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The COMPAS/FP business panel fears that Canada may well be catching the “Dutch disease” –rising exchange rates and a decline in traditional exports as a result of a jump in the price of a commodity, in this case oil. They are concerned that Ottawa is not taking the problem seriously and give the federal government a very poor grade for its handling of the situation.
The CEOs and business leaders in the COMPAS/FP panel agree with only a portion of Bank of Canada Governor David Dodge’s analysis of the situation. They agree that the economy is apt to face inflation of 3% but do not agree with Dodge that high commodity prices will benefit every region or that the manufacturing sector is adjusting well.
Decided majorities fear that
- Conflict between Ottawa and Edmonton will be exacerbated
- Canada’s large export sector will be seriously harmed by the rising loonie, and
- Our large government sector will grow further as a result of windfall energy tax revenues.
Overwhelming majorities favour slashing taxes on the manufacturing sector and oppose taxing heavily the oil and gas sector for purposes of regional income redistribution.
The business panel is polarized over whether the solution to Edmonton-Ottawa discord is “a well-led, Alberta-based Conservative…government in Ottawa.”
These are the main findings from this past week’s web-survey of CEOs and business leaders conducted by COMPAS for the Financial Post under sponsorship of BDO Dunwoody LLP and the Canadian Chamber of Commerce.
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