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Aid on its way in Canada — again; key new Trudeau cabinet minister
Gary Park for Petroleum News
As Canada started its descent into the depths of COVID-19, Finance Minister Bill Morneau made a statement that will hang over the governing Liberal Party for years.
He promised on March 25 that federal help for the hard-hit energy sector would be on the way in “hours, potentially days.”
Despite an investment of C$1.7 billion to clean up abandoned wells, C$750 million to lower methane emissions and the offer of direct financial support, nothing emerged from the government of Prime Minister Justin Trudeau that will protect Alberta from the economic fallout of COVID-19 or set Canada’s energy stronghold on a path to sustainable prosperity.
Only one taker In the five months since Morneau’s infamous commitment, only one company has taken advantage of the federal support - InPlay Oil, with daily output of less than 5,000 barrels of oil equivalent - through an agreement with the government-owned Business Development Bank of Canada, BDC, for a four-year term facility of C$25 million.
Ben Brennen, vice president of the Canadian Association of Petroleum Producers, told the Calgary Herald that although the InPlay deal was “positive ... we remain concerned that companies needing liquidity still might not get it, and, even if they do, will it be enough to support them?”
In addition, InPlay Chief Executive Officer Doug Bartole said his company pursued assistance for months, resolving to dog the BDC and Export Development Canada, EDC, “to the end, and we did.” Three other companies have been approved for EDC funding, but not a penny has been distributed.
The results have been even bleaker for companies trying to tap the government’s Large Employer Emergency Financing Facility, with one of them - Painted Pony Energy - forced to avoid bankruptcy by accepting a C$461 million takeover offer from Canadian Natural Resources.
Cabinet upheaval The biggest hope of a workable rescue plan occurred Aug. 18, stemming from one of the greatest upheavals within a federal government in recent memory.
With his pockets bulging from a fortune accumulated in a family-run human resources firm, Morneau was never expected to remain indefinitely in his job as Canada’s finance minister.
But no one expected his departure to be so sudden and his explanation to be so implausible.
In fact, no one bought his howler of a claim that his “resignation” from Trudeau’s cabinet and as a Member of Parliament was “voluntary.”
Without Trudeau even observing the normal courtesy of standing alongside Morneau, the finance minister cut himself adrift when he told a news conference that he had never intended to remain in politics beyond two terms.
In the middle of the worst economic crisis in Canadian history, he said the time was appropriate for him to step aside and apply for his “dream job” as secretary-general of the Organization of Economic Cooperation and Development.
That came only 10 months into his second term and more than three years short of the latest possible deadline for Trudeau to call an election.
Morneau said he told Trudeau a new finance minister should be chosen to “fight against the pandemic and pave the road toward economic recovery,” a journey that “will take many years.”
Without even making an attempt to camouflage the obvious, politicians from all federal parties agreed the bombshell was clear proof of a bitter relationship between Trudeau and Morneau over the strategy needed to rescue the Canadian economy.
Freeland named Other than a token expression of gratitude for Morneau’s role in his government, Trudeau wasted no time in elevating Chrystia Freeland into the finance minister’s portfolio, while retaining her as his deputy prime minister.
Freeland, who steered Canada to a revised North American free trade agreement, despite insults hurled at her by President Donald Trump, has built a growing reputation as a fence-mender with Canada’s provincial premiers.
And she was quick out of the blocks with the bare bones of an economic recovery plan, due to be released later in August.
Freeland said the Trudeau administration’s plan will restart the national economy with a “green” emphasis and address the impact of a pandemic “that is hitting women particularly hard.”
Born in northern Alberta 52 years ago, she is well acquainted with the vital role played by that province’s oil and gas industry. Under a federal equalization program Alberta’s federal taxes have contributed C$630 billion (C$240 billion in the last 11 years alone) to the federal treasury since 1961 for redistribution across the rest of Canada.
Alberta Premier Jason Kenney, who has had three meetings with Freeland since the October 2015 election, has yet to say whether his hopes in the Trudeau government have been restored by the cabinet shuffle.
However, he may have drawn a shred of optimism when newly appointed Intergovernmental Affairs Minister Dominic LeBlanc visited Newfoundland Premier Andrew Furey on Aug. 20 and pledged that the thousands of Atlantic Canadians who depend directly or indirectly on the oil and gas sector will soon be presented with a “series of policy instruments ... to ensure there’s a sustainable, long-term future in this industry.”
Only this time LeBlanc sidestepped Morneau’s blunder of promising an announcement in “hours, potentially days.” Instead the best he would offer was “soon.”
At the least, the western oil and gas producing provinces - Alberta, Saskatchewan, British Columbia and Manitoba - are counting on nothing less than whatever the Trudeau administration serves up to Newfoundland, while mindful of what happened in March.
- GARY PARK
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