A nine-step plan to fix Canada’s resource economy – by Barrie McKenna (Globe and Mail – October 6, 2012)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

OTTAWA — Canada will never be a true resource superpower until it shuns “rip-and-ship” extraction, embraces sustainability and shares the wealth with future generations.

Those are among the key conclusions of a provocative new report by the Canadian International Council, entitled “Nine Habits of Highly Effective Resource Economies.” Canada has won the “geological lottery,” with vast stores of resources that the world craves, but it risks squandering that inheritance because it lacks a clear national plan to exploit them wisely, the CIC says.

The foreign affairs think tank points to Norway, Sweden, Finland and Australia as the best examples of countries successfully leveraging their resources for maximum economic and social benefit.

“Other resource producers do a better job of collaborating, of finding a balance between environmental protection and the economy, of adding, building, or extracting value from their resources, of saving for future generations, and of being strategic about resource development,” according to the report, written by Madelaine Drohan, The Economist’s Canadian correspondent and former Globe and Mail reporter. “There are smaller countries with fewer resources than Canada that punch far above their weight on the global stage.”

Canada is hampered by a “fragmented approach to resource policy” that is often reactive to external events, such as the U.S. decision to block the Keystone XL oil pipeline, growing opposition to the Northern Gateway pipeline and state-owned CNOOC Ltd. of China’s $15-billion bid for Calgary-based oil producer Nexen Inc., said the report, based more than 160 interviews with industry players and experts.

CIC offers a nine-step plan to put Canada’s resource economy back on track:

1. Treat resource royalty revenue as capital to be saved and invested rather than income to be spent

Use royalties to lessen currency volatility, even out boom-bust cycles and make long-term investments. The best model is tiny oil-rich Norway, which has put $617-billion (U.S.) into its sovereign wealth fund. Only two provinces, Quebec and Alberta, do it now in Canada, but they have just $20-billion (Canadian) saved.

2. Build value on resource base

Emulate Sweden and Finland by providing industry with the tools needed to innovate, including modern infrastructure, skilled workers and public research. And companies have to invest much more money in R&D to overcome the stronger dollar, climate change and new competition.

3. Promote joint research between governments, universities and industry

Ottawa and the provinces should target their R&D spending at collaborative projects and promote a “Team Canada” mindset. The payoff in Sweden and Finland has been more bang for the research buck and more focused results.

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/a-nine-step-plan-to-fix-canadas-resource-economy/article4593322/

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