OTTAWA – Bank of Canada governor Mark Carney pummelled Thomas Mulcair’s economic theories Friday, a smackdown that left the NDP leader speechless.
Using the strongest language yet, Carney debunked claims the booming resource sector is driving up the value of the dollar and hurting exports.
"While the tidiness of the argument is appealing and making commodities the scapegoat is tempting, the diagnosis is overly simplistic and, in the end, wrong.
"Canada’s economy is much more diverse and much better integrated than the Dutch disease caricature," Carney said about the concept that the natural resource sector has artificially inflated the value of the dollar and has caused manufacturing to slump – especially in Ontario.
Carney’s analysis in a Calgary speech is expected to become fodder for Conservative attacks on NDP policies when Parliament resumes this month.
Mulcair and the NDP have been critical of oilpatch development – even sending MPs to Washington to lobby lawmakers to oppose expansion and the Keystone XL pipeline to the Gulf Coast from Alberta.
Carney said those who see natural resources as a "curse" look at the global commodity boom and make the "grim diagnosis" of Dutch disease.
"They dismiss the enormous benefits, including higher incomes and greater economic security, our bountiful natural resources can provide."
Carney noted higher commodity prices are "unambiguously good" for Canada.
"The strength of Canada’s resource sector is a reflection of success, not a harbinger of failure," said Carney, who is also chairman of the international Financial Stability Board for G-20 countries.
Mulcair wouldn’t react to Carney’s assessment, leaving it to a spokesman to promote the party’s platform of higher taxes on the resource sector.
George Smith said the reason the dollar is "artificially" strong is because polluters don’t pay for the pollution they create.
"New Democrats have always believed that our natural resources are a tremendous blessing, and that they have to be developed in a responsible, sustainable way," he said.
Natural Resources Minister Joe Oliver was optimistic Carney’s message would resonate with resource opponents.
"We’re very fortunate our natural resources are increasing the wealth and prosperity of Canadians right across the country. And for Mr. Mulcair to denigrate a precious natural resource and to want to see it stranded and our legacy squandered is unthinkable," he said in Vancouver.