A recent Credit Suisse report offers a startling snapshot of the relationship between American and Canadian personal wealth. For 2013, U.S. median personal wealth sits at $44,900 (U.S.), while in Canada it stands at $90,300. Part of that dramatic difference is thanks to Canada's relatively untroubled housing market in the wake of the 2008 global financial crisis, but the fundamental factor is the country's robust economic performance.
And Canada achieved this thanks to its rich endowment of natural resources. While both countries have lost manufacturing jobs to China, new Canadian jobs were being created to supply China's appetite for energy, metals and lumber.
Canada is the world's sixth-largest oil producer, third-largest natural gas producer and third-largest producer of hydroelectricity. In mining, it is the top potash producer, second-largest uranium producer, third-largest aluminum producer and ranks as one of the world's top five producers of other key minerals and metals.
In 2011, the resource sector employed 1.6 million people, directly and indirectly, and generated $233-billion in export revenues, according to Natural Resources Canada. As well, companies plan to invest a staggering $650-billion in hundreds of Canadian resource development projects over the next decade.
A study by economic research firm Informetrica, cited in a Natural Resources Canada report prepared for a meeting last year of the country's mining and energy ministers, noted that the cumulative 10-year impact of these projects would add a staggering $1.4-trillion to Canada's GDP and create an average of 600,000 new jobs per year.
The projects are aimed at fast-growing Asian economies; however, as the report warned, "Canada has a significant opportunity to capture these new markets … but we face stiff opposition. To fully realize Canada's tremendous resource potential and planned investments, governments must continue to collaborate and put in place the most effective measures to enable investment and responsible resource development."
The largest growth opportunity lies in the oil and gas sector, but progress has stalled over the crucial issue of market access. Most of the focus over the past year has been on the uncertainty about U.S. approval of the Keystone XL oil pipeline. Whether it is approved or not, the key lesson of Keystone applies to both oil and natural gas, and that is Canada's urgent need to lessen its dependency upon an increasingly energy-independent customer.
The most willing customers for Canada's oil and gas are energy-hungry Asian economies. Projects to pipe natural gas to liquefied natural gas terminals on B.C.'s northern coast seem destined for success, but the Northern Gateway oil pipeline project to that same coast is mired in controversy. Even if it receives federal regulatory approval, and even if B.C. Premier Christy Clark and Alberta Premier Alison Redford come to an agreement, the project faces strident opposition from First Nations.
That uncertainty sparked the proposed Energy East pipeline that would move Alberta crude on a much longer route to Asia, via Irving Oil's deep-water terminal in New Brunswick. While some native groups have come out in opposition, the proposed use of existing pipeline rights-of-way reduces their chances of blocking the project on the basis of "traditional territory" claims.
Native activism also bedevils other resource sectors. A recent Fraser Institute survey of mining executives identified uncertainty due to land claims as the "primary deterrent" to investing in British Columbia. First Nations opposition is also problematic for mining projects in Ontario, Quebec and other provinces. Companies cannot justify risking hundreds of millions of dollars identifying a resource, designing facilities and going through regulatory processes if a project can be stymied because one or more of Canada's 600 First Nations hold a de facto veto.
Finding ways to remove this huge deterrent to investment should be the top priority for governments as they try to bring in measures to encourage responsible resource development. Failure to do so will surely derail the resource investments that are generating the export revenues and jobs that are underpinning Canada's superior personal wealth statistics.