Mr. Chair, esteemed members of the committee, clerk and fellow attendees, I'm Brendan Marshall, vice-president of economic and northern affairs at the Mining Association of Canada. MAC is the national voice of Canada's mining and mineral processing industry. I am pleased to appear and discuss this important matter.
The Canadian mining industry is a major economic driver, contributing over $55 billion in GDP in 2015, employing approximately 374,000 people, and accounting for $92 billion, or one-fifth, of the overall value of Canada's total exports. Across all four stages of mining, the industry also accounted for $43.2 billion in foreign direct investment in Canada—that's 7% of the country's total.
Understanding the committee's focus today, I would like to speak on two areas. The first is the industry's perspective on the trans-Pacific partnership, and the second is how Canada's critical infrastructure deficit in the north acts as a barrier to the territories' benefiting from TPP.
MAC expresses its firm support for Canada's participation in the TPP. On principle, Canada's mining industry strongly advocates for liberalized trade and investment flows. Free trade agreements, such as NAFTA and others with various countries in Latin America, Africa, and Asia, have all helped to increase Canadian mineral exports. Importantly, they've also increased two-way mineral investment that has supported mining jobs for Canadians and the generation of taxes, royalties, and a host of indirect and induced economic benefits. A testament to this is the fact that Canada's mining industry is one of the largest in the world.
The products that our members extract are sold on international markets at international prices all over the world. Given the highly internationalized nature of the business, measures that break down price barriers and other barriers can become competitive advantages for companies. At the very least, pursuing the TPP ensures that Canada remains on a competitive playing field, all else being equal, with other peer mining countries the world over. The TPP represents a massive trade bloc, including critical emerging markets, and is a trading partnership Canada must not risk being left out of.
Mining is the largest private sector driver in Canada's north, employing approximately 8,500 people. That's one in six jobs. As of 2014, direct GDP contributions in Yukon, the Northwest Territories, and Nunavut were 18%, 29%, and 18% respectively. Mining has had a transformative effect on northern and indigenous communities through generating employment, supporting skills and training, and, in some cases, contributing royalty or direct equity shares, all while paying taxes and royalties to governments.
With respect to the north, it is instructive to ask the question: if the TPP is enacted, will it benefit the region? I would say, all else being equal, yes. Unfortunately, though, all else isn't equal in Canada's north. Let's have a look at why.
A recent industry report that MAC spearheaded, called “Levelling the Playing Field”, found that it costs two to two and a half times more to develop a comparable mine in the north than it does in the south, with 70% of the cost differential stemming directly from the lack of infrastructure. Geography itself, in these circumstances, and the costs that result from it, significantly affect the economic viability of project development and threaten the long-term viability of the largest private sector economic driver across the three territories. Decades have gone by without substantial trade-enabling infrastructure development.
While the infrastructure deficit is significant, there is tremendous potential in the north. MAC's research indicates that 15 mines could start or restart production in the next decade, with total life-of-mine investment exceeding $35 billion, nearly four-and-a-half times the size of all territorial economies combined in 2014.
Opening up the north to responsible mining development in partnership with communities will enable northerners and indigenous communities to increasingly access the socio-economic benefits that mines bring to regions. To this end, MAC recommends that the federal government establish tax and infrastructure investment incentives for remote and northern regions and include a northern-specific fund within the proposed Canada infrastructure bank based on the highly successful Alaskan model, AIDEA. The concept of incorporating a northern fund within the Canada infrastructure bank has been supported by the National Aboriginal Economic Development Board, as articulated in its January 2016 report, and the Canadian Chamber of Commerce, in a study released in June.
Depending on how the Canadian model is developed, direct and indirect job creation, tax and royalty revenue generation, and broad-based social and economic development can be weighed in assessing the public value of an applicant's business case. Further, special consideration could be given to infrastructure investments that enhance the economic viability of projects in regions with historically high unemployment and limited alternative development opportunities. Considerations such as these require recognition of the unique challenges and opportunities facing northern Canada. Creating a mechanism that facilitates economic growth will enable remote and northern regions to further develop their potential for business development, thus reducing their reliance on federal support.
Across the areas of trade and investment, indigenous reconciliation, and climate change, the pursuit of stated public policy objectives in the north must be done in tandem and built on a solid foundation. Without strategic and wealth-generating infrastructure development to enhance investment competitiveness, the north will unsustainably remain disproportionately reliant on transfer funding for core services and program delivery, frequently at lower standards than southern Canadian jurisdictions enjoy.
Equally strategic and synergistic investments in energy infrastructure are essential to reducing northern reliance on costly and high-emitting fossil fuels. With the development of a price on carbon, northern industry requires a viable fuel-switching opportunity. Otherwise, the cost of development will outweigh the benefits, pushing investment further away. At stake is the single largest territorial economic driver and the largest proportional employer of indigenous Canadians.
In conclusion, trade begins at home. Northern mining companies will be challenged to take advantage of newly created market shares via TPP or any other agreement if they are unable to competitively develop mines and unable to effectively deliver their product to export markets.
In this sense, trade, investment, and economic development in the north are intrinsically linked to addressing the infrastructure deficit. A reliable transportation system and strategic power development need to be viewed by government as key factors in the success of Canada's trade and economic development priorities for the north.