Editorial Providing the freedom to compete

Canada had better take a close look at its competitive position, and soon, or it is going to find its mineral industry withering away, the victim of neglect. The lure of foreign lands is proving too attractive for mining companies and investors to resist. The result, already being felt, is a redirection of capital away from Canada. Bolstering the industry here requires a major change in how this industry is perceived. Legislators in particular have to appreciate what contribution mining makes to the Canadian economy and understand that its contribution cannot be taken for granted.

Mining is seen by too many as something of a cash cow, an industry that can market the country’s abundant natural resources regardless of the cost of extracting them. Like spoiled children, many Canadians accept the benefits of the industry with disdain, saying mining is too dirty, not high-tech enough, too environmentally undesirable — but demand their “allowance” anyway.

The geology with which the nation is endowed has for too long been expected to provide a competitive edge. But the geology of other, less developed nations is proving extremely attractive. Now factors other than geology are proving to be the difference between investing here or investing elsewhere. We cannot change geology, but we can have some effect on those other factors.

Political stability, for example, has long been a key appeal of investing in Canada. Those who put their money here know they can get it out later, whether that be next year or next decade. Yet Canadians seem determined to squander that hard-earned reputation by generating a constitutional crisis over the Meech Lake Accord. Already the economic damage of breaking up the country is being calculated.

And regulatory pressures being put on the industry are restrictive to a degree out of proportion with the problem. The need to protect the environment is high on everyone’s list of priorities, but onerous rules from a growing corps of regulatory bodies are handcuffing the industry in its efforts to arm wrestle with competitors from South America and elsewhere.

Restrictions and disincentives to investment also run counter to encouraging a strong and growing industry. Getting tangled in the red tape of government grants is not the answer, but loosening the binds of taxes on capital gains could go a long way to continued development of our mineral resources.

There’s no magic formula, no single action that will guarantee Canada does not lose further ground to foreign mineral producers. It requires decision makers to get behind the mining industry and demonstrate its support for mining rather than simply drain it of its vitality by increasing the tax and regulatory burdens it is expected to carry.