If the Prime Minister were to retire today, his economic legacy would be clear. Under his leadership the country's books got back into the black, the debt started to decline, income taxes were lowered, and Canada enjoyed sustained economic growth, with a smaller downturn than the United States after Sept. 11. While some would quibble that Canadian productivity has yet to equal our southern neighbour's, or that tax rates are not yet fully competitive, today's situation is a far cry from the tax-and-spend deficit days of the Trudeau era or the "we tried but we are still losing" times of Brian Mulroney.

If rumours are to be believed, Jean Chrétien wishes to enhance his legacy by moving to the left in the 18 months he plans to remain in office. To that end, his senior advisers are mulling over all sorts of improved social benefits.

Other commentators are already pointing out the folly of spending what may well be illusory surpluses. My purpose here is not to rehash well-made points, but to point out that just a little overspending exuberance, especially on programs committing the government to new long-term outlays, can quickly undo all the progress we've achieved since 1994 -- and with that, a return to an underperforming economy and a reduced standard of living. Nevertheless, the improved social benefits will be popular, as I am sure the polls will show.

But there's a difference between being popular on the day of Mr. Chrétien's retirement and improving his legacy. After all, his legacy will be how he is viewed in five, 10, 25, and 50 years from now. As bad as it would be, the effect on the economy of a fresh period of government overspending will pale compared to the result of Canada's ratifying the Kyoto Protocol. While Kyoto is popular in public polls, the problem is that Canadians have not understood its economic impact on Canada, both in absolute and relative terms.

First of all, Kyoto establishes emission levels for Canada that will remain fixed, regardless of our population. This means that every year our population grows, our per capita emissions target under Kyoto will shrink. Apart from resource production, roughly 80 per cent of Canada's emissions are population driven.

We use energy to heat and cool our homes, operate our cars, light our houses, run our appliances, heat and cool our places of work, grow our food, deliver our food and other goods to stores. The bulk of this energy is derived directly or indirectly from the combustion of greenhouse gas producing fossil fuels. Under Kyoto, as our population increases, we will have to cut back on our per capita green house gas emissions. This means fewer automobiles, smaller houses, turning off air conditioning, you name it.

Every time an immigrant arrives from Europe or a developing country, we shall have to share our fixed level of emissions with that person. Given population growth estimates of 1.5 per cent per annum, this is no small problem -- the per capita consumption of energy forced on us by Kyoto will amount to possibly less than half of today's by 2100.

In contrast, European per capita consumption levels will be allowed to increase under Kyoto since its population is not only stagnant but expected to shrink during this century. This effect will be magnified since an immigrant to Canada from Europe will leave his conceptual "share" of emissions to be divided between those he has left behind, while forcing us to lower our per capita emissions in order to share with him.

The developing world is not subject to Kyoto targets but the act of bringing in an immigrant from such countries will also have a negative impact on us. While I point out what will happen to individuals by 2100, the squeeze on our quality of life will be felt much sooner: Kyoto will force us to adopt almost immediately relatively draconian measures as compared to our U.S. neighbours, who are not covered by Kyoto.

Second, Kyoto's impact on business capital investment in Canada will be almost immediate. Faced with expanding or modernizing your North American operations, would you pick Kyoto-free America or a Canada faced with ever-increasing pressures on energy use (and price), with a government where regulation-writing envirocrats reign supreme?

The answer is clear. Capital destined for investment in Canada will flow south. This will start a downward economic spiral as existing plants become less and less competitive and new endeavours become few and far between. In turn, this will cause unemployment, a poorer consumer economy, and even more disincentive for capital investment. This aspect of Kyoto's impact on Canada will be seen in concrete terms as early as 2004.

Third, one of the major economic pillars of the Canadian economy historically has been our natural resources. While the world has been running out of conventional crude oil, we have prided ourselves that even as our own conventional reserves are shrinking, we can fall back on deposits of heavy oil and oil sands that dwarf even the conventional reserves of the Middle East.

What is little understood is that although oil, when burned, is "clean energy" compared to coal, there are emissions associated with its production and initial processing. While substantial improvements have been made in emission levels for Canadian oil production, it is still the case that producing from heavy oil or oil sands means two to three times the level of emissions per barrel compared to conventional crude.

Because Kyoto sets an absolute level of emissions for Canada, we shall not be able to see our oil production grow, let alone maintain current levels. Rather, for every barrel of conventional crude that is depleted, we'll be permitted to substitute at most half a barrel of oil sands or heavy oil production. An immediate impact of Kyoto will be to stop new oil-sands initiatives. Where will Canada be when Alberta becomes a have-not province?

For all these reasons, signing Kyoto will put a major blot on the Chrétien legacy.

The sad thing is that not signing Kyoto does not impede Canada from adopting a sensible energy-conservation program. In no way are we prevented from coming down hard on dirty pollutants that cause smog (the principal emission regulated by Kyoto is carbon dioxide, a colourless gas, and not a smog-causing culprit). Whether or not we sign Kyoto, there will be little effect on the growth of worldwide greenhouse gas emissions, because Canada produces so little of the world's total.

The Prime Minister has a choice: Sign Kyoto and risk history calling it his worst economic decision -- or adopt a pro-active made-in-Canada environment plan that improves both our quality and standard of living.
Roger Phillips is a member of several boards, including Imperial Oil Ltd. A former president and CEO of IPSCO Inc., and a former member of the Economic Council of Canada, he is an officer of the Order of Canada and a fellow of the Institute of Physics (United Kingdom). He lives in Regina.