Thank you. Good morning.
I've appeared before this committee before and I know how quickly seven minutes can go. I'm going to move right into my talk by presenting you with the Alberta Federation of Labour's top five reasons why the oil sands are a blessing, but a mixed one.
Number one. The oil sands are a mixed blessing as opposed to an unambiguous and unadorned blessing because the pace at which governments at the provincial and federal level have allowed development to proceed is one that's open to question. Before he died, former premier Peter Lougheed made it clear that, if he were still in charge, he would only approve one major oil sands project at a time. By taking a more reasonable and measured approach to development, Lougheed said, we could avoid overheating the provincial economy, we could improve the economics of value-added projects as opposed to always opting for rip-it-and-ship-it projects, and we could do a better job of balancing economic concerns with environmental concerns.
Interestingly, after announcing his retirement and being freed from the yoke of Conservative Party discipline, outgoing Fort McMurray MP Brian Jean gave a few media interviews in which he sounded an awful lot like Peter Lougheed. Mr. Jean said his community is feeling the strains of the gold rush approach to development. He said it probably would have made sense to set a more deliberate pace for development. As federation president in Alberta, I spent a lot of time in Fort McMurray and I can tell you that, if it was up to the people who actually live in that community, the pace of development would look a lot different from what it does.
Number two. The oil sands are a mixed blessing because the public who owns the resource is not getting a fair price for the sale of their assets. When talking to investors, oil industry leaders have bragged about mountains of revenue and avalanches of profit, but when it comes to the public share, the mountain is a molehill and the streams of cash are a relative trickle compared to the cascades of corporate profit.
In Peter Lougheed's day the public, as the owner of the resource, was paid about 40% of the revenue generated by Alberta's oil and gas sector. Today, the public share has dropped to as little as 10% of the oil and gas pie. According to a study from the Alberta government itself, which we had to pry out of their hands using freedom of information legislation, we get far less for our heavy oil than other nations with comparable resources. We get less than Norway; that's perhaps no surprise. We get less than Russia; we even get less than Angola. The biggest reason we get less is that since the 1990s developers in the oil sands sector have been getting a sweetheart deal the likes of which is not enjoyed by any other industry or sector in the Canadian economy.
The oil sands royalty regime has been tweaked since Ralph Klein introduced it in 1996, but the basic outlines remain the same. Oil companies pay a token royalty until they pay off their capital costs. Once these capital costs are paid, which can take years and years, the royalty goes up but it is still lower than most oil-producing jurisdictions in the world.
When the Canadian Association of Petroleum Producers puts billboards or bus stop ads out in public spaces saying that they're paying for health care and education, they're engaging in a fabrication. The truth is that the public is paying. Specifically we're paying a large portion of the costs for all of those expensive oil sands projects in the form of forgone revenues. Instead of Canadians thanking CAPP for the abundance that they bring, CAPP should be thanking Canadians, and particularly Albertans, for the giveaways that have allowed them to prosper while ordinary Albertans struggle with cuts to things like education, health care, and universities and colleges.
Number three. The oil sands are a mixed blessing because the current rip-it-and-ship-it approach to development doesn't create nearly as many stable long-term jobs and economic spinoffs as would be the case if we followed Lougheed's advice and focused on upgrading. We've all heard the numbers from CAPP and from other organizations about the hundreds of thousands of jobs that are being created and will be created by the oil sands, but those numbers should be taken with a huge grain of salt. CAPP has never released the methods that they use to get those numbers, and those numbers have been used by other groups like The Conference Board of Canada in their reports, and they don't jibe with the numbers that you get if you used Statistics Canada's own multiplier tables. The truth is that there are about 22,000 direct, permanent jobs in the oil sands, and that's great news. A lot of our members hold those jobs, but it would be better if we upgraded and refined our resources before exporting them instead of shipping them raw and cheap. Here's a quote for you on that subject: the export of Canadian bitumen rather than higher quality upgraded oil “could become the greatest loss of economic value for any country in world history”. Now, that's not a quote from me or some wild-eyed socialist. That's from Wilf Golbert, who is the chairman of the Calgary Economic Development Board.
Number four. The oil sands are a mixed blessing because overheated development in the sector is being used as a pretext to expand the temporary foreign worker program, to the detriment of individual working Canadians and the broader Canadian labour market. Employers say they need the program to address labour shortages, but the facts tell a different story.
The facts tell us that there are currently seven unemployed Canadians for every vacant job in Canada and 2.5 unemployed Albertans for every job vacancy. The facts tell us that the majority of academics and senior policy experts, including people such as former Bank of Canada governor Mark Carney, don't think Canada is suffering from a labour shortage.
The facts also tell us that employers are using the program as a first choice rather than a last resort. Whether it's a company like Saipem, on the Husky Sunrise oil sands project, or Pacer Promec, on the Kearl Lake project, employers are using the temporary foreign worker program to displace Canadians and drive wages down.
The problems used to be more evident in the low-wage service sector, but now it's high-paying and high-skilled jobs that are being affected. Conservatives are fond of saying that Canadians should train themselves and move to where the work is. Well, that's exactly what was done by dozens of apprentices who were displaced by temporary foreign workers at the Kearl site not very long ago. These are people who were from Hamilton, Cape Breton, and Montreal. They followed the rules and they followed the advice to head west, and what was their reward? Their reward was to be displaced by temporary foreign workers and the program that the federal government has put on steroids.
Number five. The final reason the oil sands are a mixed blessing is that they have been used to entrench what I would describe as an “energy McCarthyism” at the heart of Canadian politics and democracy. For some reason, we can't have a rational, nuanced conversation about the benefits and costs—and I underline the word “costs”—of developing this important resource. For too many people in government and industry, “you're either with us or against us”. If you raise a question about pace, or royalties, or value-added development, or, heaven forbid, the environment, then you are painted as a simpleton, or, worse, some kind of traitor to Canada and its core industries. This has to stop.
To the Conservative members of this committee, I say this—