Quebec Election 2012: The Significance of a CAQ Win

by Keith Edmund White

Yes, the PQ is still leading polls.  But after a reader comment directed me to review the parties' economic platforms, two things became very clear:  (1) the conservative CAQ are definitely in contention and (2) a CAQ government in Quebec would mean big changes to the economic and spending policies coming out of Quebec City.

Quebec Party Platforms

After a reader comment on an earlier post regarding the PQ’s economic platform, I thought readers might appreciate having a few resources on policy positions of Quebec’s three leading political parties: the PQ, the Liberals, and the CAQ.

One can find these parties full platforms at CBC News. (Side-note: to get the PQ’s platform in English, check out this Google-Translate page).

And for those wanting a quick primer, Reuters offers this crib sheet of these parties’ respective economic platforms.

Political Recap: PQ Leads, but CAQ Is on the Rise

The Gazette, a leading Montreal newspaper, offers an excellent report on the dynamics of the 2012 Quebec election. The PQ leads (with around 33%), but is unpopular, and is now shifting its attacks from its Liberal opponents (who have slipped to third place) to the CAQ. Both the Liberals and PQ are polling in the high 20s, but the Liberals are slipping, while the CAQ is on the assent.

The possibility of the CAQ winning a three-way race against the PQ and Liberals is itself a historic and significant development in Quebec politics. As the discussion below of the parties respective platforms will reveal, the CAQ has the opportunity to push a drastically more conservative approach to government spending and taxing in a province where a majority of the voters favor left or center-left on economic policies. Oh, the joys of modified parliamentary systems!

The Economic Politics of Quebec: Left (PQ) vs. the Center-Left (Libs) vs. the Conservative (CAQ) 

Now while I can’t comment on previous governing records in Quebec, the Reuters report allows a few conclusions to be drawn of these parties economic plans. 

1. Balancing the Budget:  All three parties are committed to balancing the province’s budget by 2013-14. 
2. Spending:  The PQ and Liberals favor government spending, but the Liberals’ spending plans are half of those of the PQ. 
3. Taxes:  All three parties are pushing tax increases, but the CAQ’s revenue plans only increase the estate taxes of second homes.  But guess what?  This revenue goes to paying for an income tax cut.

Conclusion

PQ is pushing (by to use American standards) and pretty liberal economic plan, Liberals are pushing what could be viewed as a center-left plan, with the CAQ’s plan that would probably find a lot in common with the Republican economic platform.

And on a final note, I find myself a touch envious that when Quebec voters go to the polls next week, they'll actually know--to a surprising degree of detail--what policies they're voting for.  The U.S. 2012 election, for all the focus on the role of government in the economy, has yet to see either major party lay out any real details on government spending. 

North America’s Shale Energy Stockpiles: Ohio Enters The Game—But Is it too Late, and Will State Politics Get in the Way?

by Keith Edmund White, Editor-in-Chief

With all the chattering over Canada’s oil sands, it’s important not to forget what natural resource literally ties Canada and the United States: shale gas. This resource, while perhaps not as pronounced on the public mind as black-gold brother, has gained prominence over the last decade. For most readers, T. Boone Pickens—and the numerous commercials he generated extolling naturally gas—may have been your first brush with shale.. But now even CNN’s Fareed Zakaria has seemingly blessed this energy shift: noting not only can shale gas production be done responsibly, but could serve as a geo-political stabilizer: with energy-hungry nations like the United States and China not having to be as dependent on keeping oil on the market from more volatile regions on the globe. And, as Canada’s showing, shale brings with it job and GDP growth (refer to page 27). While Canada’s oil sands grab the headlines, it’s clear the natural gas—promising less environmental impact—is trying to give it a run for its dominant role on the global energy stage.

And now Ohio is in on the game. And it’s bringing about its own interesting energy-state politics. First, the geology. Ohio sits—along with about 7 other U.S. states and Ontario—on the Utica shale gas reserves. How much is there? Apparently a lot. And in Ohio is pushing to up its 7-wells, and try to get in on the shale boom.

But this is where the state politics come in. Ohio Gov. John Kasich, not known as a moderate in his former Congressional career and now still-short tenure, has used the issue to show off his inner populist. His plan: finance a across-the-board income tax cut with increased taxes on drilling, which—it should be noted—admittedly Ohio already accessing this ‘severance tax scheme’ at a lower rate than other States. But, alas, Kasich finds himself fighting his own party over the tax proposal, with others calling the tax-proposal a possible killer of shale’s potential for spurring Ohio economic growth.  Whether Kasich populist pivot results from conviction or political necessity is debatable, but in the result is the same:  Kasich is pushing shale gas in a way that presumably will be supported by most Ohio voters.

Now there are two things to consider when assessing the virtues of natural gas. On the macro-scale, its undoubtedly true that natural gas is clean than oil—but, is using natural gas as a crush keeping the American economy from entering its green phase? On the ground in Ohio, there are two far less abstract questions. First, is the market to awash in natural gas?  As pointed out in John Funk's The Plain Dealer Nov. 2011 piece, Ohio might be too late to the party to enjoy a true shale boom:

The problem for Ohio is that the gas industry has been too successful over the last three years at developing shale gas in other parts of the nation, using technologies to drill horizontal wells and then fracturing, or "fracking," the rock to release the gas. 

Now there is too much of the stuff. The glut is growing and prices are falling. Those are the facts. Additionally, no one knows for sure how much gas -- or more valuable oil and other hydrocarbons -- lies trapped beneath Ohio. "The issue for the Ohio economy is whether there is enough demand for natural gas to permit development. It's not a question of whether it will create 150,000 jobs or 170,000 jobs but a question of whether it will happen at all," said Andrew Weissman, executive director of Energy Business Watch, a national private analytical service for energy investors. 

"It will happen on some scale," he added. "But the question is whether it moves quickly or whether it moves slowly so that it has only a modest impact on Ohio's economy."

And second, are Ohioans being over-sold on the economic benefits? Yes, with gas comes drilling operations, leasing and royalties, and pipeline infrastructure (all of which equal more jobs—especially for lawyers!). But, as this OSU report makes clear, while a short-term of income burst is to be expected in drilling areas, shale gas development’s ability to create long-term job-creation is dubious at best (and still comes with some not-fully understood environmental impacts) (refer to pages 15 and 27).  One fascinating statistic: Pennsylvania counties with drilling actually had less job growth than non-drilling countries, though both saw roughly equal income growths over 2000-2010.  Assuming this is trend  continues in Ohio, Governor Kasich’s plan makes sense: use the short-term income boast to simulate growth (income taxes) or some smart government-spending that can actually lead to sustainable job creation.

In any case, shale is here to stay. And with it, at a minimum, will come even more links between Canada and the United States.