Oil matters — until it doesn’t. It mattered a lot in June of last year, a short seven months ago.
Joe Oliver, the federal finance minister stood at a podium in Montreal and issued an ominous warning, admonishing those gathered not to kid themselves about the importance of getting Alberta’s oil to tidewater.
“So the choice is stark,” he stated. “Head down the path of economic decline, higher unemployment, limited funds for social programs like health care, continuing deficits and growing debt, or achieve prosperity and security now and for future generations through the responsible development of our resources.”
Contrast that with “the oil industry isn’t remotely the entire Canadian economy,” the message from Prime Minister Stephen Harper just last week.
The prime minister did acknowledge that the contribution of the energy industry to the national economy is “significant,” but his emphasis was clear. Plummeting oil revenues are a much bigger problem for Alberta.
Yet the federal finance minister is delaying his budget, saying he needs more time to let the situation stabilize. And we’re seeing nothing of that timidity here in Alberta.
The new federal timing is imprecise at best. Oliver says it won’t be “earlier than April.” That of course doesn’t mean April. It only means it won’t be February or March, the usual time (current fiscal year) for a federal budget.
Beyond that, it’s anyone’s guess.
Another question worth asking: why is Jim Prentice not delaying Alberta’s provincial budget for the same reasons?
The Alberta government certainly isn’t in any hurry, but it has committed to finalizing a budget before the end of the fiscal year.
The premier is musing about raising taxes, cutting spending and running a deficit.
Predicting the price of oil is a mug’s game, but the province has managed to quantify the many billions that have evaporated for this year, next year and the year after that. So why can’t the feds?
In Ottawa’s case, it apparently understands enough about the impact of plunging oil on the national economy to know that increased taxes, spending cuts and deficits aren’t necessary, according to an assortment of federal ministers.
But it doesn’t know enough to detail a spending plan during the usual time-frame.
Oil and gas, along with mining, is roughly eight per cent of Canada’s gross domestic product. But that doesn’t really capture the true economic impact.
The energy industry also touches on so many other sectors of the economy like manufacturing, construction and transportation.
In Alberta, the conversation is about ending the madness of living beyond our means — of constantly trying to rely on unreliable revenue.
In fact, how we go about doing that will likely be the ballot box question in the next provincial election (an election many expect in late April — despite Alberta’s fixed election date legislation).
Conventional wisdom seems to be that a similar inclination to debate the relative value of the oil industry is not gripping Ottawa.
Although the common mantra is that “markets don’t like uncertainty,” the other reality is that politicians like it even less.
In other words, the economy could get a whole lot worse and the federal Conservatives might also well want to pull the plug before that happens.
Oil does matter. How much depends not just on who is talking — but when.