William A. Macdonald is a corporate lawyer turned consultant with a long history of public service and social engagement.
Both Alberta and Quebec are still without the economic policies needed for their futures. The trends that dominate now come from the politically-inspired Alberta Sovereignty Act and Quebec immigration targets that are too low to meet the needs of its economy. It is almost certain that when Canada and the world are hit by an inevitable recession, these two provinces will have to be prepared to make big changes in their economic policy. Those changes will, unfortunately, come too late.
But late is better than never. Canada’s economic future does not need the politics of grievance from Alberta or the politics of nationalism from Quebec. The two provinces must find the grand bargain that sets aside the misguided visions their leaders have – not just for their own sake but for the sake of the entire Canadian economy.
The two provinces need to work together to revive the Energy East pipeline project, TC Energy Corp.’s plan that would transport Alberta crude to the Atlantic Ocean for export. It was cancelled by the company in 2017, falling victim to, among other factors, excessive red tape and a lack of political will. Reviving it is entirely within the hands of our governments.
Before the Russian invasion of Ukraine in February, Canada had two important economic advantages: agriculture and its high-tech sector. Since the invasion, it has three. After decades of stalled infrastructure developments and capital flight, Canada has an oil advantage again. That advantage is precious because of the precarious situation Canada is in, and the overall ugly state of the world.
Canada lives in several new worlds: one threatened by a Third World War if Russian President Vladimir Putin corners himself or if China makes a mistake on Taiwan; climate change; another global pandemic; the need for a new global oil order; and a potential breakdown of the post-Cold War order into an increasingly destabilized global order.
At home, Canada’s unique emphasis on mutual accommodation is being tested again - primarily in Alberta and Quebec. As well, Canada has come through 15 years (under the governments of Stephen Harper and Justin Trudeau) of weakening on the three fronts on which it has always needed to do well: the economy (15 years of no productivity growth); national unity; and relations with the deeply divided United States, on which we have come to depend so much.
In a speech entitled “Coping With a United States in a Changing World” I delivered at a luncheon meeting in Tokyo in the mid-nineties, I said the greatest danger to the world then was the pressure being placed on the United States from a world that was demanding too much of the U.S. political system, and that was not prepared to take on its fair share of global leadership. That scenario steadily worsened over the next 25 years, and as the United States turned inward the over past few years, no economy has been more affected than Canada’s. That is where Alberta and Quebec come in.
Alberta has the world’s fourth-largest oil reserves, and that commodity, the industry says, is produced to some of the world’s highest environmental and ethical standards. And Quebec’s approval is key to having a West-East pipeline. According to the original plan, an existing, underused gas pipeline would be converted to make up 70 per cent of a new oil pipeline. And by moving oil to the East Coast, Canadian crude would potentially displace some of the ethically-contentious supply from Saudi Arabia.
Alberta and Quebec have now been given an opportunity. There is a grand bargain to be made, for that is the best way forward when the times are bad. Canada needs a new oil bargain. This will require overcoming domestic political problems.
This grand bargain will require political commitment and skill on the scale of Confederation and the transcontinental railway. If that shared commitment is not forthcoming, Canada will have failed to live up to its promise of mutual accommodation that has made it the best place in the world to live. Now is a moment for political vision.
But if that shared commitment is forthcoming, it would be more than an achievement in itself. Alberta’s and Quebec’s co-operation can serve as an example of what can be accomplished if jurisdictions work together to focus on the bigger picture.
That could spur further efforts at co-operation between other jurisdictions, especially involving those outside Canada. TC Energy’s Keystone XL pipeline was killed by the U.S. federal government. Enbridge Inc.’s Line 5 faces intense opposition in Michigan. These events, too, reflect how grander goals have been needlessly displaced by petty politicking.
Thus, a grand bargain within Canada is also a path toward something greater: a grand bargain with the United States, for the good of us all. North American energy security and self-sufficiency, achieved while meeting the low-carbon standards we have set for ourselves, is vital not just for our economic prosperity. In light of recent geopolitical shocks, it is vital also for the world.
This all begins, of course, with premiers Danielle Smith and Francois Legault. They have the wrong visions for their provinces, as a recession next year now looks increasingly likely. While Ms. Smith is a firm supporter of Alberta’s oil industry, her needless antagonizing of the federal government will cost her the support she needs to move big infrastructure projects along. She, like Mr. Legault, needs to know that this country is bigger than one province.