of the Canada Canine Wheat Board, which was a very poor institution to have in Canada. It was there for years, but it was certainly tremendous progress that was made in improving the distribution of grain for Canadian farmers, plus a number of other reforms that were done. So you know very good government.
Jack Mintz:As a result, my real frustration has come since 2015, where I've seen government decisions that have been less focused on issues like productivity and growth, a movement away from the kind of fiscal discipline that we started First under Mulroney, although he didn't do a great job at it. There were things that he should have done, that he didn't do with the deficit, but it certainly was dealt with by the liberals in the 90s. The Harper government continued it and even with the financial crisis, harper ended up restoring balance to the books by 2015. And so there were a lot of good things that were done, but then I started seeing that unravel and I was getting very concerned about Canada's productivity and its growth prospects as a result of focus on redistributing income, which I think is important to have a social safety net, but not at the expense of giving up on growth. And here we are 10 years later and I feel that my concerns are justified in terms of what I've seen over the past 10 years.
Stewart Muir:So, jack, you were active as an economist and advisor under John Turner, when he was head of the Liberal Party, under Moroney, when he was the conservative prime minister, under Jean Chrétien and then Paul Martin. As two successive Liberal prime ministers, you thought things were working. You seem happy with the general drift of things, the program review that you referred to, when government was just pared back to what it needed to be was under a liberal government in 93 onwards, and then the other reforms you initiated, and then Harper came along, and it seems to be a story of continuity through all of those years until 2015. Would that be a fair summary?
Jack Mintz:I think it would be a fair summary and I've written about this. There was a change in 1980. Well, let me go back a bit when I was a PhD student in England. I saw the PhD student in England. I saw the difficulties that Great Britain went through with respect to having an economy that was really going downhill. You know, there were a lot of difficulties. Exchange rate dropped like a stone. In fact, when I first came to Britain in 1975, it was $2.30 Canadian for every British pound. One year later it was down to $1.68. I mean, that's a tremendous change to happen in devaluation and it was part and parcel of what was going on. I remember the coal strike that went on when I was there, the bread strike where all of a sudden you couldn't buy bread, et cetera, et cetera. All these things happened and towards the end, that was the time when I became, when I was going back to Canada, but it was also the time that Margaret Thatcher got elected and then, of course, reagan got elected in 1980.
Jack Mintz:And there was a big switch actually in public policy in the world, including Canada, where it became a focus on trying to grow the private sector by reducing the role of government or the intervention that governments had that impeded growth. Governments had that impeded growth. In fact, when I was at finance in 1984, mickey Cohen, who was the deputy minister at that time, prepared books for the new government whoever it was going to be, whether it was liberal or conservative on removing obstacles to economic growth in Canada and it had all the sorts of things that we saw later on. You know privatization, tax reforms, a number, you know a host of policies that would really put a focus on economic growth.
Jack Mintz:Because previous 15 years were not very good years and from an economic policy perspective we didn't have very good growth and governments inflated the economy. We had very high inflation during that period and there were a lot of severe problems as a result of government spending that went up much faster than taxes and huge government deficits and a pileup of debt during that period. And when the Mulroney government took over it was to start righting the situation and even though he did make some advancement during that period, it wasn't enough really and really waited to the liberals in 1993, when they got elected, to start really dealing with the deficit through a very difficult 1995 budget that led to significant cuts. But it was all a way of trying to right what was going wrong.
Jack Mintz:And of course the provinces also carried out similar changes, particularly in Alberta and in Ontario. There was quite large changes that were made, but even in Saskatchewan trying to deal with a fiscal situation, but all reflecting really a new way of looking at things philosophically in the world. Going back to the Reagan and the Thatcher revolution that said we have to rely on the market to help grow the economy. We can't just have governments trying to lead it through this through their various activities.
Stewart Muir:And we have terms from then like Reaganism or, you know, thatcherites doing their economic policy. Those were used more as epithets because not everyone was in favor of breaking up the old order, because there were different oxes that had to be gored there. Do you think it was something that when it came to Canada through the actions of liberal and conservative governments, that, because it had happened elsewhere already, it was maybe an easier transition for Canada just to get with the program and pare back excessive spending and have a balance of growth and also redistribution?
Jack Mintz:I think the issue is balance, and that's what Canada was good at is keeping that balance between making sure you have good public services, a social safety net for people, but at the same time you have spending on those activities that create growth. I remember one thing I always liked about Paul Martin's budgets particularly is they were very focused and everyone was on a very specific thing and everyone was on a very specific thing, whether it was research and development or education, for example. But those are productivity-enhancing expenditures that you know that was an emphasis during that time, and so it wasn't just tax reform or deregulation or privatization you know that was carried out but it was also really having a much better focus for government spending that really put emphasis on areas that needed to be done and it wasn't just displaying a spending that went on over.
Stewart Muir:You know, at that time it feels like a different era. I remember, as a lowly journalist showing up at Paul Martin's office. We'd have a conversation almost like this. It would be like he would explain his idea to me and I'd go wow, that's fascinating. And he actually took the time to meet with me when I would make my occasional forays out to Ottawa from Vancouver. I feel like we're in a different era now where if I did that meeting, all I would get would be some sort of bizarre sound bites. It feels like we're in different times. Has it changed? Maybe? Before we go there, I just want to say that you started talking about 2015, forward and what's different. I want to come back to that in a moment, but has something changed in how people talk to each other?
Jack Mintz:Okay, I've written about this once before. In fact, I gave a speech called the Princeton Lectures at University of Alberta recently and I republished it in the National Post. But basically it's an argument that there's been a tremendous change in philosophy public policy philosophy over the past 25 years and when we go back to the year 2000, it was really a period of very good growth in the world. You actually had a sharp reduction in inequality in the world, in the sense that Asian countries grew a lot and their per capita incomes grew a lot. But it came at an expense, and the expense was certain parts of the population in the advanced countries, where people lost jobs because manufacturing went to Asia and China and et cetera, and so there became a kind of resentment towards this globalization and trade. There became a view that governments weren't controlling the economy anymore well enough and they needed to be more directive of things. And then the 2008 financial crisis, where really bad banking practices, partly as a result of the regulatory system, led to people losing their houses in Europe and in the United States and a real feeling that governments weren't doing their job very well. And it was after that period, plus the adoption of social media, that really gave a bullhorn to people, whether it was Occupy Wall Street or later on, to voice their criticisms of what was happening. To voice their criticisms of what was happening.
Jack Mintz:And so in the past periods, especially since 2010, we started seeing the shift in policy, where it became much more nationalistic.
Jack Mintz:Governments had to control the economy, industrial policy became in vogue, trade became a bad thing, not a good thing, even though it allowed people to have more redistribution to parts of the population.
Jack Mintz:People started talking about guaranteed incomes, all sorts of other policies, but I think the concern that I had was the movement towards nationalism, and, in fact, we've now seen a manifestation of that over the past year, as the Trump administration has brought in tariffs that we haven't seen before, very high levels of tariffs. All that is part of an America first strategy, which is a very nationalistic strategy, which is a very nationalistic strategy. There's also been more wars happening, as we've seen in Europe and the Middle East, but now we're starting to see governments ramping up their military expenditure and, partly pushed by the Americans, saying we no longer want to pay for it all. You're going to have to pay for it too, and so we're seeing a very different world today. That kind of reminds me, unfortunately, of what happened before the first world war and, of course, we saw what happened with the ugly side of nationalism in the second world war, when Hitler came to power and carried out the most terrible things that we still haven't forgotten about today.
Stewart Muir:It almost sounds like Trump could be seen as a historical inevitability. Is that?
Jack Mintz:possible. I think it is an inevitability. I think he's an extreme form of it. When he brought in this reciprocal tariffs I would have never thought he would bring in 50% tariff rates and things like that, but what we're seeing today in the United States and in Europe and other countries is really, I think, a manifestation of this change that I think began in 2008-9 with the financial crisis, where all of a sudden it became markets are bad. Only governments can solve problems and, of course, as soon as you have only governments can solve problems, it increases or moves more and more towards nationalism, where governments have to control the borders and the country that they're running.
Stewart Muir:So how was this experienced in Canada starting in 2015? I mean, of course, we know that was when the Trudeau government took office, but we're pointing here you are pointing to some patterns as well that are bigger than one country.
Jack Mintz:Yeah, well, it partly started in the Harper government had to deal with takeovers by state-owned enterprises in in the energy area, uh, particularly uh in Canada, and and started using national security as as a way of, you know, blocking uh certain types of of uh takeovers and and I didn't have a major issue on the national security side by side. But I did have a concern about state-owned enterprises taking over Canadian businesses, because here we went to a lot of length to privatize companies in Canada from crown corporations, to great success actually in many cases and then all of a sudden we're getting state-owned enterprises buying up Canadian businesses and I had my concerns with that particularly.
Stewart Muir:I thought one of Canada's problems as a country is that we have a pretty small population, vast landmass. It's very hard to get the amount of capital required to develop industry. So we have to go to foreigners to say bring us your capital and help us develop this thing here in Canada. So if it's a rich person from Europe or it's a state-owned enterprise from Asia or whatever it is, it's just someone with money. Isn't that a good thing if we want to develop our economy, regardless of who has that money?
Jack Mintz:I have always written that foreign direct investment is a good thing. It can improve management, it can bring new technology. But I've also written about going back actually to my PhD thesis. I've also written about state-owned enterprises aren't all that successful. In fact, my whole PhD thesis was about public-private mixed enterprises companies that are jointly owned by governments and private investors and, in fact, jointly owned by governments and private investors.
Jack Mintz:And in fact, when China state-owned enterprises came in and bought Nexen and some other companies in Canada, I couldn't believe that my PhD thesis came alive again, because the state-owned enterprises from China would say oh no, no, we're just like commercial enterprises, we're no different and in fact we sell shares. Some of our ownership is sold off in the market in Hong Kong or New York, so we behave just like commercial enterprises, which was exactly opposite to what I showed in my PhD thesis 30 years earlier. And several other countries there became this view that all of a sudden we should have state-owned enterprises, should partly sell their shares off or their ownership off to have some market discipline and they would perform better as companies. But that actually didn't happen. In fact, it's a very difficult relationship between government and private investors because governments want to pursue objectives that are not just profitability, and then they start bringing in requirements that are needed. So I didn't object to foreign investment coming into Canada. I'm quite agreeable to it. My bigger problem was state-owned enterprise investments coming into Canada.
Stewart Muir:Look, we're in the middle of the federal election race. I just want to get at some of the issues that seem to be consistently at the core of what people are talking about, and I'm really surprised that in 2025, energy is a huge topic, not just before and in the early days of the race, but for weeks. It's maintained. Pipelines, building pipelines. Candidates are being asked how would they build pipelines? Would they build pipelines? And we're getting some different answers. I'm not clear whether we're getting straight answers from everybody and I'd like you to help me find that out. So, mark Carney, leader of the liberals, pierre Poliev, conservatives their solution. In a way, they have the same solution streamline infrastructure and energy projects. They're both talking about that. Do you think that they are saying the right things to get those things done? Do you think?
Jack Mintz:that they are saying the right things to get those things done. I'm actually kind of gratified that both the liberals and the conservatives are focused much more on growth this election. If you notice, there's hardly any discussion about starting up new programs for redistribution. For redistribution, I think people are now very worried about economic growth because if you don't have economic growth, you can't afford the redistribution programs you want, and that's why I've always been worried myself about economic growth and, unfortunately, the past decade we have really hurt ourselves in terms of not just the oil and gas sector, in terms of getting things done, but also even in mining and other resource sectors where we could do a much better job.
Jack Mintz:Because Canada, regardless of what anyone wants to say, is basically a resource-based economy. It's given us huge comparative advantage and opportunities to create wealth, and so both parties seem to be much more focused on especially on energy and trying to get things going. However, there is, I think, an unclear statement from the liberals and Mark Carney vis-a-vis the oil and gas sector. They talk about having electrical transmission across the country, and there's been some discussion about maybe a pipeline from east to west, maybe to displace the imported oil that we bring from abroad, but I don't see a real commitment towards liquefied natural gas being sold internationally or more oil being sold internationally by the liberals, although it's very clear that the conservatives would be willing to go in that direction, and so I still think that's a major wedge issue in this election campaign, in that we really don't have a clear view from the liberals whether they support more oil and gas development.
Stewart Muir:Jack, there's a policy from the Trudeau time, the emissions cap. And recently another economist this one, the parliamentary budget officer said it's not a cap, it's a production cap. It's not an emissions cap. It will reduce the GDP from the oil and gas sector by 5%. It'll cost, I think, 40,000 or 42,000 jobs. It's definitely a cap on production and that's going to result in a specific economic decline. I noticed that was brushed aside almost staringly by Mark Carney, as if. Who's this parliamentary budget officer? What does he know? It's an emissions cap, not a production cap. I mean, what do you make of this? Which is it?
Jack Mintz:Oh, it's definitely. It's an emissions cap that will lead to a production cap. There's no question in my mind. It's not just the PVO analysis, but it's also other analyses that make this very clear. But it's not just that.
Jack Mintz:Also, the concern made clear that they want to revamp the regulatory system Bill C-69, which, by the way, not only makes it very difficult to build oil and gas infrastructure, but it's also very difficult to get mining projects off the ground too. Supposed to take a short period to get approvals done, but they. It has only been one or two projects that have actually gotten through the whole system and it's took years to get them approved. And and there's a whole bunch of projects that are, that are in the in the line, but they've. They've gone well past the first stage where there was supposed to be approvals by a certain point in time. Uh, and it hasn't been done yet.
Jack Mintz:But that's not the only issue. There's not just only the emissions cap, the oil and gas emissions cap and Bill C-69, which has really hampered the development of regulation because of all the requirements that are required and that are part of that system, but also the carbon plan that is being proposed by the liberals, and I've read that plan in quite detail. It includes new mandates, for example, for industrial emissions. It has new requirements that are going to be under the so-called industrial carbon tax. That will be a lot stiffer. It includes the idea that businesses will sell credits or buy credits from not just other firms but from the private sector, which I find really concerning because I suspect that's going to be full of abuse in the end. And then there's a carbon tariff that's being proposed, which is very complicated or border adjustments as it's called and that could have a very significant impact, especially since the United States is not going in that direction, and I can imagine us trying to tariff manufactured goods coming in from the United States because it has too much carbon associated with them.
Stewart Muir:So there's a couple of policies there where there's a very stark contrast between Mark Carney for the liberals and Pierre Poliev, and those first two are in that category. The emissions cap Carney will not get rid of, poliev will. Bill C-69, carney keeps, poliev gets rid of it. Now they differ in this respect, but they're both saying oh, we want to build pipelines. Well, polyev has some ideas about an energy corridor. That's an interesting idea, and when he's in Calgary and maybe Edmonton, mark Carney is in favor of pipelines. But I noticed he was in Quebec and he said something different that left it open to interpretation. Maybe pipelines aren't what's needed. Is this confusing?
Jack Mintz:It's confusing, but it also makes you question what is the real stance of the liberals and can you really trust what they're saying? And I think that's one of the concerns I have is there's a lot of promises that have been made in this election campaign and it's kind of interesting that you know governments that do get elected often like to carry out their campaign promises. You know, sometimes there's some that might get dropped, mainly because they're unrealistic in the first place, but I do worry that actually. You know, we've seen the liberals try to move back to the center, but they've been copying a lot of conservative ideas. You know, for example, not going ahead with a capital gains tax increase, but who knows, maybe that will change. Ahead with a capital gains tax increase, but who knows, maybe that will change. Getting rid of the fuel charge, carbon tax but it actually hasn't been killed by legislation Because of these flip-flops that are done by the liberals, for example, on the oil and gas missions.
Jack Mintz:Cap is a good example. First Mr Carney said he wasn't going to move ahead with caps and then two days later he said OK, I'm going to be doing it, because his minister of environment said that, and I think part of that reflects what's happened to the Liberal Party. The Liberal Party moved very much to the left over the past decade. It's not the same Liberal Party that I knew in the 1990s and worked with at that time. While a leader may try to shift some of that back to the center, he doesn't necessarily have full control over the party, and there's the same people that are going to be elected if they end up winning power. It's going to be the very same people that are going to be back in the cabinet that were during the turtle years, and so I don't know and I'm not convinced that we are actually going to see a major change in policy by the liberals if they win this after this election.
Stewart Muir:There's a term they use in the Quebec press Trudeauism. You don't really see that for whatever reason, in Anglo-Canada, although it's a pretty good description of something that was around for 10 years and voters by the end got pretty sick of and then they got rid of the guy called Trudeau but not, it would seem, Trudeauism. So is Carney just a continuation of Trudeauism, based on what we're seeing on campaign?
Jack Mintz:One thing you know, and I do know Mark Carney and you know he is an intelligent person and I don't doubt that he will probably make some better decisions as a prime minister.
Jack Mintz:But he does have his ideology, particularly over climate change, which again will go contrary to resource development, especially in oil and gas. But also there'll be issues around agriculture and when you read his book Values and some of the things that he said in the past and using the financial sector to influence the way capital is going to be spent on companies that cause emissions or don't cause emissions, there'll be an allocation towards those companies that reduce emissions. So I think a lot of that is the sort of thing that we've seen over the past decade. That I think will continue. And of course, this will have not only major issues vis-a-vis the economy and growth of our economy, because the oil and gas sector, the agricultural sector, generally the resource sector, is so important to Canada that it also will have some implications for national unity, because we might see a continuing alienation in Western Canada. That will continue. That could have ramifications down the road in terms of what happens to Canada as a country.
Stewart Muir:Well, I see an economist who I came to associate over the last decade with that kind of a green conservative movement of carbon pricing conservatives, christopher Reagan from McGill McGill, and he's out saying well, you know, the submissions cap could provoke Western separatism in a way that we might not be ready for. You know, the cap is causing a lot of agitation, not just in Calgary, where you might say, oh yeah, what else is new? But in Toronto. I mean, we saw business leaders who wouldn't normally be putting statements out of a partisan nature to say vote for this party To me. I was surprised to see like 30 names of the titans of business of Bay Street saying you know, we're really concerned about these policies, so much so we're asking you to place your vote over here. This seems like new territory. Things have been turned upside down.
Jack Mintz:Oh, that's right, and I think that's why this is a very important election in that sense. And you know, I think the you know, and I wrote about this a while ago after the carbon plan, that was one of the first things that Mark Horning published was this carbon plan. It came out very quickly and I said, you know, and I went through that plan, I said here, this is really replacing one carbon tax with another bigger carbon tax on big emitters, and plus, there was a lot more added to it in terms of what the carbon plan would be. And I said this will be a wedge issue, no doubt.
Jack Mintz:And I think the reason why you have business leaders here in Toronto that are very concerned is you look at the story of Trans Mountain Pipelines. That could have been built in just a few years' time if it had gone away, but instead it took years to get developed. It took years to get developed and now that it's finally working, which gives us an option vis-a-vis the United States in terms of selling our oil somewhere else besides the United States, it has added also 0.25 percentage points to Canada's GDP, and that's not a small number. And so, you know, add up all these different projects that haven't been able to go through all these years is a very good example of kind of the problems that we've missed out on or we've made and the opportunities that we have.
Stewart Muir:Trans Mountain Project. Now we have a government that says you know what, let's tax that out of existence, let's put a cap on the production of that, even though we just spent $32 billion of taxpayer money to build that project. That gets that very product to market. You know what? I don't want to seem like we're just singling out Carney. Let's look at Poliev here. He's talked about this National energy corridor. Is this a panacea? Is it a quick fix that sounds great but will fall apart as soon as you look into the details?
Jack Mintz:Well, I think it's going to be a different way of regulation.
Jack Mintz:I actually, when I was director of the School of Public Policy, we actually started a series of research on the national corridor, and I look at it not just in terms of energy but in terms of other infrastructure, and my favorite example is Australia, but there's been some other countries that followed this type of approach where you have a corridor that's created that deals with some of the common issues that would be found with any project that would go into it, whether it's an electrical transmission line, a railway, a pipeline or whatever, and the issues that you deal with with the corridor are the kinds of things that are very important, such as the indigenous claims, some of the maybe major environmental issues that are common to all projects, things like that.
Jack Mintz:But once a corridor is approved, then the next step is if somebody wants to put in a railway, or if they want to put in a pipeline or electrical transmission line, they just need to get the project approved without adding all the things. In fact, under Bill C-69 today and the Australians have a very fast way of getting projects approved. In fact, when I was on the board of Barefield, we were able to get in one year a railway put in Western Australia in a pre-approved corridor as an example, and I know that TransAlta was able to get an electric transmission line quickly done within a year in Australia, but in Canada we've taken years to get these things approved, and so I think there is something to the concept of national corridor, but I wouldn't want it to be just an energy corridor that the Conservatives have mentioned. I like it to be something that would apply to any type of infrastructure that we want in order to transport goods or energy or for whatever cross lines.
Stewart Muir:A year ago you wrote a paper it was called or you co-wrote Resources Are Still Our Golden Goose, and I read that paper. I thought it was full of insights Too many to mention here, because you see, natural resources, that's what resources are, and natural resources are mining and forestry and energy, and maybe we've missed some. But things that come out of the ground in some form are grown or mined or cut down. Why do you see them as so foundational to the Canadian story Jack?
Jack Mintz:Well, of course, it goes in history back to the fur trade. In fact, we sold lumber fish and other things at the beginning when Canada first started off. But it's a huge comparative advantage for Canada the resources and one of the things in preparation of that paper I spent a lot of time looking at was the trade literature. And sure enough, the areas where you have comparative advantage are the ones that you end up exporting and you actually end up creating a lot of wealth for a country and a lot of economic progress. And we were blessed with resources. It was kind of like mana that fell from heaven and we should be taking advantage of that and we shouldn't believe that.
Jack Mintz:In fact, there was a view Justin Trudeau even said it himself that we're not a country of resources, we're going to be a country of resourceful people. Well, that's all very nice, but in fact I was really shocked. I was looking at a website of the federal government a couple of years ago and they talked about all the advantages of Canada, but the one thing they didn't mention was resources. And yet we built this country on the resource sector. And so when you look at our exports, our major exports, except for the auto, trade is all associated with resources, whether it's oil and gas, mining, agricultural goods, mining agricultural goods all these things are resource-based.
Jack Mintz:When you look at the importance of the energy sector, as well as the resource sector in general, to Canada's GDP, which includes all the related industries that are at both the manufacturing and the distribution state, and related being in the sense that a significant part of their value added is based on resources of some sort, it's like 25% of Canada's GDP in total. So it's a huge industry. It's a huge part of our life in Canada and it's paid for a lot of the things that people want. They've gotten good salaries, so they have money in their pocket to go and buy goods and services. We've gotten taxes out of the industries. That has allowed governments to provide all sorts of social services, which kind of goes back to my long-run view about how important it is to have a strong economy so that you could have real prosperity in society at the same time, and that's why I've always been very focused on economic growth as a very important thing for countries like Canada.
Stewart Muir:Now, these things were true before January 20th, but 86 days into Trump 2.0, should we be thinking even more about the importance of that point?
Jack Mintz:Yes, I think that it's very important that we think about what kind of world order we're going to have in the future.
Jack Mintz:Resources are still going to be needed, no matter how the world gets reordered after what Trump is doing, and we may want to trade with other countries.
Jack Mintz:In fact, I had argued in my recent piece that not only should we look to try to trade with other countries, but we should actually go back to some of the trade agreements we've had like with Europe and Asian countries and even go further to reduce tariffs and non-trade barriers that we can, and I hope that we can actually work out something with the United States.
Jack Mintz:Maybe it will be after Trump leaves. I think we'll be dealing with whatever we have in the United States to deal with, because, in the end, we're a continent that has benefited from the strong ties that we've had between Canada, the United States and Mexico, and so I think we need to restore that wealth and think of North America as a very strong region in the world. That is very important, and I think even Trump has a view that the continent itself, the North American continent itself, is really the American playpen in a sense, and of course, we don't want the United States taking over Canada, or nor do we want the United States taking over Mexico. That would be not something that would be even conceivable, I think. But certainly working together will probably still be required because even with trade diversification, our best economics lie with trading with the United States.
Stewart Muir:What if we fail in reaching the promise of getting resources to market?
Jack Mintz:I think that you know, even though we have very good education system, well-trained workforce and we're a peaceful society here in Canada, but you know, the resource sector has given us the kind of comparative advantage that you don't find elsewhere, because there are other societies that have infrastructure, they have a good education system, you know, et cetera. But unless we find an alternative, if we're just doing what everybody else is doing, we don't have any comparative advantage in doing that, and so it's going to hurt our prosperity quite a bit if we shut down that resource sector.
Stewart Muir:Jacques Mitz, thanks for your insights.
Jack Mintz:My pleasure.
