Evidence of meeting #177 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was funding.
A recording is available from Parliament.
10:05 a.m.
Chair of the Board of Governors, Explorers and Producers Association of Canada
Yes, definitely, at a time when we're seeing increasing demand.
Oil demand in the world right now is 100 million barrels a day and it's expected to increase by 30%.
10:05 a.m.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
Over the decades in this industry, at a time when prices have been rising and we're at a relatively high point, in any past cycle of the ups and downs of prices, we would see money flowing into Alberta, people obtaining high-paying jobs and working. We are not seeing that at this time.
Thank you.
10:05 a.m.
President, Canadian Association of Oilwell Drilling Contractors
Thanks, Mr. Chair.
I just have a comment on Wesley's piece. When Wes has problems raising money in New York, it impacts my guys in the service sector because Wes basically tells my guys that we've raised x number of dollars, so this is the drilling program and this is the number of wells we're going to drill and then he hires my guys to go out. My guys represent the blue-collar, hard-working women and men of our industry, who are really impacted significantly because of the negative conversations that Wes is having in New York.
I would even go further to say that my membership and my international contractors, a disproportionate amount of their own capital, even 90%, is going to their international operations and not being deployed in Canada.
10:10 a.m.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
It's staggering. I've heard that the provincial initials of AB for Alberta means “anywhere but” in finance circles in London and New York. This testimony seems to suggest that's the case. The loss of 500 rigs that have disappeared is indeed a function of the inability to raise money and the inability for Alberta and Canada to take advantage of the recovery in prices.
Mr. Kobly, did you have anything you wanted to add?
10:10 a.m.
President and Chief Executive Officer, Alberta Chambers of Commerce
The clear impact that most people will see is the reduction in what those fellows do. I can tell you that the impact on the communities in the province of Alberta is as dramatic. When you don't have the crews out working, you don't fill up the hotels and you don't have folks living in their community. Maybe they have to move out of the community to a different centre to take work. That is one of the hugest impacts of having what we have now on the individual communities in this province.
10:10 a.m.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
I'll ask either Mr. Morningstar or Mr. Scholz for a quick comment.
What are the impacts of some of the intangible signals that can come from a government? Flippant comments about phasing out oil sands and these kinds of things, which aren't statements of policy or a change in law, send a signal to decision-makers in finance.
What are some of the intangible impacts of this non-support, or what seems like non-support, for the industry?
10:10 a.m.
Chair of the Board of Governors, Explorers and Producers Association of Canada
I would add that investors are typically looking for a stable economic environment in which to work. We're not here advocating for tax cuts particularly, but we're advocating for fair access to global markets, so that we can get away from one customer and get fair prices.
When you have comments like that being made, they would lead investors to believe that there aren't stable environments in which to invest in western Canada, right now.
10:10 a.m.
President, Canadian Association of Oilwell Drilling Contractors
I'll reiterate what Wes said.
I think it's really important to recognize that the tone at the top matters. It matters in any organization, in terms of strategic direction. It matters in federal or provincial governments. I think it's really important for all of our political leaders to stand behind a world-class regulatory environment and to advocate for signalling to the investment community that this industry is important to the Canadian economy and the government wants to see it grow.
10:10 a.m.
Liberal
The Chair Liberal Wayne Easter
Mr. McLeod, you have five minutes. We will have time for one more question from each party following that.
Go ahead, Michael.
10:10 a.m.
Liberal
Michael McLeod Liberal Northwest Territories, NT
Thank you, Mr. Chair.
Thank you to all of you for your presentations. It's a very interesting discussion.
I represent the Northwest Territories, and I listened with great interest to Janet Lane's presentation.
In my previous life, I did some work with indigenous communities in the Northwest Territories. One of the projects I worked on was setting up a pellet operation in the north. I did some assessment in the area and we put a workforce strategy together. It didn't take long for me to realize that, oh my God, we were in trouble. We have high unemployment rates in the north, but at the same time there is a reason for it. The literacy rates are very low.
We also recognized that the ability to manage money, personal financial management, was going to be huge challenge. A lot of people hadn't had a good work record because they didn't know how to manage money. You also factor in addictions in our communities, and it makes it more challenging. There were many people we talked to who said, “There are 16 of us living in a house. We're probably not going to be able to get up in the morning. It's hard to sleep.”
There are huge compounded challenges, in addition to what you said. I'm really curious—and I know you're just talking about the west and you haven't really looked anywhere else—about what needs to be done.
What would it cost to correct some of the shortages and the cognitive skills in other areas that you pointed to?
10:15 a.m.
Director, Human Capital Centre, Canada West Foundation
Various studies are still being done around what it would cost, but I know we have examples of especially workplace-related skill upgrading that is not that expensive.
When you're dealing with your communities, you have a little further to go. A lot of your people are perhaps at level one literacy rather than at level two. That would take longer, obviously. You're changing culture as well, from an oral tradition to a written tradition. This is going to take time.
However, predominantly in the workforce across Canada, people are at what we would call level two literacy for the most part, if they have a shortage of skill. That can be corrected with as little as 25 hours of upgrading classes through a workplace environment.
What is really important is that the training is embedded in other training. It doesn't have to be.... You don't go to somebody and say, “You know, you have a problem. You can't read”. That is just going to put people's backs up. It's going to make it really hard. However, you can say, “Let me help you to become better in your job. Let me help you figure out how to change the way you work.” Then, embed that literacy and numeracy training in training that is directly related to the job at hand.
That can be done. We know how to do that. We know how to develop the curriculum, to deliver that curriculum. For the most part, we bring people over that hump into that fluid capacity in as little as 25 hours of training. The Canada job grant could be very useful in that.
10:15 a.m.
Liberal
Michael McLeod Liberal Northwest Territories, NT
I live in a small indigenous community, and on one side we've had oil and gas operations for 20-some years. We don't have one person there. The oil and gas activity does not benefit us at all in terms of employment. On the other side of the community, we have a diamond mine. Now, they offer literacy courses, so we are seeing a success there.
I don't think it's the responsibility of the different sectors to offer literacy and financial management, although some of them are doing it.
I want to know what the government can do. What would you suggest that the government do to change the situation? I think it's compounded in the north, but from your standpoint, could you maybe just say a few things that we could do? What would you recommend?
10:15 a.m.
Director, Human Capital Centre, Canada West Foundation
The government across the country transfers funds through the labour market development agreements for training for people who are unemployed or between jobs. That funding could be directed to apply more to those lower cognitive skills than just to what are typically the supply-push kinds of programs that are offered now. Often, if you're unemployed and you're going to a training program that is offered provincially but funded federally, you're being trained for a job that might exist in the future, rather than something that is industry-driven. I heard that word here earlier.
The industry-driven piece is really important. If employers could be given the tools to say, “These are the skills we're looking for”, and if those skills were further identified as to what cognitive skills go along with being able to do that technical skill, then the curriculum could be designed to cover both. The labour market development agreements—the funding that the federal government supports training through—could help to improve both the technical and cognitive skills of people who are in the situation that you're talking about, not employed.
10:20 a.m.
President and Chief Executive Officer, Alberta Chambers of Commerce
As a practical solution, I would commend to you Aspen Heights school in Red Deer. They have a program called “MicroSociety”. If you are interested, we could arrange a tour down to that school. It's a classic example of bringing kids in who are very vulnerable but are turning around, and teaching them skills, literacy, numeracy and the ability to function as a society—as a microsociety.
10:20 a.m.
Liberal
Michael McLeod Liberal Northwest Territories, NT
I have one quick question for Ken. It's regarding the northern construction corridor.
I represent the Northwest Territories. I have not heard anybody from the Northwest Territories asking for funding for the northern corridor, but it's ironic. I come to Alberta and you're asking for funding.
10:20 a.m.
President and Chief Executive Officer, Alberta Chambers of Commerce
It's because you've come to Edmonton and we have a very close allegiance with the NWT, particularly through the Edmonton Chamber of Commerce. The University of Calgary is the organization that has brought up that we should be doing a study. The Senate has suggested that the funding should be provided for that study of transportation utility corridors in the north.
10:20 a.m.
Liberal
The Chair Liberal Wayne Easter
We'll go to one question from each of the parties.
Before I do that, I guess the federal government has to look at what it is possible to do in the short term. If the finance minister had the nerve to do something before the end of the year, what would those two possible things be—accelerated capital costs? Budgets are cumbersome. Comprehensive tax reform, I think you'll find all of us are supportive of that, but that's more long term. We looked at it and debated whether we'd do it as a committee about two years ago. I think we even had a recommendation. We don't have the expertise. You really need to do something like a royal commission, and then turn it over to the committee down the road. That's a three- or four-year process.
What can be done quickly, in the short term, to enhance our ability to be competitive, especially given where the United States is at?
Who wants to take that?
10:20 a.m.
President and Chief Executive Officer, Alberta Chambers of Commerce
Certainly, there is accelerated capital cost allowance, if the finance minister were to do anything. Other than that, I'm not sure that I would be true to what we're saying by saying, “We'd really like to see this happen as well.” Certainly the royal commission is a long-term process, but I think it's very difficult for somebody to say, “We want this, this, and this, but by the way, we want you to balance your budget.”
If the minister would want to do something, it would be accelerated capital cost allowance.
10:20 a.m.
Chief Economist, Canadian Manufacturers & Exporters
I would echo that comment. The accelerated capital cost allowance is a huge issue. If you're looking for any one thing that would make a difference as soon as possible, it would certainly be that. Beyond a first one, nothing leaps off the page quite to the same extent as the ACCA does. But if I were to pick one to highlight right now, it would probably be on this issue of reinvesting carbon tax revenue, however that ends up unfolding, back into the valued-added economic sector, in manufacturing specifically.
In Ontario there's a program called the SMART Green program, which was cancelled a little while ago. Effectively it provided information and incentives for manufacturers in Ontario to invest in emissions-reducing machinery and equipment. I think using carbon tax revenues to finance a program like that would be beneficial.