On Tuesday December 4th, I attended an event hosted by the Canadian International Council that featured Madelaine Drohan, the Canadian correspondent for The Economist. Ms. Drohan was mandated to research and write a report on the practices of responsible resource economies such as Norway and Sweden, and how Canada could benefit from adopting such policies. Whether or not one disagrees with the development of the Alberta oil sands or other exploitation operations, it is a thought-provoking process to envision a scenario in which the Federal and Provincial governments start treating resource extraction as a means to fund our present-day social programmes.
Ms. Drohan’s report bears witness of how far behind Canada lags in terms of funding for our social programmes, and our collective vision of the future. As of 2010, only two Canadian provinces, Alberta and Quebec, were putting aside resource revenue into specialized funds devoted to government spending. Together these funds amount a total of 15.6$ billion, which is a staggeringly low amount if compared to funds such as Norway’s, which totalled 512$ billion in 2010.
Canada is in a pivotal point in its history. As our population continues to age, our tax base is becoming increasingly burdened with the financing of our social services. These programmes run the risk of becoming underfunded if our revenues are not diversified accordingly. This is why it is important to start a conversation as to how our resource economy can contribute to the welfare of our social programmes, the backbone of Canada.
This issue is not about the existence of resources, for Canada has been blessed with a vast quantity of them. The issue raised by Ms.Drohan’s report is a matter of restructuring our priorities, and start accounting for longer-term planning in our economy. Willingness, as opposed to profit, guides this principle, and the case of Norway is well known to many as being representative of such a philosophy. But there are other less publicized cases that also reflect this togetherness. One such example is Timor Leste. Since 2002, Timor Leste started a fund raised by oil and gas revenues, which had already amassed 7$ billion by 2010. There is no doubt that Timor Leste’s fund is significantly lower than Canada’s, but unlike our funds, Timor Leste’s is closer to being proportionate to its 1.176 million population.
If a country such as Timor Leste can be proactive enough to have a significant and centralized approach as to how it extracts its resources, I believe Canada also can, and above all, should.
Madelaine Drohan’s report can be found here.