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Contents

Section I  – Proposed FDI in Potash Corporation by BHP Billiton

Section II – Canadian Rejection of FDI &  the Declaration of a Strategically Significant Industry

Section III – International Relations Theoretical Foundation for Canada’s Position

Theoretical Discussion.

Summary.

Bibliography.

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oreign direct investment has been a key component of the development of the modern Canadian economy.  Since before confederation in 1867 an economic heritage developed based upon foreign investments from European and American sources.  The foreign capital provided basis for much of the infrastructure required to exploit the wealth and diversity of natural resources throughout the farthest reaches of Canada.  This paper will explore a most recent example of Canadian rejection of foreign direct investment – the 2010 case where a hostile bid for Potash Corporation of Saskatchewan was rejected on the grounds of preserving national interest.  This case is unique because it is the second such case in the past three years that has come to define the investment climate of the Canadian economy under Stephen Harper’s conservative government.  This paper will seek to answer the question of whether international relations theory is relevant in the formulation of foreign and domestic policy.

In doing so, this paper will first provide an overview of the case and provide context for why the rejection of foreign direct investment (FDI) in Canada matters.  It will explore the nature of the proposed acquisition of Potash Corporation of Saskatchewan (Potash Corp), the largest global supplier of potash, by BHP Billiton Limited (BHP) an Australian company that is currently the world leader in the iron-ore and coal industries, to name a couple.  Background information on each company will provide clarity to the importance of the proposed deal.  Ultimately this paper will delineate the exact impact such a deal would have on Canadian interests by examining the nature of the global mining industry and the nature of the potash resource for Canada in comparison to the rest of the world. 

Once the nature of the deal is clear this paper will then examine the relevance of federal and provincial governments in reaching the final decision of deterrence.  It will become clear that these domestic actors play an important role in defining the terms of foreign direct investment.  Although, the actual authority of domestic interests on FDI is concentrated at the federal level the provincial governments play a key role in deciding whether to intervene against FDI.  Drawing upon research by Steven Globerman and Daniel Shapiro this paper will demonstrate three distinctive eras of government regimes in response to FDI.  It will become clear that the government of Canada has transformed to become more welcoming of FDI which is reflected in the changing regulations of Foreign Investment Review Agency (FIRA) to the Investment Canada Act.  This second section of the paper will attempt to answer the question – if Canada has become more welcoming to FDI in recent years, then why is the current administration blocking the sale of Potash Corp to foreign interests?

The third section of this paper will explore the theoretical framework of international relations theory to attempt to rationalize why Canada rejected FDI in Potash Corp.  It is generally accepted that the body of work on international relations theory is expansive.  To attempt to apply each major theoretical model – ranging from realism, liberalism, historical structural, to constructivist or reflectivist theoretical approaches – would not provide an adequate analysis of the issue at hand.  Instead this paper will only examine the theoretical approach known as liberalism.

Specifically this paper will focus on the written works: “Liberal International Theory: Commond Threads Divergent Strands,” by Mark W. Zacher and Richard A. Matthew; “International Public Goods Without International Government,” by Charles Kindleberger;   “Hegemony in the World Political Economy,” by Robert Keohane; and “Democracy and Globalization,” by David Held.  This paper will explore each article, describing the central argument of each author.  Once the foundation for liberal theory has been established it will then be utilized to develop an understanding of Canada’s position on foreign direct investment. This paper will demonstrate that international relations theory is indeed relevant to the formulation of Canadian policy positions.

Section I
– Proposed FDI in Potash Corporation by BHP Billiton –

Potash Corp has recently been given status as a strategically vital industry to Canadian interests after an unsolicited bid by Australian company BHP Billiton Limited (BHP) was rejected by Canadian regulators.   The rejection of foreign direct investment (FDI) in Canada should be considered an important event since Canada is not historically known to be in opposition to free market principles.  In a speech given by Prime Minister Stephen Harper to the World Economic Forum in January 2010, he says that Canada plays a leadership role in the advocacy and protection of the free market.  Given the participation in the World Trade Organization (WTO) as well as bi/multi-lateral free trade agreements and the public affirmation of the benefits of free and open trade between nations Canada should be considered a steward of free market principles (Harper, 2010, p. 5).  However, the recent case of protectionism against FDI in Potash Corp marks an important event that may indicate a rising trend against free market principles.

The following section will provide background on Potash Corp and will try to rationalize how the firm gained its special status in Canada.  The discussion will be centered on the relevant history of both companies, Potash Corp and BHP; information on the proposed acquisition; the nature of the global mining industry; and the related importance of natural resource control to Canadian national interests.

According to the history available on the company website, Potash Corp originally began operations as a crown corporation of the province of Saskatchewan in 1975.  Potash Corp was later transformed into a public company after an initial public offering in 1989 for $18.00 per share.  As a publicly traded company Potash Corp is listed on both the Toronto and New York Stock Exchange.  Through the years the company has strategically acquired and merged with potash mines and chemical technology companies from around the world.  Currently Potash Corp has operations and business interests spanning several countries from Canada, Chile, China, Israel, Jordan, to the United States.  The results of the management decisions has positioned Potash Corp as the world’s largest fertilizer producer serving three distinct markets – agriculture, animal nutrition and industrial chemicals – with three distinctive product components – nitrogen, phosphates, and potash.  Each of these components is essential to the formulation of fertilizers. (Potash Corp, 2010)

The operating environment of Potash Corp makes the company ideally suited to maintain it’s near monopoly status in the fertilizer industry.  As part of the global mining industry Potash Corp faces many of the same factors that affect both supply and demand.  The supply of fertilizers is characterized by “substantial barriers to entry, few producers, low government ownership, and no known product substitutes” (Potash Corp, 2010, p. 1).  While the demand for fertilizer is closely correlated to growth in population – where more population signals greater demand for agriculture products.  In the case of a near-fixed amount of farmland throughout the world there is great pressure for each acre to produce more, which is typically assisted by the use of fertilizers.  Potash Corp estimates that without the use of fertilizer forty per cent more farmland would be required to produce the same amount of food (Potash Corp – 5Ws, p. 4).

The bulk of Potash Corp. operations are split between: Canada, where the bulk of potash production occurs because of the nature of the resource deposits; and the United States, which produces and refines phosphates and nitrogen for global export (Potash Corp, 2010).  The primary markets for Potash Corp are China, India, Brazil, South East Asia and North America – wherein China consumes nearly twenty per cent of the total global supply (Reuters, 2010).

One of the reasons Potash Corp has been able to develop into a global leader is the way they have leveraged their dominance in the Saskatchewan marketplace.  After all, Saskatchewan has the location advantage of being the site of “more than half of the world’s potash reserves” and is the leading producer of potash with ten operational mines (Bouw, 2010).  Half of which are operated by Potash Corp.  Furthermore, Saskatchewan has a history of public investment in the economy as a means of jump-starting industry.  The province still maintains public monopolies in sectors like insurance, energy and telecommunications.  The result of initial provincial involvement in the potash industry has been astounding.  The economic impact for the province for Potash Corp alone is borne in the establishment of over 5,000 jobs and the creation of millions of dollars in tax revenue for the provincial government (Hervieux-Payette, 2010).  These benefits are magnified given the local economic trickle-down each mine contributes to Saskatchewan’s economy.

In the summer of 2010 BHP Billiton Limited, an Australian company, made an unsolicited bid to purchase all ownership interests in Potash Corp.  In an August 2010 press release statement issued by Potash Corp the company rejected the $130 per share offer on the grounds that it was “wholly inadequate”.  The company’s President and Chief Executive Officer Bill Doyle stated that the bid fails to “reflect the value of our premier position in a strategically vital industry and our unparalleled future growth prospects. (Potash Corp, 2010)

The company wishing to acquire Potash Corp is BHP Billiton Limited (BHP), a major international resources company involved primarily in mineral exploration and production.  As the “world’s largest coal exporter and third-largest iron-ore shipper” BHP’s economic influence and power is both diverse and enormous (Keenan, 2010).  The Australian-based company operates on all continents of the world and has a history of regulator rejection of the hostile foreign direct investment methods the firm often pursues.

For example, in 2008 BHP made numerous unsolicited offers to invest in the British-Australian company Rio Tinto Group, the second largest iron-ore producer in the world.  The proposed deal was important because it was the largest proposed merger in history, valued at $119 billion dollars which would have effectively provided BHP with near-monopoly powers over the global iron-ore supply (The Economist – Business Section, 2008).  Given the potential of the deal to create a tight grip on iron-ore pricing the European Union’s competition authorities made objection to the merger (Ibid).

Given BHP’s international position as a leader in the supply of strategically vital minerals, like iron-ore, the company would have much to gain by diversifying their portfolio to include other strategically vital industries like agriculture.  It quickly becomes clear that BHP has much to gain from the proposed deal,

Buying Potash Corp., owner of about 20 percent of global potash output capacity, would propel BHP to the top of the league of producers of the mineral, a form of potassium used by farmers to help boost crop yields by improving the ability of plants to withstand dry soil conditions” (Keenan & Behrmann, BHP Billiton Makes Hostile $40 Billion Bid for Potash, 2010).

The addition of Potash Corp would enable the company to gain a strong-hold in the supply of fertilizers to global markets.  It would also provide BHP with a substantial amount of control of one of Canada’s most prized prairie resources that has experienced a boom in the past decade as demand has surged from developing nations like China and India (Reuters, 2010).

As the world’s population continues to increase so will the importance of agriculture-related industries like potash-based fertilizer producers.  Interestingly, BHP had already submitted a proposal to Canadian regulators to launch a new potash mine in Saskatchewan before making the bid for Potash Corp (The Economist, 2010).  This suggests that BHP will enter the Canadian market regardless; the acquisition of Potash Corp would have merely provided the foundation for a near-monopoly over the Canadian production of potash.   If this is the case, why did the Canadian regulators decide to block FDI by BHP?

Section II
– Canadian Rejection of FDI &
the Declaration of a Strategically Significant Industry –

The provincial and federal governments of Canada were not in favour of the proposed acquisition and made their positions clear.  The province of Saskatchewan was quick to oppose the BHP bid to acquire Potash Corp based on the potential of the resource company in relation to the future of Saskatchewan and Canadian interests.  As an ardent opponent Brad Wall, premier of Saskatchewan, points to the fundamental issue at hand, “What other takeover involves 25 to 30% of the world’s anything? … This is not like other takeovers we have contemplated in the country” (as quoted in Koven, 2010).  It is estimated that Potash Corp controls 20 per cent of the global potash supply; producing approximately 12 million metric tons of potassium chloride in 2009, and is expecting to near 20 million by 2014 (Reuters, 2010).  Potash Corp is one of the last remaining owned Canadian mining companies and maintains a strategically dominant position in the international fertilizer market that is paralleled by no other transnational company.

The sub-federal, or provincial, governments of Canada do not have express formal right to block FDI in their respective jurisdictions.  The power of protection over FDI rests at the federal level.  Canada has established ownership restrictions in sectors such as air transport, broadcasting, financial services, telecommunications and uranium mining.  Each of these areas has respective bearing on maintaining Canadian autonomy over national security, culture and heritage, economic solvency, national security and international non-proliferation objectives.  Therefore extra scrutiny by the federal government has always existed which is no different than other jurisdictions like the United States and the European Union.  However, Canada is “one of the few industrialized countries to have foreign investment rules requiring the review of proposed foreign investment proposals based on monetary thresholds” (Competition Policy Review Panel: Executive Summary, 2008).

At the federal level Tony Clement, Minister of Industry, signaled that the attempted hostile takeover would not be a net benefit to Canadians and therefore motioned to deny the acquisition.  Blocking the takeover was done on three-part reasoning; that there would be no ‘net benefit’ effect “on Canada’s ability to compete in world markets; on productivity, efficiency and innovation in Canada; and on the country’s overall level of economic activity” (Ibbitson, 2010).

In the November 4^th issue, The Economist identifies that party politics most likely play a larger role in Harper’s government decision to block the takeover bid on the grounds it would not be a net benefit to Canadians – his party included.  The case is considered unique because “…in the past 25 years, the country has shot down only one other foreign takeover, a case involving satellites and space missions that was vetoed on grounds of national security” (The Economist, 2010).  The Conservative party is currently supported by nearly all of the possible parliamentary seats in Saskatchewan – thirteen of fourteen. Since the premiers of Saskatchewan, Alberta and Manitoba are against the foreign takeover of Potash Corp the federal government must carefully consider the regional wishes to prevent opposition and loss of support in the next election (Ibid).   This suggests that domestic politics have a bearing on the relative success or failure of FDI.

To block FDI in Potash Corp was seen as a controversial ruling by the conservative Harper government which is considered a market-friendly administration (Financial Post, 2010).  However, how does the decision to block FDI in Potash Corp compare to the most recent track record of Canadian market intervention?

According to Globerman and Shapiro Canada has three distinct eras of foreign direct investment policy regimes.  The first era was between 1974 and 1985 and is best characterized by the Foreign Investment Review Act (FIRA).  The FIRA regime of government regulation of FDI in the Canadian market is distinguished by a sense of uncertainty caused by perceived government hostility towards foreign investment.  The government required FDI to be of a ‘significant benefit’ to Canadian interests under FIRA.  This effectively insulated Canadian domestic firms from outside investment which would create competition in the marketplace.  It is estimated that “Over the period 1975-84, the Agency’s disallowance rate was 7.0 percent (Safarian 1993, p.130 as quoted by Globerman & Shapiro, 1999, p. 516).  Although it can never be known how many foreign investors never attempted to invest in Canada because of the uncertainty and added legal and administrative costs associated with ensuring all proposals met FIRA’s expectations.  However, Golberman and Shapiro conclude that during the first era, FIRA had no significant effect on deterring or attracting foreign direct investment (1999, p. 526).

The second era came to be after the realization of the Investment Canada Act of 1985 which fostered greater willingness and openness to greater amounts of FDI in Canada.  Essentially the Investment Canada Act was a renewed and updated version of FIRA that established sectors exempt for review, set a threshold limit for transactions subject to review, and changed the condition of acceptance from ‘significant benefit’ to ‘net benefit’ (Globerman & Shapiro, 1999, p. 517).  Currently the Investment Canada Act thresholds are: “5 million dollars for direct investments and 50 million dollars for indirect transactions,” however, WTO member countries benefit from a 299 million dollars threshold (Industry Canada, 2010).  The update from FIRA to the Investment Canada Act enabled greater foreign access to the Canadian marketplace during the second era described by Globerman and Shapiro.

Under the Investment Canada Act, 1985 the federal government never blocked a foreign takeover on the grounds of failure of the ‘net benefit’ test until 2006.  In the first twenty three years of the Act, between 1983 and 2006 the federal government approved approximately 1,587 foreign takeovers that required formal review and 11,214 foreign acquisitions that required formal notification (CBC, 2008).  Regardless of the added government involvement in the economy no significant deterrence to FDI occurred during this second era; instead the FDI regime of Canada became more clearly defined which increased the accessibility of Canadian markets to foreigners.

The third and final era of FDI regimes discussed by Globerman and Shapiro is based upon the implementation of the Free Trade Agreement, 1988 and subsequent North American Free Trade Agreement (NAFTA) of 1994.  Each of these agreements signaled the further liberalization of the Canadian market to greater inward flows of FDI.  “In Canada’s case, for example, the FTA/NAFTA Agreements appear to have significantly increased levels of inward and outward foreign direct investment” (Globerman & Shapiro, 1999, p. 526).  The results of the study by Globerman and Shapiro signify that Canada has been on a trajectory course that has positioned the country as more welcoming to FDI in recent decades – especially given the increasing character of multilateral and bilateral trade agreements Canada has entered into with other nations.

In the study, ‘Motivations for FDI and Domestic Capital Formulation,’ the authors discuss how Canadian outward FDI surpassed inward FDI in the third era of liberalization.  There is a marked difference of the third era to the first; compared to 1970 levels where inwards FDI amounts were four times greater than inwards levels of FDI (Hejazi & Pauly, 2003, p. 285).  This suggests that Canada has experienced greater involvement in foreign markets by making direct investments in other national economies.  This indicates that in recent years Canadians have had a greater interest in ensuring access to free and open markets than ensuring open access for others’ FDI in the domestic Canadian market.

In a study by Nathan Jensen there is clear evidence supporting the fact that democratic governments attract higher levels of foreign direct investment (FDI).  Where “democratic institutions have a large positive effect on FDI inflows … [and] democratic regimes attract as much as 70 percent more FDI as a percentage of GDP than do authoritarian regimes” (Jensen, 2003, p. 612).  Wherein, Jensen defines FDI as private capital flows between countries and firms that provide some element of control over elements like equity, capital, debt and earnings of the firm or resource.  Jensen concludes that democratic political regimes are most likely favourable to foreign investors because the associated risks of dealing with a democratic regime are perceived to be lower.  One of the defining characteristics of a democratic regime is transparency in how decisions are made.  This begs the question – should Canada be considered a democratic economic regime based on the most recent examples of protectionism against FDI?

The evidence to suggest Canada is protectionist is indeed limited.  For the past three decades the Canadian government has only blocked two attempts by foreigners to invest in Canada.  The 2006 government intervention surrounded the sale of the space division of MacDonald, Dettwiler and Associates (MDA).  The deal was deemed to be a threat to national interests in technology and space and was subsequently the first major government intervention deterring foreign direct investment in Canada since the introduction of FDI regulations.  MDA technologies included Canadarm and Dextre as well as the Radarsat-2 satellite which had major associations with the Canadian Space Agency and were significant factors of Canadian participation in international space efforts.  The second instance of government intervention in FDI attempts is illustrated by the Potash Corp case of 2010 that is at the center of this discussion.

The case of Potash Corp is comparable to MDA because of the impact the firm has on Canada’s control of the potash resource and in turn global food security.  It is also comparable because of the related impact on international relations between Canada and her allies are considered immense.  To illustrate the importance of the resource industry to significant trading partners of Canada we must understand that potash is a strategic input for agriculture and therefore is considered closely linked to national food security.   According to the US Geological Survey, close to half of the total Canadian production in 2008 – nearly five million metric tons of potash (K₂0) – was directly supplied to the United States.  Although the amount of trade in potash fluctuates year-to-year based on prices, Canada is responsible for supplying an average of 86 per cent of all imported potash to the USA between 2005 and 2008.  Based upon this information alone it can be surmised that Canadian interests in the potash industry have direct impact on the food supply of the largest economy in the world.  (Jasinski, January 2010, p. 1 & 2)

Section III
– International Relations Theoretical Foundation for Canada’s Position –

In order to understand Canada’s domestic position on deterring foreign direct investment in the case of Potash Corp it is essential to examine the theoretical models of international relations theory.  Theory often explains action; therefore a review of theory should provide some rationale to the decision to deter FDI in Canada.  It is generally accepted that international relations theory has traditionally been dominated by the realist and liberal perspectives.  For this reason, this paper will utilize the liberal approach to international relations as the basis for illustrating Canada’s FDI rationale.

The chapter “Liberal International Theory: Commond Threads Divergent Strands,” written by Mark W. Zacher and Richard A. Matthew as found in the book Foundations of International Relations Theory is particularly useful to this discussion.  The authors do a comprehensive job delineating the nature of liberalism as an international relations theory.  They argue that there are three fundamental core values of liberal international relations theory inherent in all strands of liberalism:

• The first principle of liberalism is based upon a progressive and optimistic view of human nature.  Reason and learning is part of the human condition.  While it is also accepted that discord and coercion are necessary in some circumstances, human freedoms have been encouraged by the general condition of peace, prosperity and justice.
• The second principle of liberalism is based upon the fact that although anarchy is a reality the state is an essential actor that makes cooperation is possible.  This cooperation is necessary to maximize total group benefits and mitigate damages.
• The third principle of liberalism is that international relations have been transformed by modernization.  The major phases have included the agriculture revolution, industrial revolution, and scientific revolution.  (Zacher & Matthew, 1995)

Zacher and Matthews describe how these core fundamental values have been developed through years of theoretical debate and developments by such authors as Locke, Voltaire, Rosseau, Kant, and more recently Keohane, Nye, and Hoffman.  It is evident that there are numerous strands of liberalism; the strands range from republican, interdependence, cognitive, sociological, and institutional liberal-‘isms’ (1995, p. 121).  It is worth noting, for Zacher and Matthews, individuals are the primary actors of international relations and when comprised are represented by states which are the most important collective actors.  The interests of these actors are constantly evolving and shaped by domestic and international conditions.

One of the main conclusions that Zacher and Matthew present about liberalism is a correlation exists between democratization and free trade as means of preventing international aggression and war.  Wherein international laws and organizations brought about by democratic actions create an international regime that facilitates commerce between nations; where the mutual interests of nations, upholding principles of free trade, maintain the integrity of the regime (1995, p. 137).  That is the mutual interests of the group maintain peace among group members.  However, the authors do point to the inherent roles of self-interest and power in individual action which in general advocates “prudence” in foreign policy decisions (Ibid, 112).

Charles Kindleberger, also a liberal international relations theorist, was best known for his development of Hegemonic stability theory.  His article “International Public Goods without International Government” was a reflection of the changing nature of international relations theory – beyond the strict traditional dichotomy of realism and liberalism.  The result was sort of cross-pollination of disciplines including political science, economics, sociology and philosophy.  In an aggregating many related factors hegemonic stability theory attempts to explain how and why regimes are established and maintained by looking at a variety of contributing factors.

Kindleberger infers that stability in the international system is possible when clearly defined hegemony exists because it will act as an overarching authority.  A hegemon is best understood as a leading or dominant power (1986, 1).  In the international nation state system a hegemonic power could be considered the United States.  Acting as a hegemonic power, the United States has played a primary role in establishing stability because of the way it has founded, maintained, and regulated a common system that promotes free market principles.

In this way, Kindleberger describes that at the root of hegemonic stability is the notion of providing and sustaining public goods.  A public good is non-excludable and non-rival; where everyone has access to it and consumption does not diminish the availability of the good (Kindleberger, 1986, p. 2).  An optimum example of a public good is a free and open market economy.  Today an open trading system between most all countries is made possible by the standardization of weights and measurements, freedom of the seas, and the protection of property rights – all concepts that have been developed and enforced by hegemonic powers (Discussion, 2010).  For Kindleberger the essential role of the hegemon is to police the ‘free riders’ – those who directly benefit from the public goods but who do not contribute to maximizing the delivery of public goods (1986, p. 13).

In Hegemony in the World Political Economy Robert Keohane clearly defines the parameters of hegemony as the control of resources like raw materials, capital, markets and competitive advantages.  An important observation by Keohane is that important economic issues are often closely correlated to military-security issues of the hegemony.  This explains the military power exercises of the United States and her allies in the protection of commercial oil interests in the Middle East (Keohane, 1999, p. 300).

Although Keohane proposes that a single dominant power creates and maintains order in world politics, his understanding is not limited to the dominance of one state as a sufficient and necessary condition for the development of world order.  This idea permits the waxing and waning of hegemonic power as well as the cooperation of many states in an effort of international stability.  Keohane suggests that a single state with ability and willingness can make and enforce rules of a regime.   The key to this understanding is that willingness of a state is driven by domestic politics (Keohane, 1999, p. 295).  That is hegemonic leadership in international relations are determined in part by domestic conditions which create a demand for cooperation or conflict.

In the chapter “Democracy and Globalization” David Held discusses the idea of a cosmopolitan democracy as both necessary and possible in the globalizing world.  He argues that a shift has occurred in human affairs where we are more inter-connected having overcome spatial distances with fundamental changes in the way we perceive communication, culture, the environment, finance, security and transportation (1998, p. 12).  Overlapping spheres of influence create interest dilemmas that present challenges to the way we think of national sovereignty and boundaries in the international arena.

Held discusses the fundamental issue of constituency in a liberal democracy where consent of the community legitimates government’s actions.  He is right to point out that most forms of democracy exist on a domestic or national level.  For Held, in the case of issues where interests are cross-reaching across national interests, like the ready availability of cheap fertilizers, current forms of democracy do not adequately provide representation for global citizens to direct or have input on decisive actions to promote or uphold those interests.  For the most part, economic forces operate at a global level which cannot be contained or directed by the conventional notion of national governments (Held, 1998, p. 27).

Theoretical Discussion

Applying Zacher and Matthew’s observations of the liberal perspective of international relations theory we can make a few conclusions about Canada’s position on FDI.  The first is that the state should be considered an important actor of international relations; since both federal and sub-federal governments influenced the decision to block the foreign investment.  However, individuals should be considered the primary actors motivating action in the international community.  After all, BHP Billiton is a publicly traded company comprised of the aggregated interests of individuals.  Marius Kloppers is the chief executive officer (CEO) of BHP, he is responsible for driving both attempts to acquire Rio Tinto and Potash Corp; two failed events that cost the company approximately $800 million dollars (MacDonald, 2010).  On the other hand, Bill Doyle, CEO of Potash Corp played a key role influencing shareholders and government officials to act in concert with the rejection of BHP’s offer.  Brad Wall and Stephen Harper were also individuals with government regulatory capacity who impacted the final decision to deter FDI.  Their personal opinions no doubt had a direct impact on blocking BHP’s attempt to gain access to the Canadian market by way of acquisition.

The second observation we can draw from Zacher and Matthews liberal interpretation is that international relations are shaped by self interest and power which results in a constant state of flux.  This is demonstrated by Stephen Harper actively promoting the advancement of free and open market principles; when in fact his administrative decisions display hypocrisy between words and actions.  The control of resources as power is mirrored in Canada’s direct protectionist measures to ensure domestic control of the largest potash mines in the world and a considerable portion of the global fertilizer supply.  It is important to weigh the fact that had BHP acquired Potash Corp the monopoly that may have been created could have had a negative influence on global supply prices – thereby negatively affecting the entire group of potash users.  Canada’s display of prudence of self-interest over group-interests demonstrates that coercive intervention by state actors is at times acceptable to maintain the balance of the system.

Based on Kindlerberger’s assertions of liberalism we can infer that the decision to maintain Canadian interests in Potash Corp indicates the desire to maintain stability by way of a level of hegemonic control over the domestic potash resource.  Canada clearly enjoys the economic benefits of the company’s production over the natural resource.  There is also a net benefit to the global community by providing access to the by-products generated by the company’s operations at a fair market price.  In this way Potash Corp is delivering a modern public good – the seemingly limitless production of a commodity necessary to obtain higher crop yields which in turn sustains a greater number of people on the same amount of arable land.  Since the nation of Canada coincides with the geographic location of a majority of the world’s potash supply it is most likely in the best interests of the Canadian people to maintain some sense of control over the largest producer of such a valuable resource.

Applying Keohane’s conceptions of liberalism to the case at hand it is clear that potash is a valuable resource that is closely linked to food security.  For this reason, Canada has a vested interest in maintaining some level of domestic control over the resource’s means of extraction and production.  The second section of this paper demonstrated that there was as domestic willingness to preserve the integrity of Potash Corp as a Canadian entity from both the provincial and federal levels of government.  The government’s ability to control FDI is vested within the Investment Canada Act and is a tool for ensuring dominance over natural resources like potash.

Applying David Held’s conclusions of liberalism to the case study we find a disconnect in his interpretation of the liberal theoretical framework.  While it is acceptable that potash as a commodity does serve cross-reaching national interests, to argue that there was no constituency on the issue to block the BHP bid to acquire Potash Corp seems unfounded.  In fact the shareholders of Potash Corp had the ability to individually block the sale of their shares to BHP in an attempt to prevent the foreign acquisition.  Furthermore, Canadian citizens can demonstrate their acceptance or rejection of the regime advanced by the Harper government during the next election by choosing to vote or not to vote for the conservative party.  In some context, Held is correct to say that the citizens of Malawi, for example, do not have a voice in the nature of FDI permitted in Canada as was the case of Potash Corp – however, it begs the question of whether they deserve a voice in determining the relative openness or closeness of the Canadian economy to FDI.

Summary

This paper has outlined the nature of the proposed foreign direct investment in the case of BHP Billiton and Potash Corporation of Saskatchewan; the influence of federal, provincial, and individuals on the relative success of the deal; and the theoretical basis for liberal international relations theory.  Based upon the information herein presented it can be concluded that international relations theory does influence and explain the formulation of foreign and domestic policies.

Although Canada’s position on free market principles may seem obscure, the actions by the regulatory agencies were indeed influenced by the goal to preserve Canadian national interests of sovereign control over scarce natural resources.  In the past three decades Canada has been an open market and has advocated the same free market principles.  The Potash Corp case marks the second such intervention by Canadian regulators; this prudence in policy is more generally an exception to the norm.  While it may not be the norm it does mark a significant departure and signals a sense of uncertainty to potential foreign investors.

The ‘net benefit’ test has been criticized on the international stage as being too obscure and subjective to the whims of government self-interest.  The government argues that the proposed FDI did not promise to provide a net benefit because the deal would have hampered the country’s ability to compete in world markets.   Since Potash Corp is geographically based within Canada, due to the location of the mines and existing production facilities, how would ownership by BHP differ than the current structure?  It is important to keep in mind that since Potash Corp is already a public company listed on both the New York and Toronto Stock Exchange there is significant diffusion of ownership interests among a large group of individuals, many of whom are not Canadian.

The international criticism is not unwarranted.  The Harper government is now responsible for the two instances of deterring FDI – MDA in 2008 and Potash Corp in 2010.  For a government that publicly advocates principles of the free market to the world through major forums like the WTO it must ensure some level of consistency at the international level in order to be taken seriously by other economies.  Although the evidence presented herein does demonstrate that Canada has a vested interest in advancing a free market agenda to gain FDI access for Canadian investors.  After all, the Canadian levels of outward FDI have outpaced inward FDI in recent years.

The question remains –should Canada be considered a democratic economic regime given Canada’s most recent example of FDI deterrence based upon the principle of “net benefit” to Canadians that is based upon limited transparency?  The fact is this is the second case of FDI deterrence that is marking the beginning of a trend against foreign acquisitions of priority national industries.  Although it may not be entirely clear how the government reached the decision they do seem to exhibit liberal international relations tendencies in their approach to foreign and domestic policy development.  These tendencies are reasonable cooperation in general while minding the needs for power and self-interest in the long-term.

Bibliography

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Curtis Matwychuk-Goodman

—

“Ben Franklin may have discovered electricity – but it is the man who invented the meter who made the money”
- Earl Warren-

Introduction to the Issue

conomic growth and electricity consumption are directly correlated.  As a nation’s electricity consumption increases so does the gross domestic product.[1] It is generally accepted that access to electricity is a necessary element for a healthy economy; in today’s day and age electricity is required for production of both goods and services.  Without access to reliable sources of electricity the efficiency and productivity of the North American economy would tumble.

This paper seeks to investigate the current trade policy between Canada and the United States in the case of International Power Lines (IPL) and the international sale of electricity.  The specific case of the Montana-Alberta Tie Limited (MATL) project provides an excellent case study of the Canada-U.S. relations on electrical energy.  MATL will be the first direct merchant-based grid interconnection between the province of Alberta and the state of Montana and will provide context for the regulatory environment of each country.  This paper will present the case from the Alberta perspective.  It will, however, provide analysis of both the federal and sub-federal governments from both Canada and the U.S. and their related jurisdictional authority over the MATL project.  In doing so, this paper will discuss the context surrounding the construction of an International Power Line (IPL).  The recent final approval of the MATL project demonstrates the continuing harmonization of the North American electricity grid; which will briefly be discussed.

In addition, this paper will directly examine the popular notion that Alberta is an energy superpower in the North American marketplace; albeit perhaps not a leader in the electric energy industry specifically.  In fact, this paper seeks to demonstrate that Alberta has tremendous growth opportunities but currently lacks the adequate infrastructure to exert such influence even in the North American marketplace.  To begin our discussion, let us first explore exactly what electricity is.

Electricity is an interesting commodity.  Once electricity is generated it cannot be stored. The laws of physics declare that electricity will always flow through the path of least resistance.   This is the reason that when a light switch is turned on, the lights turn on instantly. In addition to this, electricity demand is very unpredictable.[2] As a whole the electricity market services residential, commercial and industrial purposes; which means electricity must be available at any time of day in many different locations.   Furthermore, electricity loses potential over great distances and with changes in temperature.[3] This presents an interesting challenge for the creation and maintenance of a reliable electricity grid.  A perfect mix of generation, transmission, and distribution (or retailing) must exist to efficiently service all customers in need.  As a result of this the electricity industry has traditionally been region-specific and usually exists as a vertically-integrated entity.  To increase the overall efficiency of an electricity grid it is best to have many interconnections between regions because it creates economies of scale, which in turn determines the most efficient price of electricity for all users. [4]

—

The MATL Project

Montana Alberta Tie Limited (MATL) is a Calgary-based company that is currently in the progress of building Alberta’s first International Power Line (IPL).[5] This line is monumental, in that it represents the first merchant-based international project of its kind in Alberta.  This project is also unique in this province because the entire construction and financing is done by a private company instead of by the end-user who traditionally pays for such infrastructure through offset transmission charges.  Once constructed this IPL will be the first direct inter-tie between the electricity grids of the United States and Alberta.  The grid interconnection points will be located in Lethbridge, Alberta and Great Falls, Montana; crossing the border west of the Coutts crossing and spanning a distance of 345 kilometers.  The transmission power line will be privately owned and operated as a merchant system with a nominal rating of 300 megawatts of alternating current.  According to MATL, this is 240kV or enough power for 35,000 homes.[6] Even before construction, the entire line’s capacity has been auctioned off to private companies, including NaturEner, Wind Hunter and Invenergy.

The MATL transmission power line is a strategic addition to the electricity-grid and is ideally positioned for further development of local wind turbine generation projects.  The proposed IPL traverses some of the best wind energy potential locations in the western parts of North America.  In fact, the company estimates that in addition to creating 150 jobs and adding $10 million to the local economies during construction, the power line will enable up to $1 billion dollars in wind farm developments.[7] The MATL project provides a significant and necessary resource for both nations to move towards reducing their carbon footprint by providing access opportunities for renewable energy sources to join the electrical grid.  Most importantly, the MATL line will increase the overall efficiency of the Western energy grid.  If the MATL project promises such great benefits, who then has effective regulatory oversight over the IPL – Canada or the United States?

Regulatory Jurisdiction over MATL

The construction of Alberta’s first IPL provides an excellent case study of the symmetries and asymmetries of regulatory systems and trade policies of electricity as a commodity, on both sides of the border.  This paper will examine the regulatory regimes of both nations separately by looking at the jurisdiction of federal and sub-federal authorities.

The fundamental differences between Canada and the U.S. are manifested in the fact that significantly more opportunities for stakeholder input exists during all stages of the application process in the U.S.  The U.S. also has a more equal division of jurisdiction on the issue of IPLs and the international sale of electricity.  In Canada, on the other hand, authority is retained by the provincial government and there are not as many opportunities for public consultation.  In fact the provincial government is currently seeking to limit public input in essential transmission infrastructure.

After the context of each country’s regulatory regime has been established this paper will examine the move towards North American harmonization of both systems by means of joint intermediary institutions like the North American Electricity Reliability Corporation (NERC).

Canada

–>Federal Level

At the federal level there is relatively little direct control over electric power lines and related facilities, since these are under provincial jurisdiction.[8] However, the federal government retains quasi-jurisdiction and oversight through the National Energy Board (NEB).[9] The purpose of the NEB is to “promote safety and security, environmental protection, efficient energy infrastructure and markets in the Canadian public interest.”[10] In order for an IPL to be constructed the NEB must first issue a permit to construct and operate.  This provides some effective federal control over IPLs.  The NEB considers the “technical feasibility of the project, its effect on adjacent provinces and its environmental impact.” [11] In this way the NEB ensures that projects comply with the national standards set by the Canadian Electrical Code, the Canadian Standards Association, and the Canadian Environmental Assessment Act.  Additionally, the NEB has a mandate to ensure that IPLs are managed effectively to meet the needs of national security.  This requires an electricity reliability organization (ERO). The North American Reliability Corporation (NERC) has been appointed by the NEB as the best agency to ensure this electricity is reliable and can be counted on when needed.  NERC will be discussed further in the section on joint initiatives between Canada and the U.S.

The NEB does not regulate the import of electricity.[12] However, in addition to issuing construction and operational permits, the NEB can establish the limit of electricity to be exported.  This is determined by the total available electricity and the corresponding domestic demand.  Nearly 70 per cent of all energy exports to the U.S. are generated by hydro-electric facilities which are subject to dynamic environmental conditions.[13] This directly impacts the amount of electricity that can be exported to the U.S. at any given time.

–>Provincial Level

In Canada electricity is considered a resource and is therefore under provincial jurisdiction.[14] As a result of this, provincial regulations can vary by province.

In most provinces electricity is a public utility and is operated by a Crown Corporation.  In the cases of British Columbia, Manitoba, Quebec and New Brunswick excess electricity is exported through IPLs. The revenues earned from electricity exports are used to maintain “domestic electricity prices at levels that are lower than they would otherwise be.”[15] Each of the aforementioned provinces has substantial hydro-electric generation facilities and has nearly maximized their export potential.

Alberta is unique among all the provinces as it is the only privatized electricity sector in all of Canada.  The electricity industry was deregulated under the Electric Utilities Act (EUA) of 1995 which effectively privatized the electrical supply market.[16] Initially, this act mandated that all electricity generated would become part of a Power Pool which was regulated by the Alberta Energy Utilities Board (EUB).  However, as of 2001, retail competition was introduced effectively giving choice to consumers.  Presently in Alberta electricity generation is predominantly owned by private interests who sell the power to private retailers.  Through this process the retailers pay the owners of the transmission line for the intermediary use.  Electricity generation is separate from transmission, and separate from distribution. All three levels are private – yet must act in concert to ensure profitability of the entire system.

Although the power industry is privately owned there is still regulation oversight by three government created agencies: the Alberta Electric Systems Operator (AESO), the Alberta Energy Utilities Commission (EUC)^[17], and the Market Surveillance Administrator (MSA).  The first provincial regulator is the AESO; which is responsible for the reliability of the Alberta Interconnected Electric System (AIES).  The AESO is an independent not-for-profit organization that regulates access to the grid for generators and distribution companies so that electricity in Alberta is safe, reliable and affordable.  AESO facilitates a “competitive wholesale electricity market, which has more than 200 participants and about $8 billion in annual energy transactions.”[18] The AESO has a mandate to determine the need for expansion and infrastructure reinforcements.  Once a need has been determined, the AESO makes a recommendation to the second level of provincial regulation the: Alberta Utilities Commission (AUC).

The AUC is ultimately responsible for issuing permits to construct necessary transmission facilities and must conduct public consultation sessions to ensure all stakeholders have adequate input on new developments. The purpose of the public hearings is to assess local impacts, mitigate problems and accommodate solutions. As well, the AUC seeks approval of projects from the Alberta Ministry of Environment to ensure the project meets the requirements of the Environmental Protection and Enhancement Act.[19]

Currently there is great public debate in Alberta over the authority of the AUC to construct a domestic power line between Edmonton and Calgary.  A high-voltage line between these two cities has been recommended by the AESO to reinforce the power grid, as it has only seen one infrastructure upgrade since 1989.[20] Similarly, the AESO has recommended the construction of four other critical projects, together worth an estimated $8.1 billion, out of $14.5 billion dollars in total recommended system upgrades.[21]

The AUC and the Alberta Government face even greater criticism over the proposed Bill 50: Electric Statutes Amendment Act, 2009.  The intention of the bill is to provide unilateral authority of the Alberta government to approve critical transmission projects.  If Bill 50 passes, the provincial cabinet would have considerable power over the AUC, which would compromise the democratic nature of the intended system.  Tensions are exacerbated by both landowners and ratepayers.  Landowners are worried about the negative impacts of building a line over their land – including lost property values, health impacts, and a general belief of ‘not in my back yard.’[22] Rate-payers also have concerns because they will be responsible for paying for the transmission upgrades through increases in annual electricity bills.

The third provincial regulator of electricity is the Market Surveillance Administrator (MSA).  The main purpose of the MSA is to ensure fairness of the electricity markets in Alberta’s public interest.  The agency monitors, reports, investigates and is an advisory body that reports to the AUC.  The MSA does not have regulatory authority over IPL project applications.

United States

–>Federal and State Levels

In the United States the MATL project is similarly impacted by two levels of government.  In this case the regulatory process of approval required for an IPL provides effective control to many government departments related to energy and the environment.

The state of Montana has authority over matters of transmission under the Department of Environmental Quality (DEQ).  The DEQ has authority set under the Major Facility Siting Act of 2003 (MFSA) which effectively supersedes all other local government entities and regulations.[23] The federal executive level of government it is largely involved in the proceeds of the state level regulatory process, has the ability to make recommendations, or can effectively veto the project.  Under the MFSA act the Montana DEQ requires two authorizations for a developer of an IPL to proceed with construction.

The first is step of constructing an IPL is an application outlining many factors.   In the MFSA application procedure a transmission developer must demonstrate the need for the project, justify its proposed location or alternative sites, and provide a baseline study (or a reliability analysis). Most importantly, the application must demonstrate a cost-benefit analysis of the project.  The Montana DEQ submits all relevant information to the DOE; in turn the DOE will issue a Memorandum of Understanding (MOU).  Based on each government’s findings and subsequent public hearings, the DEQ will issue or deny a Certificate of Compliance.  This certificate signifies that all conditions of the application process are met which permits the developer to proceed to the next level of the regulatory process.[24]

The first step of the MFSA application process involves communication with all relevant stakeholders from the beginning to allow maximum public input from the start.  This public consultation at the early stages of project authorization has allowed the local constituents most impacted to have a voice in the development.  In the case of MATL, local farmers were responsible for changing the pole type design on farm-lands most impacted by the line crossing.[25] The cost-benefit analysis of the MATL project suggested a local impact to farmers that would annually result in $210,000 in additional farming related costs.[26] This was out-weighed by the net benefit from tax revenue from MATL which is estimated to be $730,000 annually. [27] This does not include the potential gains from greater system efficiency and future wind farm development related tax revenue.

The second step of the authorization process to construct an IPL like MATL, is also a multi-level process involving the federal Department of Energy (DOE) and the Montana DEQ.  This step is mandated by the National Environmental Policy Act (NEPA).  Many levels of government have input in reviewing the project application through a report known as an Administrative Draft Environmental Impact Study (or agency comment stage) which is available first to related agencies impacted by the development for review.  This step of the regulatory process is intended to measure the level of environmental impact each project will have.  The implication of this is to ensure a more rigorous scrutiny process for projects that will have environmental impacts by way of national parks, critical habitat areas (reserved for endangered species), breeding areas, cultural areas, waterways, and areas of scientific, paleontological or anthropological interests.

In this way, the DEQ based their approval of the MATL project on the company’s adherence to the “Suggested Practices for Avian Protection on Power Lines: The State of the Art in 2006.” This document was created through a multi-stakeholder policy approach with input from the California Energy Commission, the Avian Power Line Interaction Committee (APLIC)[28], and the Edison Electric Institute (EEI).[29] In addition to meeting these standards the MATL project must also adhere to the National Electrical Safety Code, the Federal Aviation Administration, water quality statutes during construction, and local visual management plans.[30] This process enables simultaneously action by both the federal level (DOE) and the state level (M DEQ) and related agencies.  This fosters greater input on the proposed projects from a wider range of state and federal levels.

Once the agency comment stage is complete, the DEQ issues a Draft EIS which is released for public comment.  This provides the general public an opportunity to comment on the proposed project.  However, this stage is limited by time; within thirty days the DEQ will issue a Final EIS which legitimizes the IPL development as a real possibility.  Based on this report the DEQ has nine months to review it and draft and issue all permits not covered by the Major Facility Siting Act (MFSA) required by the proposed development.[31] This process occurs simultaneously at the federal level under the jurisdiction of the Department of Energy (DOE).  There is considerable cooperation between the state and federal levels during the second stage.  Within thirty-days of the DEQ issuing a Draft EIS the DOE may issue a presidential permit to continue with construction.  Once the DEQ and the DOE approve the application a Record of Decision is given which authorizes the construction of the IPL.

It is important to note that the federal level of government is also represented by the Federal Energy Regulatory Commission (FERC).    This effective authority over IPLs is retained by the Electrical Reliability Organization (ERO).  In the United States the designated ERO is the North American Electricity Reliability Corporation (NERC).  This will be discussed in the next section.

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North American Electricity Integration

Recently Canada and the United States have fostered a dialogue to create a Smart Energy Grid.  This would effectively lead to greater harmonization among all North American power generators, transmitters, and distributors.  Already this has occurred through a main joint coordinating agency that links the Canadian and American electricity market is through an Electricity Reliability Organization (ERO).  The designated ERO for both Canada and the U.S. is the North American Electricity Reliability Corporation (NERC).

Interestingly NERC was first designated as the main U.S. ERO in 2005 by the Federal Energy Regulatory Commission (FERC).[32] This was a result of the major blackouts of 2003 in the Northeastern regions of North America.[33] Subsequently, the NEB in Canada appointed NERC as the national ERO because it was required if Canada was to increase the trade in electricity with the U.S.  This suggests that NERC is a domestic policy tool that has been applied to Canada – meaning Canada was treated as a sub-set of American domestic policies.  It is arguable that Canada voluntarily joined NERC, yet was there an alternative option?  If Canada was not a part of NERC, then most transmission interconnection points with the U.S. would no longer be functional.  Before however, NERC was a voluntary authority that set out policies and standards for nine regional electrical councils within the U.S.  Now NERC has the ability to fine electrical generators and distributors for non-compliance with their standards and policies.  The regional council that has jurisdiction over the MATL project is the western Electricity Coordinating Council (WECC).

The effective jurisdiction of WECC is over the states and provinces of: Alberta, Arizona, British Columbia, California, Colorado, Idaho, Montana, New Mexico, Oregon, South Dakota, Texas, Washington and Wyoming. [34] WECC has effective control over the interconnection points between Canada and the eastern coordinating councils through many high-voltage power lines; once completed MATL will become another one of these interconnections.

In order for an IPL to be approved WECC must approve the technical aspects of the proposed project.  This ensures that any new transmission infrastructure is compatible with the entire electricity grid in North America.  MATL required a Phase III status on the transmission pathway rating in order to be eligible for connection with the WECC.[35] This means that the IPL is engineered to meet the standards specified by NERC.

NERC is also part of the North American strategy for national defense; the Critical Infrastructure Protection (CIP) program has developed Cyber Security Standards to protect assets deemed high risk but necessary for the reliability of the North American system.[36]

—

Discussion

The case of MATL suggests there are many similarities between Canada and the U.S. in terms of regulatory processes of IPLs.  However, it is evident that the process in the U.S. is much better organized with greater chance of public involvement.

In Canada the regulatory process appears less well-organized.  Also, in Alberta there is less opportunity for public consultation, which under Bill 50 may diminish even more over time.  The MATL project has demonstrated that Alberta regulatory process of IPL’s is still in an infancy stage of development.  Before MATL Alberta did not have IPLs.  During the MATL approval process Alberta effectively changed the regulatory agencies responsible for IPLs – the Alberta Utilities Commission (AUC) was not the presiding agency in the approval of MATL.  In fact, the AUC was formed by the dismantling of the Alberta Energy and Utilities Board (EUB).  More investigation is required to determine if the MATL project played an influencing role on the change of the provincial government regulatory framework.

The MATL project has been very effective, especially in the U.S.  The company began the IPL development process in August of 2005 and in four short years was able to secure full regulatory approval from multi-levels of government from two countries.  The MATL project has also been successful in gaining funding by the federal U.S. government under the Recovery Act of 2009; made possible by the DOE through the Western Area Power Administration (WAPA).  In exchange for the conditional right to 50MW of the MATL line capacity, WAPA will cover the expected construction costs of $161 million.[37] MATL is the first project to be funded by WAPA under the Recovery Act of 2009.  This suggests that the project managers of MATL were keenly involved in the U.S. government regulatory process.  The Canadian company understood that in the U.S. regulation is a multilevel process that requires a coordinated and micro-policy approach.  The MATL project: aimed to harmonize the North American electricity system; is sectoral in character; and appealed to regulators because of the potential for renewable energy to be added to the grid.  It is for these three reasons that MATL was able to achieve project approval in the U.S. in just four years.

There is evidence that suggests greater integration of the North American electricity market will lead to a harmonization of regulatory oversight over matters of IPLs.  NERC is a perfect example of how Canada and the U.S. work together through an independent, sectoral-based organization to achieve common ends.  Interestingly, however, NERC was borne as a subset of domestic American policies.  This suggests that Canada could be considered the fifty-first or just another Northern state.  Given the enormous energy reserves in Canada, more specifically in Alberta, perhaps it should be the other way around.  After all, media has a unique ability to continually purport that Alberta is an energy superpower.

Is Alberta an energy superpower?  In electricity the straight answer is no.  Before the construction of MATL Alberta does have access to the United States electrical market through inter-provincial ties via British Columbia and Saskatchewan.[38] This has traditionally allowed for Alberta to engage in the import and export of power.  According to the National Energy Board, between January and February 2009 Alberta exported 167,412 megawatt hours (MW.h) of electricity. This was worth an estimated $5.6 million at an average cost of $35.32/MW.h.  During the same time period Alberta effectively imported 485,367 MW.h of electricity; worth an estimated $16.6 million at an average cost of $52.02/MW.h.[39] Based on this data it is evident that in 2009 Alberta has been a net-importer of electricity and has faced higher importing costs than those states that purchase Alberta electricity.

Alberta has paid a premium on electricity imports; paying on average $16.70/MW.h more to buy than is charged for the export of the exact same commodity.  This is most likely due to discriminatory pricing techniques involved in the electricity industry – wherein prices vary by demand and are influenced by complex financial derivatives.  However, it is interesting to consider that Alberta faces a trade deficit in electricity exports.  It is because of this that Alberta cannot be considered an energy superpower.  However, some may consider the development of Alberta’s first IPL marks an important development in the province’s energy-related economic growth strategy towards becoming an energy superpower.

It is interesting to consider that currently in Alberta most electricity is generated by burning coal.  In 2007 Alberta was responsible for the burning of a staggering 52 per cent of all coal in Canada for the purpose of electrical generation.[40] Coal is a reliable fuel source.  The economics are simple: as electrical demand increases more coal is burned so supply and demand are equal.  Subsequently, coal has a bad reputation based on the high levels of greenhouse gas emissions that result from how it is converted to energy.  If the MATL project enables Alberta to export electricity, then will impending government climate legislation detrimentally affect Alberta exports?  Will the Americans impose higher tariffs on energy from ‘unclean’ sources?  Or will MATL spur the development of renewable energy sources as promised?

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Figure 1: Chart of Electrical Line Losses by Load and Temperature

(DOE 2008)

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Figure 2: Major Western Canadian Electricity Transmission Interconnections – Domestic and International

(NEB January 2003, 9)

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Figure 3: IPL Regulatory Framework – U.S.A.

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Table 1: Key Regulatory Approvals Required by Jurisdiction

*Effective January 1, 2008 the EUB became: Energy Resources Conservation Board (ERCB) and the Alberta Utilities Commission (AUC)

**The amount of time MATL application process required for approval

***Designated the official federal Electricity Reliability Organization (ERO) by FERC in 2006; members include states/provinces from Canada, USA, Mexico

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Table 2: Summary of Alberta Electricity Imports and Exports by Company and Destination 2009

List of Acronyms

AESO   – Alberta Electric Systems Operator

AIES     – Alberta Interconnected Electric System

APLIC   – Avian Power Line Interaction Committee (USA)

AUC     – Alberta Utilities Commission

DEQ     – Department of Environmental Quality (Montana)

DOE     – Department of Energy (USA)

EEI       – Edison Electric Institute (USA)

FERC    – Federal Electricity Regulatory Commission (USA)

IPL       – International Power Line

MATL   – Montana Alberta Tie Limited Project

MSA     – Market Surveillance Administrator (Alberta)

NEB     – National Energy Board (Canada)

NERC   – North American Energy Reliability Corporation

NEPA   – National Environmental Policy Act (USA)

WAPA – Western Area Power Administration (USA)

—

Bibliography

AESO. “About AESO.” Alberta Electric System Operator. December 2009. http://www.aeso.ca/ourcompany/ourCompany.html (accessed December 1, 2009).

Alberta Energy. Energy History in Alberta. 02 02, 2009. http://www.energy.alberta.ca/About_Us/1133.asp#2000_-_Present (accessed 12 01, 2009).

DOE. Department of Energy Announces Start of Western Area Power Administration Recovery Act Project . September 19, 2009. http://www.energy.gov/news2009/8017.htm (accessed December 3, 2009).

DEQ. “Federal Draft Environmental Impact Statement.” MATL Transmission Line EIS. 2008. http://gc.energy.gov/NEPA/nepa_documents/docs/deis/eis0399/vol2/Volume2g.pdf (accessed 12 1, 2009).

MATL. Our Project – Regulatory. 2009. http://www.matl.ca/project/regulatory.php (accessed November 1, 2009).

Mintz, Jack M. “The Power of Exports.” National Post. November 9, 2009. http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/11/09/jack-mintz-the-power-of-exports.aspx (accessed December 1, 2009).

Montana DEQ. “DEQ Findings for Certification.” Tonbridge Power – MATL Project. October 22, 2008. http://www.tonbridgepower.com/Project/DEQ%20Findings%20for%20Certification.pdf (accessed December 1, 2009).

NEB. Canadian Electricity Exports and Imports. An Energy Market Assessment, National Energy Board, Calgary: Canada, January 2003, 66.

NEB. Electricity Exports and Imports. Monthly Statistics Repor, Calgary: Canada, September 2009, 31.

NEB. Global and Canadian Context for Energy Demand Analysis. Energy Briefing Note, Calgary: Canada, September 2008, 20.

NEB. International Power Line Security Management. 11 20, 2009. http://www.neb.gc.ca/clf-nsi/rsftyndthnvrnmnt/scrty/ntrntnlpwrlnscrtymngmnt-eng.html (accessed December 7, 2009).

NEB. Who we are, governance, and responsibilities. 11 16, 2009. http://www.neb.gc.ca/clf-nsi/rthnb/whwrndrgvrnnc/rrspnsblt-eng.html (accessed Dec 6, 2009).

Puckett, Carl. “Leaders celebrate the start of MATL work.” Great Falls Tribune. December 01, 2009. http://www.matl.ca/documents/2009/project/press/articles_pdf/2009-12-01%20%28Great%20Falls%20Tribune%29%20-%20Leaders%20celebrate%20start%20of%20MATL%20work.pdf (accessed December 04, 2009).

Reuters. “Alberta needs $14.5 billion in new power lines: agency.” National Post. June 2, 2009. www.nationalpost.com/story.html?id1655795 (accessed December 1, 2009).

Statistics Canada. “Electric Power Generation, Transmission and Distribution (57-202-X).” Statistics Canada. 2007. http://dsp-psd.pwgsc.gc.ca/collection_2009/statcan/57-202-X/57-202-x2007000-eng.pdf (accessed December 2, 2009).

“Summary of State Transmission Siting Law in the Western Interconnection.” Western Governors Association. http://www.westgov.org/wieb/transmission/other/siting_paper.pdf (accessed November 27, 2009).

[2] Recognizable trends exist where consumer consumption is based on time of day and time of year.  For example, most people are home and using electricity in the morning and in the evening; and there is more electricity consumption during the winter, especially in Canada, because there are less day-light hours.

^[3] See Appendix Figure 1: Chart of Electrical Line Losses by Load and Temperature

^[4] EEI – electricity 101 (NEB January 2003, 2)

[5] MATL is a wholly-owned subsidiary of Tonbridge Power Inc. (TSX: TBZ)

[6] MATL site

[7] (Puckett 2009)

[8] Constitutional division of powers

[9] As set out by: National Energy Board Act (1959); Canadian Electricity Policy (1988); Canadian Environmental Assessment Act (1995).

[10] (NEB September 2008)

[11] (NEB 2009).

^[12] (NEB September 2008)

^[13] (NEB 2009)

^[14] As per the constitutional distribution of powers

^[15] (NEB January 2003, viii)

[16] (Alberta Energy 2009)

^[17] Originally the Alberta Energy Utilities Board (EUB) which in January 2008 was dismantled into two separate agencies: the Alberta Utilities Commission (EUC) and the Energy and Resources Conservation Board (ERCB).  The EUB was the presiding agency over the MATL project.

^[18] (AESO 2009)

[19] (Alberta Energy 2009)

[20] (Mintz 2009)

[21] (Reuters 2009)

[22] As discussed in class and in So Near and Yet So Far: NIMBY or BANANA.

[23] (Summary of State Transmission Siting Law in the Western Interconnection n.d.)

[24] See Appendix Figure 3 IPL Regulatory Framework – U.S.A.

[25] This effectively changed some of the 1600 poles to be installed from just being of an H-type design to a monopole type design.

[26] These costs are as simple as a farmer being forced to combine around IPL power-poles that interfere with time-tested farming efficiencies.  These costs do not factor in the impacts of construction or lost potential land-values.

[27] (Montana DEQ 2008, 12)

[28] APLIC is a multi-level committee comprised of electric utility organizations and federal agencies.

[29] EEI is an association of shareholder electric companies that represents 70% of U.S. electric power industry.

[30] (Montana DEQ 2008, 9)

[31] (Summary of State Transmission Siting Law in the Western Interconnection n.d.)

[32] FERC is an independent regulatory agency within the DOE and is responsible to federal courts.

[33] NERC was created under the Energy Policy Act of 2005.

[34] WECC was formed in 2002 by the merger of three regional councils: the Western System Coordinating Council, the Southwest Regional Transmission Association, and the Western Regional Transmission Association.

[35] (MATL 2009)

[36] (NEB 2009)

[37] (DOE 2009)

^[38] See Appendix: Figure 2: Major Western Canadian Electricity Transmission Interconnections – Domestic and International

^[39] See Appendix Table 2: Summary of Alberta Electricity Imports and Exports by Company and Destination 2009

[40] (Statistics Canada 2007)

—

FULL DISCLOSURE:

At the time of writing this I owned shares in Tonbridge Power (TVE: TBZ) the parent company of MATL.

Curtis Matwychuk-Goodman

—

“Women now stand on the threshold of achieving more political power than they have ever had before.  A possible dream can become real if women translate their beliefs and votes into an organized electoral and political force”

Bella Abzug 1984, page 11

his paper will first define gender and what a gender gap is.  It will introduce relevant evidence of the existence of a gender gap in Canadian public opinion in addition to identifying a number of areas of both convergence and divergence of public opinion when gender is considered.  Furthermore, this paper will provide an update on recent developments in the study of gender and public opinion by identifying and explaining the findings of relevant literature.  Finally, this paper will discuss the importance of understanding gender as it applies to the Canadian political system in terms of the three elements of political culture: ideology, policy, and practice.

This paper will find that the way women live their lives today is different than twenty-five years ago.  This would imply that a meaningful difference may have arisen in women’s public opinion over this same time period.  However, there is little evidence suggesting a predictable and stable gender gap on particular issues of public opinion in Canada over time.  Although there have been instances of a gender gap existing, like in the 1988 Free Trade Election and the 1993 and 1997 federal elections.  The most concerning gap that does exist in Canada is the underrepresentation of women in the federal government.  This has implications for issues of equality and there should be a significant consideration of all political parties operating within Canada.

Meaning
What is a Gender Gap?

Gender can be defined as the classification of either the sexes: masculine, feminine, or less commonly neuter.  Gender provides classification of the fundamental differences of human life and can be considered in terms of biology, behaviour, lifestyle, and value patterns.

A gender gap can be thought of as the measureable differences between men and women; the corresponding roles and resulting patterns of “interactions, expectations and conditions towards each other, on themselves and on the opportunities they have.”[1] The gender gap in public opinion is considered to be one of many cleavages that exist in the Canadian political landscape.  A political cleavage is a concept used in analyzing voting behaviour and in some cases divides the voting populace into divisible blocs based on any number of factors (gender, language, religion, and region).[2] Next we will look at the origins of the gender gap by examining salient literature of any such existence in Canadian public opinion.

Origins
Explaining the Gender Gap

There have been instances of significant differences of public opinion between women and men.  One specific instance is the 1988 election which pundits dubbed  the ‘Free Trade Election’ because of the hot topic issue of the FTA with the United States.  In some constituencies there was a fear of job losses in traditional female industries – especially the textile sector; there was a noticeable impact on women’s views towards political parties and their stance on signing such a bilateral initiative.[3]

To explain the gender gap in Canada it is best to review literature and the significance of related research.  The scope of this paper will be limited to briefly discussing the findings from: the Status of Women Canada 2001; Kay, Lambert, Brown and Curtis 1987; Everitt 1998; O’Neill, Erickson 2002; Gidengil, Nevitte, Blais 2004.  Based on this literature review it will become clear that a gender gap does exist in public opinion but it is not stable or predictable over time.

First let us examine statistical evidence produced by the Status of Women Canada (SWC) that identifies major differences that have emerged in the roles of Canadian women over a twenty-five year period.  The SWC is a government department that produced “A Quarter Century of Change: Young Women in Canada in the 1970s and Today,” it effectively compares and contrasts the lives of women aged 20-29 over a period of twenty-five years. [4] Highlights of the quarter-century between 1976 and 2001 shows a change in four key areas[5]:

1. The percentage of total Canadian women aged 20-29 who were married in 1976 was 64.6%; compared to 41.9% in 2001 which indicates a 23% decline over time.[6]
2. There has been a marked decrease in the birth rate over time same time period – in 1976 there were 100 births per 1000 women – in 2001 this statistic was only 58 births per 1000 women.
3. Women’s enrollment in post-secondary education has seen a marked increase where the percentage of women with a degree in 1976 was 8.6%; in 2001 it was 21.4%.
4. “In 2001 71% of all women [aged 20-29] were part of the paid work force, up from 58% in 1976.” However, women are much more likely to be employed part-time and to be lassified as having lower incomes than men.  A significant majority of women are limited to positions in sales and service, clerical, teaching, or nursing.[7]

This body of research indicates that women are being employed in greater numbers, face lower levels of income-equity than male counterparts and are more likely to be employed only part-time.  Interestingly women are doing a double-duty in society as they are most likely responsible for a greater share of domestic duties including child care, cooking and cleaning.[8]

An interesting factor that is considered by the SWC is that multiculturalism adds an increasingly complex element to understanding women in Canada.  The research indicates that immigrant women, especially those of a ‘visible-minority,’ face extraneous hurdles above and beyond that of the average Canadian.  This research suggests that immigrant women are: more likely to be unemployed and have lower income levels; they are also more likely to live in either Toronto or Vancouver; and are now characteristically from Asia and the Middle East whereas before were typically from Europe. [9] This is concerning especially since on average women earn only seventy-two percent of their male counterparts.[10] This research suggests that the role of women in society has dramatically changed in the last twenty-five years.  Now let us examine how this has been explained as a result of changes in cultural socialization,

In the 1980s Barry Kay, Ronald Lambert, Steven Brown, and James Curtis (Kay et al.) explained the difference in gender and political activity as a result of a variety of factors: cultural socialization, role constraints, and the absence of mobilizing issues.[11] Utilizing data from six Canada Election Studies (CES) they were unable to identify general trends in gender-related differences in political activity.  The two major findings of their work suggest: women who have children are significantly less likely to participate in politics; and women with higher levels of education or income were more likely to have increased level of political activity.  Through further research the situational factors of children, education and income would later be confirmed as factors of the gender gap in Canada:

The gender difference becomes (marginally) significant only if we incorporate religiosity into our model.  Women are more religious than men, and it is in good part because of their greater religiosity that they are as likely to vote as men. (GIDENGIL, NEVITTE and BLAIS 2004, 232)

Gidengil et. al found that voter turnout is proportionally better among those: with higher incomes, who are married and are more religious.  These findings provide evidence that well-off women will have a higher propensity to vote as a result of their status in society.  These findings are logical and seem to be true of men as well – where educated, well-off individuals are much more active in politics.  This suggests that there is an element of gender gaps between the socialization of women and men that results in women being disinterested in the political while men are the opposite.

In the 1990s Joanna Everitt provided valuable insight of the gender gap in Canadian public opinion as related to cultural socialization.  Her article “Public Opinion and Social Movements: Women’s Movement and the Gender Gap in Canada” describes the women’s movement that resulted in a significant gender role change.[12] This role change dates back to the need for increased participation of women in all areas of society outside the home; which resulted in the women’s movement and eventually the post-women’s movement.[13] Everitt’s research suggests that support for feminism and equality issues gained considerable support during the period between the 1970s and 90s evenly among both men and women.  Furthermore support of such ideas is found among people socialized or directly influenced by the women’s movement which is more likely to occur in the young and is even more articulated when education and employment variables are isolated.[14] Overall, Everitt does conclude that “women’s support for feminism stems from personal experiences and gender consciousness whereas men’s develops from an ideological predisposition to equality.”[15] However, Everitt indicates her research is not able to identify clear and persistent differences of Canadian attitudes as related to gender.

This is confirmed by Brenda O’Neill and Lynda Erickson’s article “The Gender Gap and the Changing Woman Voter in Canada;” which provides an analysis of an emerging gender gap during the period between 1965 and 1997.[16] The article attempts to apply the realignment thesis, a common post-industrialist explanation for the gender gap in the United States, to Canadian political culture.  The realignment thesis purports that traditionally women were more likely to vote for centre-right parties; whereas “contemporary women voters have not just converged towards their male counterparts but are moving to the left of them.”[17] The results of the O’Neill/Erickson study demonstrate a gender value-change has occurred in Canada outside of Quebec and results as from structural gender role-changes.

Changes such as the extraordinary growth in women’s labour force participation and the increase in women’s levels of education could contribute to more leftwing voting preferences among women when combined with factors such as the occupational segregation, lower pay rates and higher levels of public sector employment that women experience compared to men and which are still features of postindustrial societies. But gender role changes and the structural/situational factors that accompany them are also said to both cause and interact with changes in cultural values and dispositions.[18]

The change towards post-industrialism exerts that role-changes having a positional gendered-effect on social values characteristically found in voting choices over time.   As a result of realignment an additional factor to consider in voting choice is the changed perceptional relevance of political issues to members of each gender.  In this way O’Neill et. al suggests a strong correlation exists between the importance of religion in making voting decisions; where women factor religion as a more important factor in casting their vote.  They acknowledge past research that has included religion as a structural or situation explanation for the gender gap in voting in addition to other demographic factors like class, marital status and age.[19]

In the 1997 election O’Neill et. al detected an increase in support for the NDP among women.  “Then, not only were women more likely to avoid a party clearly on the right, but they also showed more support for a party of the left.”[20] However, this is offset by the fact there is little evidence that a gender gap existed in the 1993 election results; where the Liberals and Conservatives shared a small gap in support among the genders.  The lack of a gender gap in 1993 was expected to have occurred as a result of Kim Campbell’s leadership of the Progressive Conservative Party; who was to emerge as Canada’s first female Prime Minister.  That is to suggest that female leadership of the Conservative party may have influenced voter decision-making.[21]

Together Everitt and O’Neill have identified that there are inconsistencies in public opinion as related to gender issues.  They suggest there are two ways of understanding this based on: structure and situation.  Structurally women are believed to be more reliant on the state by being more likely to be employed by the public sector and more likely to access welfare/social programs.  This may be exacerbated by gendered patterns of employment where women are concentrated in traditionally low-paying jobs and face significant pay discrimination.  The second explanation is situational, since women are the maternal force of society their thinking is fundamentally linked to compassion and providing support for those in need.  There are also gender-specific issues representing a material self-interest for women like: feminism, abortion, workplace discrimination, and lack of representation in government.  The result of structural and situational pressures on gender differences materializes in women preferences that are: generally more supportive of the welfare state, less supportive of the free-enterprise system, and more reluctant to the use of force.[22] If this is the case then one would expect to find differences of opinion in Canadian political culture on an issue-by-issue basis.

Implications
The Gender Gap in Canadian Political Culture

How does gender impact Canadian political culture?  Nelson Wiseman reminds us that a country can be understood by examining the political culture – or the patterns of a political community’s ways of life.  Political culture exists as a construction of inhabitants’ ideology, policies, and practices.[23] There are two ways of approaching understanding political culture in Canada.  The first is to study emergent properties through development of institutions and explaining history.  This will be done over the next three sub-sections.  The second way is a snapshot in time of personal preferences as interpreted from aggregate survey data; which has been presented in the previous section and can be found in the appendices.  Using this understanding let us examine the Canadian context of political culture by briefly describing each element: first the ideology, then the stages of policy-development and finally the political practices in terms of federal parties and voter turnout.

Canadian Political Culture
Ideology & Structure

Canadian political culture is ideologically and structurally based on a constitutional monarchy.  The monarchy is represented by the Governor General (GG) of Canada which symbolizes the top of the structural hierarchy.  The GG works as the commander-in-chief to the benefit of the entire nation by ensuring the constitution is upheld throughout all courses of government action.  The constitution outlines federal and provincial jurisdictional powers which are overseen by the GG.  The constitution formalizes many democratic values of which equality is entrenched in the Canadian constitution and is guaranteed to all citizens.[24] This includes equality of gender.  It is therefore important for political actors to pursue a course of action that minimizes any negative impacts resulting from gender gaps.  It is interesting to note that of the twenty-seven GGs in Canadian history only eleven-percent, or three have been female – Jeanne Sauvé (1984-1990), Adrienne Clarkson (1999-2005), and Michaëlle Jean (2005-present).  In terms of equality of representation at the highest level Canadian politics is obviously lacking the woman perspective.[25] Through all levels of federal government it is clear that women account for only 19% – 29% of total membership.  This suggests a structural-deficiency of female participation in politics especially at the executive level.

Canadian Political Culture
Policy-development

The second element of political culture is found in the policies of a nation.  In Canada policy is developed at a federal and provincial level.  Provincial governments are responsible for many aspects of daily life, but our discussion will be limited to federal level politics.  The federal government is a parliamentary democracy divided by an appointed Senate (Upper House) and the elected House of Commons (Lower House).  Currently the House of Commons is represented by three national parties (Conservatives, Liberals, New Democrat) and one regional party (Bloc Quebecois).  Over the past twenty-five years the national parties have remained very similar – the exceptions being the conservative parties merging at the turn of the century and the emergence of the Green Party.  The parties are elected by a first-past-the-post system in 308 local constituencies each of which represent a seat in the House of Commons.  The House of Commons is the main legislative body of the Canadian government; all legislation is passed pending approval from first the Senate and then ascension by the Governor General.

When examining female representation in the main policy process in Canada it is best to look at representation in political parties.  Female representation over time can be found in Table 5:  Total Female Representation by Party in All Sessions of the House of Commons; it provides evidence from Parliamentary records since Confederation in 1867 of the total number of females elected to the House of Commons. [26] In the one-hundred and forty-two year history of Canadian policy-making there have been a total of 216 elected female representatives.  The Liberal Party has been the most representative of women over time with 90 seats, while the aggregate of all Conservative parties are a distant second with 70 seats. [27] Since these two parties have dominated the political landscape in Canada it is not surprising that they account for nearly 75% of total historical female representation in the House of Commons.  It is concerning, however, that women have only ever held 5.2% of the total possible seats available over this same time period.  Moreover, there has only ever been one woman to form a government in Canada – Kim Campbell who led the Progressive Conservative Party in 1993 for a brief period between two of the most influential Prime Ministers of recent history Brian Mulroney and Jean Chretien.  This is compelling evidence of a significant underrepresentation by females throughout Canadian history in the primary policy-making process.

Looking further at the involvement of women at the federal level of politics we see a staggering lack of representation in the Senate.  Of the 903 total Senate appointments only nine-percent, or 82, were women.[28] Although this is significant of greater representation when compared to the House of Commons it still represents a severe lack of female involvement in the federal political process.  In the history of Canada the Liberal Party has appointed fifty women, the most of any party, to the Senate.  The ideological-right, or the aggregate of all Conservative parties over time, accounts for only twenty-eight appointments, while the ideological-left accounts for just one nomination.

Although a historical perspective is helpful, perhaps it is best to look at most recent data especially since female participation and representation has made a real breakthrough since the turn of the millennium.  Comparing the most recent elections (2004, 2006, 2008) we see the greatest shift in female representation away from the Liberals towards both the Conservatives and the NDP.[29] In these elections there has been a noticeable shift in the balance of power among political parties – from strong consecutive Liberal electoral victories to weak minority governments now dominated by the Conservatives.  With this shift in political power distribution there has been steady change in female representation overall.  In fact, the 2004 and 2008 election heralded record results for female representation in the House of Commons; with 65 and 69 female members being elected representing 21.1% and 22.4% of winning candidates respectively[30].  However, looking at female representation by political party we see considerable changes.  Appendix Table 6 shows that the number of elected female Liberal Party candidates has dropped by more than forty-percent. [31] Meanwhile, the NDP have more than doubled their female representation in the House of Commons; increasing the total number of seats held by women from just five in 2004 to twelve in both 2006 and 2008.  Likewise the Conservative Party has almost doubled female representation among their party in the same time period; with the biggest improvement in the 2008 election.

Canadian Political Culture
In Practice

The final element in describing political culture is found in the political practices of a nation.  This can be broken down into two categories of inquiry: how political parties operate and how Canadians interact with the political system which is best seen through voter turnout.

So how do federal political parties operate in Canada?  In the past twenty-five years of Canadian politics there have legitimately only been two parties vying to form government – the Liberals and the Conservatives.  However, Canada is characteristic of having a multi-party system which effectively splits the vote among other fringe-parties including the NDP and the Bloc Quebecois.   As a result of the multi-party system Canadian political parties are notorious for engaging in brokerage interest politics.  This means they are in constant conflict over the ‘centre-ground’ on popular issues of the day in an attempt to maintain and gain support during times of re-election.  Table 6 & 7 demonstrate that the Liberals have been the most successful in securing representation of women in executive levels of Canadian politics.  Throughout history the Liberals have been the most ideologically-centrist and therefore have been met with great electoral success.

Voter turnout is one of the most accurate measures of political culture at the individual level since it measures participation at the most accessible level to all citizens.  The Canadian Election Study (CES) provides comprehensive data which includes a broad evaluation of “respondent opinions about politics, political parties and leaders, and media and campaign activities.”[32] This data is used in many research studies and allows for accurate understanding of the three components of how an individual practices political culture.  The three components of political culture are: cognition, affection, and evaluation.  Cognition is how much one knows and understands their political culture.  Affection is how an individual feels towards their political culture through likes and dislikes.  And evaluation refers to judgments’ towards particular aspects of such a culture.  Although there are many models of voting behaviour this paper will adopt the Rational Choice Model of voting behaviour.  In this model elections are thought of as markets where national parties are producers and citizen-voters are consumers.[33] In such a model all actors want to minimize the political cost while maximizing political gains.  The rational choice model implies that voters are aware of their self-interest and of alternatives which leads them to make rational choices consistent with their self-interests.  This model is held in esteem because it is simple and relatively straight-forward in explaining voting behaviour.  However, it lacks an explanation of where individual preferences come from.  In addition this model assumes voters are fully rational in their decision-making which is questionable given personal preferences for habitual acts and a general laziness among the populace to commit time to becoming fully aware of the issues to make informed decisions.  The Rational Model would suggest women would be more likely to vote Liberal given the greater potential to gain political representation at the Senate level.  This was not confirmed during the most recent election 2008; a pre-election survey was conducted of approximately two-thousand Canadian citizens.[34] The results of this survey suggested a significant age gap exists between gender and political party preference.  When asked “If a federal election were held tomorrow, which party would you vote for?” men were more likely to response Conservative; while in each case women were more likely to vote Liberal, NDP, or Green.[35] The survey results also suggest that this gender gap exists in correlation to age demographics; where older men were more likely to prefer the Conservative Party and young women were more likely to prefer the NDP.

Discussion

This paper has discussed many issues related to the gender gap in public opinion and Canadian political culture.  It has suggested that literature on these issues explain the gap as a result of changes in structural and situational ways.  Gender is one of many cleavages which effectively divide public opinion over time and is one of many others like: age, religion, employment, and income.  All these factors combine as influencing events of an individual’s life – which act in concert with transformative events that arise from both situational and structural gender roles and expectations.

This paper has demonstrated that gender gaps have occurred in Canada on a number of issues.  Significant issues in the last twenty-five years are: the Free Trade Election of 1988, the 1993 general election that resulted in the first women Prime Minister, and both the 1997 and 2000 election that showed substantial female support of the NDP or leftist party.  Even most recently in the 2008 pre-election studies a gender gap has been evidenced in men’s general support of the Conservative Party and greater women’s support for all non-conservative parties.  There a numerous explanations for why a gender gap may exist – trying to accurately describe the gap is difficult.

Gender and corresponding gaps should be important considerations for any Canadian political party.  Since an individual’s political culture is based on cognition, affection and evaluation these findings should help federal parties to mobilize voter support by emphasizing specific gender-friendly platforms.  If a particular gender is pre-disposed to thinking or feeling a specific way then the parties that appeal to women may see an increase in voter support.  The 1993 election results suggest that a woman party leader may impact voter behaviour.

This paper has also demonstrated the significant lack of gender equality in representation of all executive levels of Canadian political culture.  Although this trend is beginning to change, women still lack representation-equity which presents a serious concern. Equality is constitutionally guaranteed therefore the strength of our democracy and meaningfulness of our formal political institutions could be gauged by the equity in representation of all citizens.  Currently Canada is not a leader in gender equity in political culture but has made some gains in recent years.  The most important thing is for Canadian political culture to support and encourage fairness and consideration for all of humanity.  This is especially true at the most executive levels of the policy process of the Canadian government.

APPENDIX

Table 1:
Ekos Poll – 2008 Federal Vote Intention by Demographics^[36]

Q. If a federal election were held tomorrow, which party would you vote for?

Table 2:
Demographic Factors of Women Aged 20-29 between 1976 and 2001[37]

Table 3:
Occupational Distribution – Statistics Canada Labour Force Survey, 1998[38]

Table 4:
Earnings of Women Employed Full-Time, Full-Year, as % of those of men,
by province, 1997[39]

Table 5:
Distribution of Positions of Power as a Percentage of Total Membership[40]

Table 6:
Total Female Representation by Party in All Sessions of
the House of Commons[41]

Table 7:
Total Female Senate Appointments by Party Affiliation[42]

Table 8:
Female Representation in Federal Parties by Election Result 2004-2008[43]

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O’Neill, Brenda, and Lynda Erickson. “The Gender Gap and the Changing Woman Voter in Canada.” International Political Science Review 23, no. 4 (2002): 373-392.

Parliament of Canada. Women Federal Political Representation 1867 – Date. November 2009. http://www2.parl.gc.ca/parlinfo/compilations/parliament/WomenRepresentation.aspx?Menu=HOC-Representation (accessed November 27, 2009).

Peebles, Dana. Increasing gender Inputs into Canadian International Trade Policy Positions at the WTO. Policy Research, Canada, Ottawa: Status of Women Canada, 2005.

Status of Women Canada. Women and Men in Canada: A Statistical Glance. Ottawa: Statistics Canada, 2000, 27 pages.

Wiseman, Nelson. In Search of Canadian Political Culture. Vancouver: UBC Press, 2007.

[2] (Jansen 2009)

[3] (Cohen 1995, 281)

[4] (Lindsay 2005)

[5] See Appendix Table 2:  Demographic Factors of Women Aged 20-29 between 1976 and 2001

[6] (Lindsay 2005, 4)

[7] Ibid. page 9

[8] See Appendix Tables 2 & 3

[9] (Lindsay 2005, 14)

[10] See Appendix Table 4:  Earnings of Women Employed Full-Time, Full-Year, as % of those of men,  by province, 1997

[11] (Kay, et al. 1987)

[12] (Everitt 1998)

[13] The women’s movement or ‘feminism’ can be described as increased awareness on issues of: domestic violence, maternity leave, equal pay, voting rights, sexual harassment, and sexual violence.

[14] (Everitt 1998, 746)

[15] (Everitt 1998, 755)

[16] (O’Neill and Erickson 2002)

[17] Ibid. page 373

[18] Ibid.

[19] (Studlar, McAllister, and Hayes 1998; Inglehart and Norris, 2000 as cited by O’Neill et. al 2002)

[20] (O’Neill and Erickson 2002, 379)

[21] Ibid.

[22] (Everitt, Kopinak, Terry, Wearing as cited by O’Neill et. al 2005)

[23] (Wiseman 2007, 13)

[24] Explicitly found in Part I – Section 2.6 and Part III of the Canadian Charter of Rights and Freedoms

[25] See Appendix Table 5:  Distribution of Positions of Power as a Percentage of Total Membership

[26] See Appendix Table 6:  Total Female Representation by Party in All Sessions of  the House of Commons

[27] Aggregate refers to combination of the Canadian Alliance, Conservative Party of Canada, Progressive Conservative, and Reform as one “Conservative Party”

[28] See Appendix Table 7:  Total Female Senate Appointments by Party Affiliation

[29] This is confirmed in “Women to the Left? Gender Differences in Political Beliefs and Policy Preferences” by Gidengil, et al.

[30] (Heard 2008)

[31] See Appendix Table 8:  Female Representation in Federal Parties by Election Result 2004-2008

[32] (Elections Canada n.d.)

[33] (Jansen 2009)

[34] (EKOS Election 2008)

[35] See Appendix Table 1:  Ekos Poll – 2008 Federal Vote Intention by Demographics

[36] (EKOS Election 2008)
Note: Random sample of 2000 Canadians aged 18 and over responded to the survey; estimated margin of error +/- 2.2 percentage points (19 times out of 20). Survey completed September 2 to September 4, 2008.

[37] (Lindsay 2005)

[38] (Status of Women Canada 2000, 16)

[39] (Status of Women Canada 2000, 23)

[40] (Status of Women Canada 2000, 26)

[41] (Parliament of Canada 2009)

[42] (Parliament of Canada 2009)

[43] (Heard 2008)