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 may 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 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 per cent.
Despite diligent searching, I couldn’t find any media reports that offered that vital perspective. Virtually all parroted the Mulcair and Brison laments about government fiscal mismanagement. Days later, a new Globe and Mail/Nanos poll found that the Mulcair NDP’s had suddenly overtaken the Harper Conservatives as the best choice to improve the country’s economic prospects. That impression will be very hard for Harper to turn around so close to an election. Some may be happy about that and others will not, but regardless of one’s political alliances, lack of cogent questioning and thoughtful analysis by reporters is anathema to presenting important perspective to voters.
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 G-7 nation besides Germany not facing a major deficit?”
Failure of reporters to ask such a relevant question reveals a wider naivety among Canadians of 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, third largest aluminum and platinum producer and 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 the 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. Notably, Ontario leads with 237,000 resource jobs followed by 210,000 in Alberta and 178,000 in Quebec. Resources accounted for almost a third of GDP in Newfoundland and Labrador, Alberta and Saskatchewan.
Unfortunately, the outlook for 2015 isn’t so rosy. Lower oil prices are expected to knock over $4 billion off federal revenues and even more for producing provinces. The slowdown in China is having a major impact on our mining and forestry industries, further reducing government revenues 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.