Capital investment in Canada is lagging far behind the western industrialized world and worse could be in store if the government of Prime Minister Justin Trudeau pushes ahead with legislation that one expert says could “drive a nail into the coffin of the resource sector.”
Rick Peterson, founder of a not-for-profit group of Canadian investment industry professionals, has launched a campaign to scuttle Bill C-69 known as the Impact Assessment Act having rounded up the support of 500 people in only a few days.
“Bill C-69 is so terrible that it’s really not salvageable at all,” he told the Calgary Herald. “It has to be stopped completely. It must be killed.”
Peterson said that will need the votes of 48 of 95 sitting Senators, 31 of whom are Conservatives and are expected to oppose the legislation, leaving lobbyists to rally support from 17 additional senators who have no direct ties to any political party.
Bill C-69 is designed to overhaul Canada’s resource project assessment regime, including replacing the National Energy Board with a new Canadian Energy Regulator.
The legislation sailed through the Liberal-dominated House of Commons earlier this year, leaving only the Senate as a barrier.
Peterson listed 10 reasons why Bill C-69 should be killed, including provisions that could extend project review timelines from an average four years by another eight to 10 months, at the same time U.S. regulators are working on two-year deadlines.
Project controlHe said the bill gives the federal environment minister the power to decide whether a project goes ahead, pointing out that the legislation was introduced by Environment Minister Catherine McKenna, with no participation by the ministers of industry or natural resources.
Martha Hall Findlay, president of the nonpartisan think tank Canada West Foundation and a former high-profile Liberal Member of Parliament, offered a blunt response when asked what could happen if Bill C-69 becomes law.
“Kiss our investment climate goodbye,” she said. “Investors - domestic, foreign, current, potential - their commentary is overwhelming. They say, ‘if this passes we are going elsewhere.’”
Hall Findlay said she has heard comments from those who had projects approved under the current regime and now insist they would not bother even filing an application under Bill C-69.
Northern GatewayShe said the resource industry has already had a taste of what the Trudeau government apparently has in mind.
Enbridge’s plan to ship 525,000 barrels per day of oil sands bitumen on its Northern Gateway pipeline to Prince Rupert for shipment to Asia spent years and hundreds of millions of dollars working through the regulatory process and obtaining approval from the cabinet of former Prime Minister Stephen Harper.
The scheme was killed in short order after Trudeau was elected in 2015 with no offer of compensation, sending out a clear warning to future proponents of resource ventures, despite it claims to endorse bitumen exports beyond North America.
Report notes low investmentCompounding this mood of despair, the highly respected C.D. Howe Institute issued a new report earlier in September warning that Canada’s economic competitiveness is under threat.
It estimated that Canadian business will make capital investments this year equal to C$13,900 per worker compared with C$19,700 in the 34 member countries of the Organization for Economic Cooperation and Development and C$23,200 in the United States.
“If business investment is falling, especially per-worker, it gives you ... an indication of the prospects for the economy,” said Jeremy Kronick, associate director of research for C.D. Howe.
He said capital investment took a hit in 2014 when oil prices took a nosedive and that money has yet to start flowing again despite a recovery of oil prices.
Kronick said that anyone who is even “tangentially related” to the Trans Mountain pipeline would have no reason to “bother investing” in the industry given when has happened to that project.
He also said that the same risk-averse banking system that shielded Canada from the worst of the financial crisis in the post-2008 years are now shielding Canada from getting the most out of the recovery.
CIBC chief economist Avery Shenfeld said that if businesses have slowed down in their desire to invest capital “we’re going to be limited in the amount of headroom we have to grow exports.”