By Gwyn Morgan
Several years ago, a Globe and Mail Report on Business article highlighted the newspaper’s commitment to providing “perspective” in its news stories. I have long considered that a laudable and necessary component of professional journalism. Unfortunately, it’s all too rare in today’s print and electronic media.
One of the most egregious examples of failure to present perspective – on Canada’s economic record – came in the aftermath of the parliamentary budget officer’s report that the federal government’s forecasted $1.4 billion surplus for the 2015-16 fiscal year might turn into a $1.5 billion deficit.
Opposition critics smelled blood. NDP Leader Tom Mulcair told reporters, “The Conservatives have always talked a good game on the economy, but they’ve never delivered on that either.”
Liberal finance critic Scott Brison said, “Their economic record is in tatters.”
Such over-the-top commentary is just part of the political game, especially so close to an election. But that doesn’t excuse reporters for failing to lend perspective. The most obvious question for both Mulcair and Brison is: “How significant is a $2.9 billion change in an $890 billion budget?”
The answer is that it amounts to less than one-third of 1%.
Despite diligent searching, I couldn’t find any media reports that offered that vital perspective.
Now let’s add another “perspective” question that alert reporters would have asked: “Given collapsed oil prices and the China-driven downturn in mining and forestry, isn’t it surprising that Canada can remain the only G7 nation besides Germany not facing a major deficit?”
Failure of reporters to ask such a relevant question reveals a wider naiveté among Canadians regarding the economically vital importance of Canada’s resource industries. The degree of that importance can be found on the Natural Resources Canada website. In mining, Canada is the world’s top potash producer, second-largest uranium producer and third-largest aluminum and platinum producer, and it ranks as a top-five producer of other key minerals and metals.
In energy, Canada is the world’s third-largest natural gas producer, fifth-largest oil producer and third-largest producer of hydroelectricity. In forestry, Canada ranks first in newsprint and second in softwood lumber and wood pulp. In 2014, capital expenditures by natural resource companies totalled $126 billion. Natural resource exports totalled $259 billion, more than half of all merchandise exports. The sector employed 1.8 million Canadians across the country Unfortunately, the outlook for 2015 isn’t so rosy.
Lower oil prices are expected to knock more than $4 billion off federal revenue and even more for producing provinces. The slowdown in China is having a major impact on our mining and forestry industries, further reducing government revenue and employment from coast to coast. And given that resource exports are the mainstay of Canada’s balance of trade, the Canadian dollar has weakened considerably.
Whether it’s a company or a country, the measure of wise financial management is taking advantage of the good times to build resilience for the inevitable bad times. In 2006 and 2007, the Harper government posted surpluses that positioned Canada to weather the 2008 financial crisis better than almost all other nations. Meanwhile, rather than building financial resilience during the extended pre-2008 boom, eurozone countries spent and borrowed as if the good times would never end, placing them in the dire debt predicament we see today.
Now, as Canada’s most important industrial sector faces difficult times, our economy faces another major challenge. Those often-criticized tough spending decisions taken to rebuild financial resilience will be key to carrying us through. That our government can even come close to balancing its books in the face of these circumstances should be a cause for rejoicing. But where else have you heard that perspective?
Gwyn Morgan is a retired Canadian business leader who has been a director of five global corporations. This commentary reprinted courtesy of Troy Media (www.troymedia.com).
