There’s a lot of hand-wringing going on in Canada these days as we try to figure out how our productivity, economic growth, and per capita GDP have sunk so badly. If you’re looking for a smoking gun, look no further than the precipitous decline in investment in Canada’s resource sector.

Canada’s resource and energy sector suffered two hits in 2015. One was the global commodity bust. The other was the election of the Trudeau Liberal government, which was intent on transforming the Canadian economy from its rollercoaster dependence on global commodity prices to one built on a more resilient and scalable knowledge economy. As Prime Minister Justin Trudeau articulated to his audience at the World Economic Forum in 2016, “My predecessor wanted you to know Canada for its resources. Well, I want you to know Canadians for our resourcefulness.” 

Paired with this thinking has been a series of punishing policies and regulations that stymied growth and investment in energy and resources. Amongst those on what has become a very long list are: the Impact Assessment Act, the oil tanker moratorium, the moratorium on offshore Arctic oil and gas licensing, industrial carbon pricing, the UNDRIP Action Plan, rejection of the Northern Gateway pipeline, methane regulations, Clean Fuel Regulations, the proposed Clean Electricity Standard, and now the proposed emissions cap and cut of 35 to 38 percent from 2019 levels for the oil and gas sector only—right as the TMX and Coastal Gas Link pipelines are set to come online and are finally providing the ability to expand production to meet demand outside of the shale-soaked United States energy market.

Although Trudeau said in March 2024 that market mechanisms, like a carbon price, are better for lowering greenhouse gas emissions than the “heavy hand of government” through measures like regulations and subsidies, his government has gone all-in on both. And while there is certainly a case to be made around the relative merits of the carbon tax as the most efficient, transparent climate policy, the Canadian oil and gas sector benefits from no such thing. It now faces three layers of carbon pricing: provincial high emitters carbon pricing (e.g. TIER in Alberta), a federal carbon tax, and soon a cap-and-trade system via the emissions cap; hardly a light hand.

The Liberals have found it easier to pass legislation that hampers resource and energy development than those that support it; of the six proposed Investment Tax Credits (carbon capture utilisation and storage, clean hydrogen, clean technology, clean technology manufacturing, clean electricity, and most recently EV supply chain) designed to advance the energy transition and compete with the U.S. Inflation Reduction Act, none have been passed into legislation at time of publication. Canada has become good at implementing policies that deter investment, but not those that attract it. 

Business leaders are saying as much. In a 2023 survey of North American energy sector executives by the Fraser Institute, 68 percent of respondents were deterred by the uncertainty concerning environmental regulations in Canada compared to 41 percent in the United States, which performed better in 13 out of 16 policy factors. In a 2024 survey of Canadian mining executives by KPMG, 98 percent said their companies require more investment, government commitment, and favourable tax policies to support their growth in critical minerals development. In a 2024 survey of Canadian transportation executives, 56 percent expressed dissatisfaction with our regulatory framework, deeming it restrictive, slow, and suffering from both lack of action and hasty decisions that lead to unintended costs. This year, positive sentiments on Canada’s overall business environment hit its lowest level—20 percent—since that survey’s inception in 2017. 

The result of all these policy and regulatory burdens, tied with a weak commodities market, has been predictable: a precipitous fall in investment in energy and resource projects in Canada since 2015. 

If Canadians have failed to appreciate the scale of the decline, it’s at least partly due to the fact that the absence of something—the project that never gets approval, or the investor that walks away—is a hard thing to quantify. But there is a way to assess the damage. Natural Resources Canada maintains an annual inventory of major projects that are under construction or planned within the next ten years. The data show a sector in a death spiral.

At its peak in 2015, the inventory held $711 billion in major projects. By 2023 it had dropped to $572 billion. That’s in real dollars. If Canada had retained 2015 levels of planned investment and kept pace with inflation, the figure today would be $886 billion. And if it had also kept pace with population growth—i.e. if the planned investment in major projects had kept pace on a per capita basis—the figure would be $985 billion. 

The declines are occurring across the board. Oil and gas, predictably, has faced the greatest absolute decline in the major projects inventory, dropping from 155 major projects worth $456 billion in 2015, to 87 projects worth $319 billion in 2023 (equivalent to $259 billion in 2015 dollars)—a 43 percent drop in value. But it’s even worse elsewhere. 

Despite the need to electrify significantly more energy use to meet net-zero goals, the electricity sector declined from 223 projects worth $156 billion in 2014, to 182 projects worth $98.9 billion in 2023 (equivalent to $78.9 billion in 2014 dollars)—a 49 percent drop in value.

And despite the need for far more minerals to provide the raw materials for electricity, renewables, and electric vehicles, as well as the ability to process them domestically, the mining sector fell from 150 projects worth $166 billion in 2014, to 129 projects worth $93.6 billion in 2023 (equivalent to $75.2 billion in 2014 dollars)—a 55 percent drop in value.

These statistics reflect projects that are planned and under construction, but many will never reach a Final Investment Decision (FID). It’s worth noting that the number of projects that were actually completed between 2015 (88 projects) and 2023 (56 projects) declined by 36.4 percent. 

An inability to attract investment in major projects ultimately leads to plateaus or declines in production. Electricity generation in Canada in 2023 hit its lowest levels since 2016, at 615.3 million MWh, despite the policy imperative to electrify more heating and transportation energy use as a strategy to reduce emissions. The challenge was exacerbated by drought, which greatly impacted hydroelectricity generation.

Mining has suffered even greater production losses than electricity, despite the acknowledged need for Canada, as the world’s second-largest country and a key NATO ally, to ramp up critical minerals production in order to reduce Chinese dominance in global mineral production, processing, and clean technology manufacturing. 

Far from being a leading mining nation, Canada now ranks just 8th globally in mineral production by volume. Between 2018–2022, Canadian critical minerals production atrophied, with nickel, cobalt, lithium, uranium, zinc, lead, and platinum all posting double-digit declines.

Our economic numbers are not good, but the decline is not inexorable. Canada has all the tools to escape our current downward trajectory, starting with our incredible endowment of natural resources. We are blessed with world-class reserves of oil, natural gas, and uranium, and possess economic deposits of practically all critical minerals. These can further support world-class sectors in EV manufacturing, nuclear energy development, low-carbon fuels, and petrochemicals. 

Just as we entered a commodities downcycle in 2015, we are now entering a protracted bull market. Let us take advantage of it by supporting our resource and energy sector with good, common sense policy. If we do, it can provide an incredible foundation for growth, productivity, security, and prosperity for all Canadians.

A full version of this commentary was published by the Macdonald-Laurier Institute on April 29, 2024. 

There is a showdown brewing in Ontario’s provincial parliament. The battle may be over a small piece of patterned cloth, but the principles at play are grand: free expression, cultural rights, and, most importantly, whether our relentless partisan divide leaves any room for reasoned political debate.

To recap, in mid-April, amid the Israel-Hamas war, Queen’s Park speaker Ted Arnott decided to ban the keffiyeh, the traditional patterned headdress worn by Arab people across the Middle East, from the Ontario legislature. Premier Doug Ford and the other party leaders all opposed the ban, but the effort to overturn the speaker’s order failed when a Progressive Conservative MPP refused to vote in favour of the unanimous consent motion. Days later, a second such motion failed again. And late last week, independent MPP Sarah Jama (previously of the NDP before being expelled from that caucus for her anti-Israel statements immediately after October 7^th) was banned from the chamber for her refusal to remove the keffiyeh. The Ontario NDP leader, Marit Stiles, now says that if the premier does not push for a reversal of the keffiyeh ban, the NDP caucus will defy the rules.

While the politicking plays out in Queen’s Park, the culture warriors have taken to their usual corners and have begun to make the expected arguments. 

Speaker Arnott reached his decision on the basis that “members’ attire” bearing “ logos, symbols, slogans, and other political messaging are not permitted,” a ban that has a long history in Ontario’s legislature. Naturally, those opposed to his decision then attempted to frame the keffiyeh as something other than political.  

The federal Justice Minister Arif Virani took to X soon after the speaker’s decision and wrote “the [keffiyeh] is an important cultural symbol” and that wearing it indicates “pride in one’s heritage.” Former Amnesty International Canada president Alex Neve called the cloth an “iconic embodiment of Palestinian culture and identity,” thus emphasizing its cultural role. And Stiles linked the ban to “anti-Palestinian racism, hate, and division.” 

The problem with this position is that it rings patently false to anyone with eyes, ears, and a cursory understanding of symbols. It is hard to deny that the explosion in the wearing of keffiyehs in North America in recent months correlates directly with growing anti-Israel protests. And the symbol is not being solely worn by those of Palestinian or Arab descent. (Just do a simple Google image search to see how many non-Arab students on campus encampments are sporting the keffiyeh.) Whatever its meaning at other times in history, wearing the keffiyeh in 2024 in Canada is not like wearing a lederhosen or a sari. 

In fact, those taking this absurd position themselves subtly (and sometimes not so subtly) concede the point. Neve, for example, writes that the Queen’s Park ban was put in place because the keffiyeh has become meaningful “to millions and millions of people in the desperate struggle to stand up for the survival of the Palestinian people and their culture.” You may agree or disagree with him that the survival of Palestinians and their culture is at stake, but “the desperate struggle to stand up” for those things sure sounds like a political endeavour. Jama drops the pretense altogether, saying “This is a political issue, my job is to be political, and so I will continue to wear this garment.” 

The other side of the debate, too, engages in discourse that gives off more heat than light. In a piece that represents much of the anti-keffiyeh position, Rahim Mohamed writes in the National Post that the kaffiyeh has an “unshakable association with Palestinian political violence,” suggesting that the “fishnet pattern scarf favoured by protesters is synonymous with militant Palestinian leader Yasser Arafat.”  

This argument is overwrought. Whatever the keffiyeh’s political meaning, it is not solely a political symbol. While it may not be the purely cultural symbol Minister Virani and others claim, it has a strong cultural component. Worn for practical reasons by Bedouins, the wearing of it predates the Palestine-Israel conflict which arose in the early part of the 20th century. And, surely, it has political and cultural associations beyond violence and Arafat. It was, for example, a symbol of the Palestinian working class in the 1800s who preferred it to the brimless Ottoman fez favoured by the upper class.   

But the key error in Mohamed’s argument is that, in trying to score a point, he subtly concedes something critical: that the problem with the keffiyeh in the legislature isn’t that it promotes bad politics, but any politics at all.

The more principled reason to oppose the keffiyeh in the legislature is that in a liberal democratic society, our deliberative institutions should strive for more reasoned, civil debate. The introduction of signs and symbols in our law-making institutions diminishes and coarsens the public discourse at precisely the moment we can least afford it.     

Regrettably, the space for reasoned debate in our society is shrinking alongside the space for non-political civic life. Every realm of public life is now infused with tribal political symbols. It is to our great detriment, and a sign of the ill health of our polity, that all things, from our beer and chicken sandwiches to the sports and comedy we watch, have become political battlegrounds. 

In this climate, it is all more important that we preserve institutions that foster articulate, respectful, pluralistic political debate. 

The institutions designed for this purpose have been weakened lately. Our universities, for example, have increasingly taken on institutional political positions, undermining their role as a forum for rigorous intellectual inquiry. Our public broadcaster is increasingly seen by the Canadian public as having a clear ideological bias. Even the office of the governor general has not been spared, having recently hosted an event that critics allege promoted the Trudeau government’s controversial Online Harms Bill.

The legislature holds a unique place in our polity and should aspire to more. While it should serve as the forum for political disagreement and debate, it should not itself be seen as partisan. And it should elevate our public discourse, instead of becoming yet another force that reduces nuanced topics to signs, pins, stickers, and placards. 

Opposing the keffiyeh for its alleged bad meaning naturally draws out the battle over that meaning, and invites another battle over the freedom of expression. It also invites future fights about the meaning of every other symbol that MPPs will hereinafter try to bring into the legislature. Is the Ukraine pin a good or bad symbol? The Black Lives Matter badge? What about the MAGA hat? Open this door just a little and we will be mired in a thousand battles about a thousand causes, logos, and signs.

The solution, then, is not to engage in a futile line-drawing exercise which will leave many stakeholders unhappy much of the time. Instead, it is to maintain the existing nearly blanket ban on political symbols. (I say “nearly blanket” because symbols like the Remembrance Day poppy are now permitted at Queen’s Park. But even that required a special exemption.) The ban avoids the problem altogether, allowing our core deliberative body to remain a place for reason above passion. 

We will likely never agree on the precise meaning of the keffiyeh (though we should at least strive to be honest in its interpretation; something the “it’s just a cultural symbol” crowd is not doing.) 

But we should agree that some corners of our society should be reserved for deliberation and debate instead of cheap appeals to emotion and tribalism. What better place for that than Queen’s Park?