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“A sliding currency can provide a sugar high and Ontario will be feeling its
effects in 2015. That’s welcome news for a hardpressed province. But without
fixing the fundamentals to make Ontario’s economy durably competitive, Captain
Kath can’t save us for long.” (Konrad Yakabuski)
It’s a tale worthy of Marvel. Just as the oil-slathered edifice of the Canadian economy tilts dangerously toward collapse, our superfit superheroine races in her Reeboks to the rescue. With her sidekicks Cheap Gas and Weak Loonie, Captain Kathleen Wynne vows to save the country.
“Ontario’s economy can be a buffer,” says the Premier of Canada’s once-dominant province. “We have a diverse economy and it can be a buffer, in a time like this, against some of that volatility.”
For a decade, Captain Kathleen’s peaceable kingdom had been so pummelled by a soaring petrodollar that it was humbled into taking equalization handouts. But no hard feelings, Alberta. Your pain is Ontario’s gain and Captain Kath is Canada’s new economic superhero.
But can her province really save us? Ontario may lead the country in economic growth this year. But it can’t match the beef-fed growth that Alberta produced for a decade and which ensured that Canada survived a global recession with a few bloody scratches instead of in traction.
Unfortunately for Ontario and the country, an 80-cent Canadian dollar can no longer fuel the kind of economic boom it once guaranteed. The structure of the economy has changed in the past decade and manufacturing – once Ontario’s engine – is a shell of its former self.
Though a low dollar drove an export boom in the 1990s, it also discouraged the kind of productivity-enhancing investments that might have saved manufacturers when the loonie rose toward parity. The result has been a dramatic decline in manufacturing capacity.
At 83.8 per cent, the capacity utilization rate in Canada’s manufacturing sector already stands above its historical average. The rate fell to 69.5 per cent during the recession in 2009. But a good chunk of the “improvement” since then is due less to expanding output than the fact that plant closings mean overall capacity has declined. What’s left is running at nearly full tilt.
For the rest of this column, click here: http://www.theglobeandmail.com/globe-debate/dont-wait-for-captain-kath-to-save-canada/article22409800/%3bjsessionid=8FCQJ0FSlJkRNTv5Y5pMMvwQKdNWyrQ9jsCpSJtFRKrhSW92g4DC!1189492431/?ts=150112123228&ord=1