Gloom and doom not shared by Bank of Canada governMark Carney acknowledges the perils of Europe and U.S. economies, but he offers adjustments Canada can make to capitalize on demand for our country's natural resources elsewhere. Notice the paragraph highlighted below in which Carney predicts precious and base metal prices will remain strong for the "foreseeable future."
Bank of Canada chief urges trade diversity
Governor's remarks viewed as an endorsement of the Northern Gateway pipeline
By Peter O'Neil, Vancouver SunBank of Canada Governor Mark Carney called Friday for a beefed-up trade diversification strategy that should include major pipeline investments linking Canadian oil and gas to booming Asia-Pacific markets.
Carney, speaking to the House of Commons finance committee, stopped just short of endorsing the controversial $5.5 billion "Northern Gateway" pipeline that would link Alberta's vast oilsands riches to hungry Asian markets via a pipeline to Kitimat.
But a Bank of Canada spokesman confirmed that Calgary-based Enbridge Inc.'s Northern Gateway is the kind of investment Carney was contemplating when he counselled MPs concerned about the mounting debt crises in the U.S. and especially Europe.
Carney said the Canadian economy depends on two areas of potential future growth: productivity investments by the many cash-rich Canadian corporations, and trade diversification into markets other than the U.S.
He cited major emerging economies and specifically China, noting that strong demand has led to "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 MPs.
Alberta Tory MP James Rajotte, the committee chairman, said after the meeting that he viewed Carney's comment as a Northern Gateway endorsement.
"I certainly saw it as that," Rajotte said.
Bank of Canada spokesman Jeremy Harrison said Carney is aware of Northern Gateway but wasn't specifically endorsing the project, now before a joint review panel involving the National Energy Board and the Canadian Environmental Assessment Agency.
But "certainly that project would be one that is consistent with what he meant" when Carney urged greater corporate investment to take advantage of hot demand for commodities, Harrison said.
Enbridge wants to move up to 525,000 barrels a day to tankers off the West Coast through twin underground pipelines 1,177 kilometres long. The project, which also includes the construction of a new marine terminal in Kitimat, is intended to give the Alberta oilsands sector an alternative market to the U.S.
The added competition is expected to bump up the price of oilsands oil sold to U.S. customers.
But the project faces intense opposition from environmental groups and many first nations in the area. National Geographic ran a feature article last month stressing grassroots concerns about the possibility of a massive tanker spill destroying the pristine coastal environment.
Rajotte said the pipeline project makes sense not just for the Alberta economy but for Canada as a whole, due to "enormous" tax revenues to federal coffers from the oilsands sector. "In my view the pipeline is of national historic interest," Rajotte said.
"It just makes eminent sense for us to have more than one buyer."
NDP MP Nathan Cullen, who represents Kitimat, said Tory MPs are doing so much cheerleading they should register as lobbyists for Enbridge.
Cullen said the public in his region believe the review will be biased in favour of Enbridge's proposal, given that the Harper government has made clear its support.
Cullen said he opposes the project due to environmental risk, first nations opposition, and the "export of jobs" given that the pipeline will transport raw rather than refined bitumen.
"The governor's a very respected voice in our economy, and I've always noticed that he's been very prudent and cautious," he said.
"I think it's a bit imprudent to start getting into favouring one industrial project over another. It puts him into a place that's outside the realm of his mandate and expertise."