Thank you, Chairman Richardson, committee members. I'm pleased to be here to present to your committee on behalf of the Fort McMurray Chamber of Commerce.
First of all, we acknowledge that we have no expertise in either environmental or social matters, and we defer to other stakeholders to represent issues in these spheres.
To begin, I wish to share with the committee members what should be obvious. Our mandate is to support sustainable economic development in our community. To that end, we adopted a position statement this past summer, which is included on page 2 of our formal brief. In summary, it says that the Fort McMurray Chamber of Commerce believes in responsible and sustainable economic development achieved through working with the full complement of community stakeholders. We wish to be clear. We do not dispute that there are challenges related to oil sands development that require bold thinking and innovative approaches. The chamber believes that Wood Buffalo can be a model for the integration of the industrial and knowledge economies for the benefit of Alberta, and indeed all of Canada. We are hopeful that all levels of government will receive contributions from the chamber that are focused on a practical solution to the challenges with which they are faced. In this case, let me add that we believe the federal government has a significant role to play.
There is more the federal government can do than just adjust its tax and environmental policies, although those are certainly measures within its jurisdiction through which it could address some of the issues in Wood Buffalo to the benefit of all Canadians. However, the constellation of issues in Wood Buffalo is enormously complex and requires a more concerted effort of will from all orders of government.
We encourage the committee to remember its interview with Pierre Alvarez, the president of the Canadian Association of Petroleum Producers, who said:
The markets send signals and companies clearly respond by reducing costs and doing things more efficiently. It’s not appropriate for governments to decide what goes ahead.
Significant oil sands players have already adjusted their schedules to respond to market conditions.
Finally, with respect, we urge this committee to resist the urge to let its recommendations devolve into inter-jurisdictional wrangling, a cognitive and procedural logjam that is entirely too familiar to Canadians when the spheres of the federal government and the provinces intersect. It is true that in the approval it granted only last week to Suncor Energy's expansion proposal, the Alberta Energy and Utilities Board said:
The EUB believes that additional infrastructure investment in the Wood Buffalo region is needed, and it believes there is a short window of opportunity to make these investments in parallel with continued oil sands development.
However, this statement, which directs the provincial government to respond appropriately within its jurisdiction, does not absolve the federal government from its moral and financial responsibility in the region that benefits the rest of Canada. In fact:
The EUB recommends that coordinated action be taken at all levels of government [emphasis added] to ensure that the Regional Municipality of Wood Buffalo has the ability to service the anticipated level of sustained growth in the region.
We believe this committee can help the federal government to consider how it can best address the following issues in support of a sustainable oil sands development in the 21st century.
In June 1996 the Government of Canada and the Government of Alberta jointly issued the “Declaration of Opportunity” in Fort McMurray. The declaration was endorsed by both senior orders of government and 18 representatives of the oil and gas industry with an interest in oil sands development. The chamber believes that this document, although implemented by the previous government, is consistent with the principles of the new Canadian government and is worthy of its support, both in word and action.
The private sector is expected to invest $125 billion in the Wood Buffalo region over the next decade, as developers seek to triple the current output of synthetic crude oil. That is a five-fold increase over the investment projections estimated in 1996 in that “Declaration of Opportunity”.
Wood Buffalo is indisputably the most robust regional economy in the world. Madam Mayor spoke briefly on the tax revenues that come forward. I would expand on that a little bit. At $30 a barrel, it was projected the federal government would receive approximately $54 billion in taxes. At $40 a barrel, the total government revenues will increase nearly 50%, yielding the federal government revenues of $84 billion. Of course, last week, we just closed at a record low for the year at $55 U.S. a barrel. In other words, those revenue projections did not account for the real world prices. We believe the federal government benefits tremendously from oil sands development, and the contribution to federal coffers of the oil sands revenues will only increase. The federal government must look to match its commitment to the region more closely with the benefit it receives.
Among the greatest regional challenges resulting from oil sands development is the recruitment and retention of skilled personnel, not only in the oil sands but in all economic sectors. Wages are high; companies offer signing and monthly loyalty bonuses and still they cannot fill the vacancies for skilled workers.
In May 2004, the Governments of Canada and Alberta signed a memorandum of understanding for the entry of temporary foreign workers for projects in the Alberta oil sands to allow for the targeted entry of temporary foreign workers to meet the urgent need for skilled oil sands employees.
Just last week, the federal government announced changes to the temporary foreign worker program to make it easier for employers in Alberta to hire foreign workers more quickly when there are no Canadian citizens or permanent residents available to fill those vacancies. The range of employees was also increased to 170 different occupations, which further demonstrates the extreme labour pressures in the region.
The willingness of the new Canadian government to build upon and improve existing agreements is encouraging. The MOU and related commitments align Canada's immigration practices with Alberta's labour force strategy, which recognizes immigration and foreign workers as the province's third most important labour source.
Although the MOU supports the recruitment of skilled employees, challenges still remain within the labour market. Among them is the accreditation of potential recruits who have received their education and training in other countries. Stories of the foreign-trained doctor or engineer supporting his or her family by driving a cab are well established.
Both the federal and provincial governments must work together to improve the recognition of foreign education or assist trained immigrants to elevate their skills sufficiently to meet Canadian standards. Most importantly, despite the MOU's narrow scope and application only to labour pressures, it has evolved under the leadership of the new Canadian government to demonstrate increasing collaboration between two orders of government where there is a demonstrated, indisputable need.
The chamber believes that ongoing efforts to address persistent labour pressures can provide the model for other tripartite agreements that are badly needed to support sustainable development in our region. There is no question that municipalities across the country are struggling with infrastructure, and since 2004 the federal government has responded by rebating GST and sharing the gasoline tax.
While those programs and others are important, they do not adequately address what is being called the fiscal imbalance in the nationwide debate over the distribution of tax dollars. The chamber merely wishes to note that out of every tax dollar collected from Canadians, roughly 65¢ goes to the federal government, 30¢ to the provinces, and 5¢ or less goes to municipalities.
The Regional Municipality of Wood Buffalo also boasts, if such a word is appropriate, unique demographics. We have virtually doubled in size over the last decade. The municipality must also provide services to a shadow population that fluctuates between 7,000 and 15,000 at any given time.
These pressures combine to create a situation in which the regional municipality has been advocating for increased investment in municipal infrastructure since 2004. The municipality pegs its share at $814 million of the $1.9 billion that has been mentioned in the RIWG's business case with the municipality. That figure still needs to be tested against continuing infrastructure requirements, inflationary increases, recent municipal commitments, and recent funding provided by other orders of government to transportation projects with municipal impacts.
In a speech to the Federation of Canadian Municipalities in June 2006, Prime Minister Harper said, “The federal role”—with respect to infrastructure—“must be defined to deal with projects of national significance.”
We cannot imagine a region in which infrastructure to support economic development is of greater concern to the nation. In particular, we emphasize that the government identified among its five principles, number four, the support for, “More competitive economic union”, and number five, “Effective collaborative management of the federation.”
Our brief, to which I direct you, outlines an area of particular concern, and that is our water and waste treatment plant.
At this time, we wish to repeat that the Alberta Energy and Utilities Board has recommended that there is a short window of opportunity for all levels of government to make the necessary investments in infrastructure to ensure that the region can handle sustained growth.
The Chamber of Commerce believes that an MOU between the Governments of Canada and Alberta to provide necessary municipal infrastructure in the Wood Buffalo region through the Canada Strategic Infrastructure Fund or other programs is not only appropriate, it is just. Such an agreement would help the federal government determine the levels of infrastructure investment in the region proportionate to the benefit it receives, would help to make oil sands development both more competitive and more sustainable, and would be consistent with the federal government's commitment to collaborative management.
The chamber also believes that the federal government must work with the provinces to remove remaining interprovincial trade barriers. More details on that issue are in my brief as well.
In closing, I would like to thank the Standing Committee on Natural Resources for the invitation it issued to us. We cannot overemphasize the degree to which we believe that addressing the sustainable development issues in the Wood Buffalo region requires the collaboration of all levels of government, and that an opportunity exists for the federal government to display leadership in this area.
The research conducted by the Canadian Energy Research Institute clearly demonstrates that the federal government is deriving tremendous benefit from the oil sands, and it is our contention that the government has not made a commensurate investment, either through taxation policy or direct investment in the region, to that benefit. We encourage you to work with your colleagues at the Government of Alberta, perhaps using the 2004 memorandum of understanding as the model for future cooperation.
The chamber has also conducted surveys with our members to ensure that the interests of the regional business community, whose products and services are precisely those that make Fort McMurray more than just a company town, are considered in decision-making. We would be happy to share with this committee our findings and to forward to you any new information or statistics we gather in pursuit of the sustainability action plan.
Once again, thank you, and we're open for business.