Opinion: Canada is broken, how can we fix it?

by Ken Mullen

There is a great statement attributed to the late T. Boone Pickens that goes something like this; “Everybody hates us until they need us. Then, they still hate us, but they have to work with us because they have no choice.” I was at a conference once when he made the statement, and I didn’t fully understand it until he added the comment; “and with that in mind, when they do need you, act accordingly.”

I am an Albertan, a Western Canadian, and I am immersed in the oil and gas industry. I have spent a great deal of time and effort trying in vain to bring forward the importance of an endorsement of Western Canada’s role and importance in Canada as a source of energy and other resources, and cashflow, for the country. I did so premised on the naïve belief that other Canadians would see through the hyperbole of climate change, and the incredibly outsized role that our industry in Western Canada is alleged to play in it. This was a gross oversimplification on my part. What (the recent Canadian) election has instead highlighted for me is the dysfunction of our country as a whole.  It has exposed our incredible void of leadership, and the substantial degree of disconnect among its regions.

I sat in absolute shock while several television “experts” trotted out maps that showed the distribution of votes, particularly in Ontario, but primarily across the urban and suburban landscape of most large eastern Canadian cities. The pundits’ conclusion was that the election boiled down to whether or not you “liked” carbon taxes. Those closer to the downtown cores, who presumably drove less, supported the carbon tax, and were Liberal supporters, while those in suburbs (whose vehicles bear a greater relative share of the carbon tax) supported the Conservatives. While the correlation was favorable, the logic insults the depth of issues upon which the parties fought this election, and the intelligence of the average Canadian voter in those centres. As with so many things, correlation is not the same as causation, and in my opinion it was not a primary contributor in this election either. It just sounded punchy, and fit the narrative. And it highlighted for me the complete misunderstanding by the media of what drove the election results.

In many ways, the election results, flying directly in the face of the demonstrated naivete and arrogance of the Trudeau Liberals, and their new (reduced) mandate, are a gift. They have uncovered for me the following dynamics in this country:

Quebec, through its endorsement of the Bloc has made it clear that it does not want to be part of Canada in anything approaching the same way as the remaining provinces have, at least tacitly, agreed to. Importantly, Quebec rejected the Liberals with almost the same vigor as they did the Conservatives, something that must gall the native son Trudeau. With all of the airtime taken up by pipelines, oilsands, and the virtue signalling in respect of climate change by the Liberals, NDP and Greens, the Bloc was effective in appealing to Quebecers’ desire to maintain their unique status as a nation state within a loose confederation of other provinces, and to maintain their uniquely divisive cultural and language policies. The anti-pipeline comments of their new leader in his victory speech had much more to do with protecting Quebec economic interests in respect of tanker unloading and handling along the St. Lawrence than with climate change, and most Quebecers understand that. Their votes in favour of the Bloc showed a complete disinterest in climate change actually. Despite that repudiation, the biases and pragmatism of the (now) minority Liberals, Quebecers will likely continue to enjoy disproportionate economic benefit funded by the rest of Canada, as the Liberals desperately work to buy them back into the fold. Those Bloc votes are the ones the Liberals will need to win back in order to return to majority rule in the future.

Ontario, on the other hand, is simply enjoying a tremendous economic boon. While pundits point to the “Ford effect” as driving votes toward the Liberals, that assumes an ignorance among Ontario voters, who are assumed to be unable to distinguish between provincial and federal politics, and who are assumed to also have forgotten the economic and social destruction of the Wynne and McGuinty Liberals. Ontarians are certainly more astute. The reality is that Ontarians simply do not care about Western Canada enough to vote for those who would allow the region to prosper. There is no correlation to climate change, no endorsement of any particular party, just a knee-jerk reaction to the fact that life in Ontario is generally very good these days. Ignoring the fact that the boom is driven by government infrastructure spending and a massive housing bubble, the simple reality is that Ontario is in the throes of a strong economic time period, and they do not want to upset that by electing a fiscally responsible government. They are certainly not alone in this.

Despite the massive, direct and indirect economic benefits that the western Canadian oil and gas industry—not just equalization, but direct jobs as well—has provided to Canada’s maritime provinces over the past three decades, their citizens also voted for the debt-fuelled economic stimulus promised by the Liberals, and also adopted the fantasy of Canada as a climate change champion. Apparently they forgot which region dragged so many of them out of bankruptcy; of course maybe they are of the view that oil and gas is truly a “sunset industry,” that it will continue to decline, and that there is nothing in it for them in the bargain. My heart hopes otherwise. Being overlooked by Ontario was not a surprise, but the lack of understanding from similarly irrelevant provinces within this union hurt…a lot.

Notwithstanding Canadians’ belief that we are particularly relevant on the world stage (and try as Trudeau might to buy our way onto it) Canada remains a small country in terms of international influence and impact beyond our resources. That inferiority complex has driven a multitude of poor policies and fiscal waste under the current Liberal federal government that will take decades to undo. The inevitable temporal and unholy alliance between the NDP and Liberals to retain power will perpetuate these policies, although the need for them to reach consensus will hopefully provide a welcome governor to the rate at which the debt and regulations are piled on. On a practical note, it is highly likely that the Liberals enlist the Conservatives to ensure the TMX gets built, although the voting patterns in Western Canada do raise the spectre that it may be more politically expedient to let it die. Billions of sunk dollars, and the spectre of an Indigenous uprising (in the streets and in court) should carry the day.

The western provinces, within which I include eastern and central British Columbia, Alberta, Saskatchewan, and Manitoba, starkly rejected the Liberals at every turn. The paucity of Liberal support in those provinces should be a concern for those of us who live here as it provides clear indication that we will never support Trudeau, nor the current Liberal fiscal and social agenda. This opens the door to a complete abdication of our needs within the context of Canada, and simply invites policy that will directly hurt our interests in favour of those regions where the votes lie. The media pundits (it is a living, I guess) will point to the homogeneous block of Conservative dominance as a clear indicator of separation potential among at least three of those provinces, but that will be seen as hyperbole within days (which it probably is). What is more likely, and preferable in my view, is to take Quebec’s lead. The western provinces will never achieve a voice in Ottawa that matters under the current Canadian political construct. However, much like Quebec, we do have the commonality of culture, politics, and economic need that should compel that we revisit our role within Canada. A great place to start would be through taking control of our pensions, taxation and culture (including immigration and international aid) as Quebec has done. This will drive the capability to reset the equalization formula on terms much more favourable to our unique needs and expectations, and in the bargain will allow Western Canada to remain within the Canadian common. It will require much to overcome the intricacies and terms of our constitution, but it can and must be done.

At the end of it all, this election, while muddled and confusing, will ultimately be seen as a watershed event. It will do, not just by highlighting the tremendous economic and social disconnect among Canada’s regions; this has been highlighted too many times to count. However, in the world of increasing fragmentation and self-determination we currently live in, it will finally initiate the process of renegotiating the “Canadian bargain” across the board. Those of us who still value being Canadian will welcome this. Absent the ascension of a leader having the charisma and integrity to unite all regions of the country (maybe Trudeau’s admiration for dictators is not as naïve as we all assume) the grand concessions that allowed Canada to become a nation will disintegrate. Western Canada has faced similar isolation by the Canadian electorate in the past, and has tolerated the subsequent colonialist management that inevitably follows it. But in a world where the EU can exist, and the possibility of Brexit can develop, the ability of Western Canada to effectively “go it alone” while staying within some form of Canadian union seems highly possible. Rest assured that the recipe for doing so is already being developed.

Ken Mullen is an analyst with Roundtable Capital Partners Inc.