CALGARY - The head of the Alberta Federation of Labour is defending Tom Mulcair in advance of the federal NDP leader's tour of the oilsands.

Mulcair has angered western premiers and the federal government for suggesting Canada's resource sector has caused an inflated dollar and cost thousands of manufacturing jobs in Central Canada.

"Instead of vilifying Thomas Mulcair, I think Albertans should be thanking him for igniting a long overdue debate about the pace of development in the oilsands and its downside both for Albertans and Canadians more broadly speaking," Gil McGowan said Wednesday after a speech to the Canadian Industrial Relations Association.

PHOTOS: DUTCH DISEASE EXPLAINED

"It shouldn't be heresy for people to ask questions about whether or not the oilsands are being developed in an appropriate way," he added.

"It shouldn't be heresy to say instead of shipping raw bitumen down the pipeline we should be keeping it here and creating jobs in refining and upgrading."

McGowan said he's angry because for years anyone who has tried to raise legitimate concerns about oilsands development has been "shouted down."

"Every time anyone, whether it's here in Alberta or across the country, raises questions about the approach the Alberta government and oil companies are taking in developing the oilsands, they're shouted down. They're demonized. They're dismissed," McGowan said.

"We've had the ghost of the national energy program thrown in our face."

Mulcair believes booming energy exports, particularly from the oilsands, have created an artificially high dollar that has, in turn, hollowed out Canada's manufacturing sector — an economic phenomenon dubbed the "Dutch disease.''

He has insisted that statistics on manufacturing job losses are "irrefutable'' and that "everyone'' agrees more than half of those losses are the direct result of the artificially high Canadian dollar created by booming energy exports, particularly from Alberta's oilsands.

Mulcair is to tour the oilsands near Fort McMurray on Thursday morning. He is then to meet with the mayor of the municipality before he returns to Edmonton for a news conference.

DUTCH DISEASE EXPLAINED

Loading Slideshow...
  • It Began In The Netherlands

    In 1977, <em>The Economist</em> coined the term "Dutch Disease" to describe the phenomenon of economies whose industrial bases suffer when large deposits of energy, such as oil or natural gas, are found. The magazine named it "Dutch Disease" because of the rapid deindustrialization seen in the Netherlands in the years after a major offshore natural gas find in 1959.

  • Skyrocketing Currency

    One of the effects of becoming an energy-exporting country is that speculators will start treating that country's currency as a "petro-dollar." The value of the currency rises (and sometimes falls) with the cost of the country's energy exports, which often means it becomes too high in value for exporters in other sectors. Those exporters then see their sales decline, and manufacturing suffers as a result.

  • Direct Deindustrialization

    As the energy export sector grows, it attracts workers from other sectors, including manufacturing, leaving fewer skilled people to fill jobs in those areas. This is known as "direct deindustrialization."

  • The Spending Effect

    As money flows to the energy exporters from energy consumers around the world, it increases the amount of spending cash people have. That additional cash increases the demand for non-manufacturing labour -- things such as beauty salons, travel, entertainment -- which in turn sends people into those jobs, and away from manufacturing. This is known as "indirect deindustrialization," or "the spending effect."

  • No Agreement

    Economists are in disagreement about whether Dutch Disease is real, whether it's an important phenomenon, and whether it actually happened in any given economy. Fifty years after the Netherlands' big natural gas find, there is no consensus on whether the country experienced the disease named after it, with many economists arguing excessive social spending was behind manufacturing's decline.

  • The Canadian Debate

    In Canada, Dutch Disease has become a highly polarized political issue. When NDP Leader Thomas Mulcair and Ontario Premier Dalton McGuinty recently referred to what they see as the problem of manufacturing suffering under the weight of a booming oil industry, it prompted accusation of divisiveness from leaders of Western provinces. Economists don't agree either. While a recent study from the Pembina institute argues the phenomenon is real and having a negative impact, others argue the strength of Canada's oil sector is creating internal demand that's offsetting the loss of manufacturing exports. Yet others say Dutch Disease is only a part of the problem, and that other factors -- like offshoring of jobs to developing countries and increases in productivity -- are also to blame for manufacturing's decline.