Canada has been partly insulated from the sharp drop in oil prices because so much of the energy sector is foreign owned, says an internal Finance Canada document.
The Feb. 20 memo says up to half of Canada's oil and gas sector is owned by foreign investors, higher than reported by Statistics Canada using different calculations.
- Analysis: Job figures show oil-price drop hasn't sunk employment
- Oil price drop creates winners and losers
"As a result, the potential negative wealth effects of lower oil prices on consumption may be considerably less than might appear," says the memo for Paul Rochon, deputy minister of finance.
Statistics Canada reported in December that about 37 per cent of Canada's oil and gas extraction sector was under foreign control in 2012, or about $206 billion of the $563 billion total. But the agency uses a method that ignores who owns shares in widely held Canadian energy companies.
Up to half in foreign hands
By estimating the number of foreign stockholders, and adding them to foreign owned or controlled firms, Finance Canada economists suggest that between 40 per cent and 50 per cent of the energy sector is in non-Canadian hands.
"A significant amount of foreign capital was brought into Canada to expand oil and gas production," says the document. "These foreign investors benefited as energy prices increased, but are sharing capital losses with Canadians as prices fall."
A copy of the memo, with a key section blacked out, was obtained by CBC News under the Access to Information Act.
A spokesman for Finance Canada confirmed that the analysis was to help assess how the collapse in oil prices last year affected the economy.
'There is no discrepancy with the Statistics Canada data.' - Finance Canada spokesman
"The analysis was conducted in order to help understand the impact of the fall in oil prices," David Barnabe said in an email, adding the calculation should not be compared with Statistics Canada's conclusions on foreign-ownership levels.
"There is no discrepancy with the Statistics Canada data," he said. "Those data were not addressing the same issue as was being analyzed in the note; rather they were an input into it."
NDP's finance critic Nathan Cullen said the Harper government has previously argued that the energy sector was the engine of the Canadian economy, yet now appears to be playing down its importance.
"I don't quite see how they get to have the argument both ways, that one day it's central and the driving force and nothing else matters," he said in an interview.
"And then the next day the same government says, well, if the market falls out of the bottom, it's not a big deal."
Explains low value-added activity
The higher foreign ownership level suggested by Finance Canada also help explains why there's so little value-added activity in Canada's energy sector, he said.
"To me it speaks volumes.… If most of the ownership is foreign, then there's an incentive to add value to the oil elsewhere, where the money can be made for other countries."
The rookie NDP government of Alberta Premier Rachel Notley has signalled its interest in more value-added activity for the oil patch. And her new chief of staff, party heavyweight Brian Topp, has previously raised concerns about foreign ownership of Canada's natural resources, citing China, Brazil and the United States as competitors.
"Canada has no energy strategy, no industrial strategy, and no trade strategy other than to invite countries that do have these policies to come and help themselves to our raw, unprocessed resources, to the benefit of themselves," he wrote in a 2012 opinion piece.
Topp did not respond to a request for comment.
Follow @DeanBeeby on Twitter