Thank you very much.
Good afternoon, Mr. Chair, and committee members. Thank you for the invitation to be here today.
As you know, CAPP represents companies, large and small, that explore for, develop, and produce crude oil and natural gas in Canada. Together CAPP's members and associates are part of an industry of about $120 billion a year in revenues.
Canada's oil and gas industry currently employs about 550,000 people nationally, and this number is expected to grow as production also continues to grow. Canada's energy sector is in an expansionary phase, and Canadian oil and gas developments are expected to create sustained demand for skilled labour over the next decade. In the oil sands alone, hiring requirements for construction, maintenance, and operations are expected to total 98,000 jobs over the next 10 years. Also, efforts to expand through the development of B.C.'s LNG industry are expected to put additional pressure on the labour market.
While the prospect of higher industry employment has the potential to create strong economic prosperity, access to skilled labour is becoming an increasingly important economic competitiveness issue. Ensuring companies have the right people with the right skills in the right place and at the right time is crucial to delivering oil and gas projects on time and on budget.
Barriers to interprovincial labour mobility and recent changes to the TFW program have hindered our members' ability to deliver resource projects on time and on budget. Higher costs and higher risk translate into reduced competitiveness and make our country less attractive for capital.
Given the high impact of skilled labour shortages on the oil and gas sector, my remarks today will focus on skills training via the federal labour market development agreements and, where skilled Canadians are not available, necessary reforms so industry can continue to access labour via the TFW program.
First, oil and gas companies want to employee Canadians, but Canadians with the right skills are not always available to our industry. At some $2 billion annually, the LMDAs are the single largest labour market transfer program to provinces and territories. Given the government's renewed focus on Canadians first, it is critically important that the LMDAs be as targeted and as effective as possible at connecting unemployed Canadians to the jobs and skills training needed to meet the labour market demands of the future. Skill development and work experience programs are the most effective for improving employment and income levels. The LMDA program, itself, has indicated that “skills development is the most effective intervention in increasing the earnings“ of active EI claimants. Skills programs improve productivity and lower EI, as well. Other LMDA programs, such as the targeted wage subsidy, self-employment program, or job creation partnerships, do not experience as consistent overall benefits.
We recommend that the government reform the LMDA program to prioritize skills development and work experience programs similar to that of the provincial labour market agreement approach and in a manner that is strongly connected to occupations in demand.
We believe in hiring Canadians first, of course, and attracting and recruiting within Canada. Oil and gas is a major reason why Alberta, with three million people, leads the country in apprentices. Despite this focus, however, we know we must move beyond our borders to get the skill sets that are not available for the jobs we have. As such, we rely on the TFW program. The hospitality and service sectors where we operate also depend on this program.
We are supportive of the many changes the government has made to the program, including stronger enforcement and compliance, and the 10-day turnaround for high-skilled, high-paid, and short duration applications. However, since the changes have been announced, the oil and gas producers have experienced significant challenges in accessing the program. A lack of access to skilled construction trades is a critical risk to major project economics. In fact, Statoil postponed its plans for a major oil sands project, citing these types of labour costs as the key reason.
All companies are watching their costs and comparing our project economics to those of other jurisdictions, such as the U.S., especially in an environment of volatile prices and given higher costs and the projected infrastructure constraints to get oil and gas to markets.
In the past, construction companies were covered under an Alberta annex for the TFW program as part of the Alberta occupation-specific pilot program. This enabled timely access to construction trades.