Mark Carney dispels 'Dutch disease' theory
Mark Carney, governor of the Bank of Canada, addresses delegates at the Changing Fortunes Global Economies meeting at the Spruce Meadows round table in Calgary, Alberta September 7, 2012. (REUTERS/Todd Korol)
OTTAWA - Bank of Canada governor Mark Carney tore a strip off NDP Leader Tom Mulcair's theory that oil money is hurting the country's manufacturing sector.
In a blistering rebuttal of so-called "Dutch disease" - the belief that the natural resource sector has artificially inflated the value of the loonie and has caused the manufacturing sector to slump - Carney used the strongest language yet to quash those claims.
"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," Carney said in a speech in Calgary.
Mulcair and his party have been vocal critics of oilsands development and pipelines and have singled out Alberta's bursting energy sector as the root cause of the country's manufacturing woes, especially in Ontario.
"The coincident strength of commodity prices and the Canadian dollar in recent years has been treated by some as prima facie evidence of Dutch disease in Canada," said Carney.
"But the diagnosis ignores the fact that the Canadian dollar is influenced by a diverse set of factors."