It’s no secret that Saskatchewan led all the provinces with 4.4% economic growth in 2008 and is expected to lead the nation again this year. Forecasts are for anywhere from zero to 1.6% GDP growth in 2009, making it the only province with a positive growth outlook.
The reasons aren’t hard to find: Saskatchewan is a major world producer of potash, uranium and oil — all much sought after over the past few years. So, the question is not why Saskatchewan is now on top. Rather, it’s why has it taken so long? Tom MacNeill, president and CEO of 49 North Resource Fund of Saskatoon, thinks he has some insight into the issue. “We’re a ‘have’ province now. We’ve always been a ‘have’ province. We just haven’t done some things right to give us that status,’’ he told delegates at the Saskatchewan Chamber of Commerce in May.
“We’re a ‘have not’ province because we haven’t been using our own money to develop our resources,” he added. That’s why MacNeill and a group of investors formed 49 North Resource in 2005 — a fund aimed at Canadians who want to support junior and intermediate resources companies in Saskatchewan. In his view, such a vehicle can help keep some of that wealth creation at home.
MacNeill’s thesis is that the province’s love affair with Crown corporations has hamstrung its economic growth and discouraged local investment. While Alberta was drilling the province’s first gusher at Leduc in 1947, Saskatchewan was experimenting with North America’s first democratic socialist government, Tommy Douglas’s Co-operative Commonwealth Federation. In the 1970s, when Alberta’s economy was turning into a private-sector powerhouse, Saskatchewan was creating state-owned oil and gas and mining companies.
Examples like the potash sector, which was government-owned before it was sold to private interests in 1989, particularly rankle: state mismanagement led to its assets being sold off cheap, MacNeill argues, with billions in profits now going to foreign owners. MacNeill’s 49 North is hoping to help prevent similar outcomes among younger local companies.
But given Canada’s traditional lack of capital — at least in comparison to global markets — and the readiness of non-resident companies to invest big in our increasingly precious resources, it remains to be seen how effective 49 North is likely to be. IE
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