THE EDITORIAL PAGE — Mining and government (1)

From its early roots in the 1800s up until the late 1970s, the Canadian mining industry enjoyed a synergistic relationship with provincial and federal governments. The goals of the industry and government were largely identical.

There were occasional tensions, for example, the demise of the 3-year tax holiday for new mines, the attempted tax grabs of the New Democratic Party government in British Columbia in the early ’70s, and so on. But by and large, governments have adopted and encouraged “investment, creating new enterprises and jobs and fostering sources of government revenues” — that, according to David Yudelman in an essay entitled “Interference or Safety Net: Government and the Canadian Mining Industry.”

This convergence of private and public interests was perfectly realized in the creation, in 1842, of the Geological Survey of Canada. Its dual mandate was to foster a growing understanding of the geology of the country and provide private companies with the kind of information that could lead to the discovery of economic deposits.

Between government and industry, the tensions that did arise usually polarized along the axis of emphasizing economic growth at the one extreme and distributing the benefits of economic activity at the other. Political intervention occurred when government and/or “public opinion” judged it to be in the provincial and national interest. (The most contentious issue to surface early on was the desire by government to have Inco smelt and refine its ores in Ontario. The government eventually won.)

Yudelman notes that maximum growth policies promoted maximum government intervention in sharing development costs (infrastructure, fiscal incentives) and offered minimal intervention in terms of distributing the benefits (revenues) of mining.

Growth-oriented policies prevailed until about 1970.

Then came a breakdown in the “historic consensus between business and state on material goals and priorities.” A raft of newly powerful and articulate interest groups and the expanding role of the state (especially pronounced while Pierre Trudeau held office in Ottawa) led to this shift. Rather than maximum growth, “optimum” development or balanced development became the operative bureaucratic terminology. Government became active participant, not facilitator, manager, not administrator, Yudelman writes. Mining taxes rose and the funds funnelled to other areas of the economy. As well, after 1978, mining was viewed as a mature industry with its prospects for growth severely diminished if not at an end.

Clearly, the movement away from maximum growth (with its implicit belief that economic benefits would trickle down through the rest of the economy) to an interventionist stance has accelerated with society’s preoccupation with environmental concerns.

In a rational world, this shouldn’t present an insurmountable problem to the industry. In a rational world, the shifting focus, first from growth for growth’s sake, then to managed or “directed” growth, and now to growth but only if environmentally benign, could be taken in stride by the industry, with perhaps a few toes stubbed along the way. But this is not a rational world. Political ambition, misinformed opinion, bad science, deliberate misinformation and just plain bald ignorance can all lead to industry-threatening legislation.

A case in point — Ontario’s Environmental Bill of Rights. And it is to this piece of legislation we will turn next week.