Harris Fricker is president and CEO of GMP Capital Inc.
Canada is the envy of the world in terms of our commitment to refugee rights, education, universal health care and world-class infrastructure. The wealth of the human experience in our country underpins our status as one of the most desired destinations for immigrants the world over.
And yet, increasingly, I find myself asking: "What will be the continuing source of this societal wealth?" Most Canadians, including me, cherish the society we have been able to build; but, as with anything of value, the benefits come with costs. More and more, the debate about what we want in our future as a society is void of any discussion of the means to fund this future and the inevitable decisions and concessions that this funding entails.
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Canada has a population of 36 million people, compared with 39 million in the state of California. We are the 37th most populated country on Earth – behind countries such as Poland, Colombia and South Korea. And yet our land mass ranks second in the world – well behind Russia and just ahead of the United States. In other words, this is a really, really big country with very few people. Not typically an equation for great wealth creation.
And yet Canada is a member of the G7 – a collection of the most advanced economies on the planet. Inevitably, much of that status is a result of our sharing a border with the world's largest economy and the wealth arising from trade between the two countries. But the real source of our wealth as a country is quite simple: We are a small population sitting atop one of the world's great bounties of resource wealth. And the extraction of this resource wealth – whether precious or non-precious metals, or hydrocarbons or water or wood – has underpinned the wealth of this region we now call Canada for hundreds of years.
Despite this reality and the wonderful benefits we have enjoyed as a society, the current political debate in this country decouples the notion of our wealth from a discussion of its source. Again, Canada is a rich country with an equally rich human experience because it has been highly adept at extracting wealth from the resource bounty upon which it sits. Period. End of story.
This discussion is especially poignant as we see intensified debate over the extraction of hydrocarbons, their transport to world markets and the implications for emerging-market opportunities such as liquefied natural gas. Factored into the mix is a discussion of our future in renewables and how Canada will play a part in the evolution of a non-carbon-based global energy economy. The later most assuredly represents the future but the former will remain relevant for decades to come. There is simply no need for, nor is this the time for a definitive either/or. How we as a country manage this transition will say much about our ability to continue to generate the wealth upon which we as a society depend. The implications of getting the transition wrong are dire and the dangers of ending up sitting in the self-congratulatory dark are very real. As the British say: "Mind the gap."
Renewables such as solar and wind represent an attractive and viable source of energy and an industry in which Canadians can and should be world leaders; but this in no way precludes the continuing capitalization on the enormous wealth in oil and gas assets.
To say that production must be undertaken in a manner that is environmentally sound and with a reasonable construct for community consultation is to state both the obvious and the essential. And here our producers have been world leaders in developing and applying innovative technologies that lower both the cost and impact of extraction.
Again, responsibly capitalizing on the natural resource wealth this country has been blessed with has made possible our notion of a fair and prosperous Canada with world-class health care, education and infrastructure among the obvious results.
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Canada has also been blessed with access to both the Pacific and Atlantic oceans. As a G7 country, it is inconceivable that we lack the political will and financial wherewithal to pipe our most important export to tidewater. This situation has been made all the more critical by the emergence of the United States as a major competitor in the energy sector.
Currently, Canada is able to pipe product solely to the United States, which means we are a price taker from our major energy competitor. You don't have to be Adam Smith to know how that turns out – just look at the price differential on our products compared with the prevailing market price, the importing of more expensive foreign hydrocarbons in Eastern Canada and the complete squandering of our natural advantage in the race for LNG. Pipelines are the most viable means to safely and cost effectively transport hydrocarbon products. Period. And of course we should strive for the gold standard in environmental excellence in their construction, maintenance and monitoring. But build them we must. East and west.
It is imperative that our political and business leaders work in unison to ensure that we continue to capitalize on the natural-resource wealth upon which this country and its social-welfare systems have been built. Our wealth as a country is not our birthright nor is its continuance in any way guaranteed. We simply must be competitive on the global stage.