OVER THE EDGE November 21-December 5, 2007 Feature Over the Edge’s Loonie Expert Panel Paul Bowles (PB) is an economics professor at UNBC and the past-president of the Canadian Society for the Study of International Development. He is co-editor of the forthcoming two-volume series, What is Globalisation? David J. Connell (DJC) is an assistant professor in UNBCSs school of environmental planning. He is currently working on a project aimed at studying the effects of local organic agri- culture on communities. Ray Gerow (RG) is the President/CEO of the Aboriginal Business Development Centre, a non-profit organization aimed at advising Aboriginal entrepreneurs. He is also a board mem- ber of Northern Sports Centre Lid. Debora Munoz (DM) is a city councillor in Prince George. Her focus is on health in communities, and she has also owned and operated two restaurants in Prince George. Tim Nowe (TN) is Operations Manager for TDB Consult- ants Inc., providing expertise and services for those in the re- source industry. Do you see a permanently high Canadian dollar as primar- ily positive, negative, or neither? RG; I see it as a positive as it causes us to reflect on the huge amount of resource extraction that we are doing just to satisfy the good old USA. I personally do not believe that this level of extraction, especially with our forest industry, is sustainable or good for our environment, so if we are forced to curtail some of this production, it may force us to rethink how we approach the forest industry. TN: I believe it will be a good thing. It will force industry to be competitive and not to depend on a favourable dollar for trade. PB: Bad for exporters, good for consumers. DJC: From a conventional economic development per- spective, I see a permanently high Canadian dollar as neutral, overall. There are definitely negative impacts. Canadians are likely to purchase more imported goods because they will be cheaper (e.g., cars). There are also positive impacts: Can- adians exports of goods will decline, thus decreasing our de- pendence on global markets. How these negative and positive impacts will be balanced is largely up to consumers who exer- cise their values through their purchase decisions. They can choose to purchase the cheapest products regardless of origin or they can choose to support their neighbours by buying Can- adian products. From a societal perspective, a high Canadian dollar is pri- marily negative. This view is predicated on an understanding that the present high Canadian dollar is not merely an eco- nomic issue. Rather, the value of the Canadian dollar reflects a range of economic and non-economic issues. Two critical non-economic factors presently supporting the high Canadian dollar are political instability (e.g., wars in Iraq and Afghan- istan) and global dependence on fossil fuels. These non-eco- nomic factors are supporting demand for the Canadian dollar. Therefore, a permanently high Canadian dollar will mean con- tinued political instability and continued excessive demand for fossil fuels. DM: I feel this would result in a positive outcome for Can- adian consumers buying US manufactured goods and prod- ucts; however it doesn’t benefit Canadian manufacturers that sell goods to the US. Most of the natural resources sector, has not been negatively impacted by the devalued US dollar as the market value of natural resources, such as base metals, pre- cious metals and oil, has increased in tandem with the Canad- ian Dollar, however the same is not true for the forest industry which has been negatively affected by the decrease in demand for housing in the US and the devaluation of the US dollar. How would a permanently high Canadian dollar affect in- dustry, jobs, tourism, and small business? TN: There will most likely be a small down turn until indus- try and tourism adjust. DM: A permanently high Canadian dollar would force the forest industry to find profitable markets for their Canadian products outside of the US, and they would have to become more competitive on a global scale to sustain a profit margin, i.e., export of lumber to the Asian market. A permanently high Canadian dollar would result in less American tourists choos- ing Canada as a travel destination. Small businesses that buy their manufactured goods in the US and subsequently sell their end products in Canada would benefit from a permanently high Canadian dollar. DJC: In the conventional sense, national economies are predicated on perpetual growth (of about two per cent an- nually) and this growth is supported by foreign spending on Canadian goods (e.g., exports and tourism). A high Canadian dollar will make exports more expensive and imports cheaper, thus reducing Canada’s national trade balance. Recent reports in the papers show a declining trade balance since the dollar reached parity with the US dollar. A high Canadian dollar will likely reduce foreign travel, thus reducing income received from foreign tourists. Thus, a permanently high Canadian dollar will compromise Canada’s ao) to maintain a national policy of economic growth. PB: Exporters will be hit hard, as will tourism. Companies importing goods will benefit. So it all depends what sector you are in. In aggregate, it’s likely to be bad for Canadian industry as the manufacturing sector will decline. Would a high Canadian dollar represent short-term pain and long-term gain or would it represent a permanent loss? PB: Once jobs disappear in the manufacturing sector it takes a long time to get them back. RG: For sure we will feel the short term pain, but if we act intelligently to do what is best for the long term sustainability of our forests we should end up gaining in the long term. DM: It is difficult to forecast what the overall impact a high Canadian dollar will have over the long haul, however if the Bank of Canada continues to keep Canadian interest rates higher than US ratés this could encourage greater foreign in- vestments in Canada. DJC: A high Canadian dollar will compromise the ability of Canadian residents to sustain their current lifestyles. The choices Canadians make in a high Canadian dollar world will determine the impacts, both long- and short-term. A Canad- ian who purchases mostly local and Canadian products will be impacted far less than another Canadian who relies on global markets, bigger cars, and bigger televisions for their material and cultural needs. Who, if anyone, would benefit from a permanently high Canadian dollar? TN: Canadian companies that import from the US and fam- ilies travelling south (the US tourism industry). DJC: It is possible that every Canadian can benefit from a permanently high Canadian dollar. Scaling down economies is a foundation for a healthier Canadian society. PB: Canadians going on holiday to the US, anyone import- ing goods from the US(whether its firms buying high-tech equipment or consumers buying cars) What sort of restructuring would have to take place to the Canadian economy generally and the British Columbia/ Prince George economy specifically? PB: In the Canadian economy. generally the manufacturing sector will shrink, which will primarily affect Ontario, and also Quebec. Canada will become even more reliant on natural resources for its exports. Even here, with many commodities priced on international markets in US dollars but firms operat- ing costs in Canada in Canadian dollars, the picture is not all rosy. In BC, tourism will be hit by a high dollar and the lumber industry is now subject to a “triple whammy” - a high dollar, low US housing starts and the tariffs resulting from the soft- wood lumber dispute. TN: Less dependence on the US market and more trade overseas, especially with the new port [in Prince Rupert] open for business. DJC: There will have to be a willingness on the part of both producers and consumers to change the values that influence their purchase decisions. The development and support for local food systems is an example of economic and social re- structuring that can take place. This requires more local food production and more consumption of local foods. To make this happen requires a restricting of the food distribution and retailing channels. The existing food system is predicated on a global scale food system; there is insufficient shelf space dedicated to local foods, which limits both ends of the ‘good food’ value chain: producers can’t get their products on store shelves and consumer who want to buy local are not able to do so. DM: What are the main economic drivers of the Canadian, British Colombian and Prince George economy? The first asset that comes to mind is the abundance of natural resources within Canada that are appreciated and highly valued by many worldwide. There is great potential for British Columbia to become world leaders in renewal energy. There needs to be the political will from all levels of government to invest in safe and sound infrastructure that supports the transportation of goods and services, nationally, provincially, globally and at the local level, such as: roads, bridges, air travel, ports, tech- nology, etc.,. A skilled work force is needed, business-friendly environments, encourage the use of new and innovative ideas, expand markets and educational opportunities in the fields of technology, the trades, natural resources sector, research, edu- cation, allied health, and commerce, build the tourism industry and capitalize on the rich cultural, social, and ecological herit- age in British Columbia. As we move forward and build foun- dations of economic growth I feel we should aim for the best possible return on our investments; which in my view, comes from smart planning principles, guidelines and policies, that are well aligned with and include the consideration of, social, environmental and cultural well being What plans do feel should be in place to deal with the changes? DM: We are in the process of developing a comprehensive community sustainability plan for the City of Prince George and included in the plan outline is the development of an eco- nomic development and diversification strategy. PB: The Bank of Canada govenor and the PM have attempt- ed to “talk down” the dollar. The Bank could cut interest rates to make the dollar less attractive but with unemployment at a 30 year low it is afraid to do this for fear of inflation. In my view, their aversion to inflation is too large. But the bigger problem remains - there will be continued uncertainty while the US economy is in such a mess and while the international economy has so few rules. DJC: Scaling down the national economy is a profound change. I suggest starting with food. RG: I have been of the frame of mind for a long time that the mechanization that we introduced into the industry was to satisfy the huge demand outside of our borders, and now we are in a position where we are slaves to this demand... If we follow the age old Aboriginal theory of doing what is best for the 7th generation, and not what is best just for us now, our province and our country would end up being a better place to live. Compiled by Andrew Kurjata GET IN THE KNOW. GET KUDOS. The word is spreading about Kudos - the financial package specifically designed for people 18 t 24. Whether you're in school or starting a career, Kudos gives you the respect you deserve with low-fee accounts, student loans, sewarts credit cards, and more. 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