Evidence of meeting #42 for Natural Resources in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tertzakian.
A recording is available from Parliament.
4:55 p.m.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Thank you, Mr. Chair.
I guess this is for both Mr. Marushack and Mr. Tertzakian. Would it help the oil sands industry to have your corporate tax rates hiked to where they were in the past?
4:55 p.m.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Mr. Tertzakian, do you see any advantage in raising your tax rates?
4:55 p.m.
Conservative
4:55 p.m.
Conservative
4:55 p.m.
Chief Energy Economist and Managing Director, ARC Financial Corp.
It would affect the returns, which would affect the ability to bring capital in, which would affect growth, which would affect jobs.
4:55 p.m.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Is that a pretty good summary, Mr. Marushack?
4:55 p.m.
President, ConocoPhillips Canada
It affects your economic viability, and it goes right into the economics when you decide what projects to invest in. Yes, sir.
4:55 p.m.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
It would be a tragedy if something like that would happen then. I can hear that.
Mr. Tertzakian, you've been talking about labour issues and those kinds of things. I just want to ask you something. There is a very active oil and gas industry in my area. With inflation at 14% per year, do you have any comments on whether some of that is self-inflicted? Do the prices that are being paid for--I don't want to call them unskilled workers--entry-level workers in your industry not contribute to some of the problems you're talking about in terms of inflation? I'm not sure those wages need to be paid in order to get workers. Our problem right now is that we don't have enough labour, not that people won't work.
5 p.m.
Chief Energy Economist and Managing Director, ARC Financial Corp.
That's correct. Just think of it this way. The industry--oil sands plus conventional oil and gas--is investing $55 billion a year now, and there are 3.3 million people in Alberta. So that number of dollars coming into a province with such a little labour pool drives inflation. That $55 billion doesn't include the $10 billion from Asian sources and the $20 billion from debt and equity.
5 p.m.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Those are some of the investment opportunities that are available to the other provinces. Things like shale gas have developed as well. There are both positives and negatives to that, but the positive is the scale of the investment.
5 p.m.
Chief Energy Economist and Managing Director, ARC Financial Corp.
Oh, absolutely. Just look to Newfoundland and, I would say, Saskatchewan--and Manitoba now. Their investment is growing quite dramatically in both of those provinces as well.
5 p.m.
Conservative
5 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
I have just a very brief question. I'll stay with where we were with our friend from ARC.
Have you or any of your colleagues done any research as to how much of the current valuation of the Canadian dollar is in part due to our export and sale of petrochemicals? I was just looking over the amount of transport that's made up of our foreign investment, as well as how much we're exporting in valuation dollars.
I was just reading an article in The Economist that was talking about the Canadian dollar increasingly becoming a petro dollar. Have you done any research into this? Has anyone attempted to assign a value of so many cents on the dollar currently at our trading rates?
5 p.m.
Chief Energy Economist and Managing Director, ARC Financial Corp.
We have done some research. There is a relationship between the price of oil and the Canadian dollar, but we should not forget that Canada has a resource-heavy economy, including agriculture, in which prices are up. Metals and all of those things have a contributing factor for the dollar as well.
5 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
As economists, though, you make an effort to parse out some of these contributing factors, and there has been a consistent and strong correlation between the price of oil and the Canadian dollar over the last 25 years. The same can't be said for wheat or even for some of the metals--for copper, gold, etc.
The question we're looking at is.... You're familiar with the Dutch disease, in terms of the effect on other parts of the economy. You've been mostly describing the benefits. Those are easy to assign because we can look at revenues coming into government, or taxes paid, but there's also a counter-effect, which I'm sure you're aware of as an economist, in pricing the dollar higher and having some impact on the manufacturing value-added sectors in our economy. I'm talking about forestry, auto manufacturing, aerospace, etc.
Have you bothered to look into that impact on the Canadian economy as well and on the Alberta economy specifically?
5 p.m.
Chief Energy Economist and Managing Director, ARC Financial Corp.
The answer is yes. That's why I'm concerned about the inflation issue.
5 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you.
Thank you, Mr. Cullen.
Thanks to all of you for your questions and comments.
Thank you very much to Ms. Dowdeswell, Mr. Marushack, and Mr. Tertzakian for excellent presentations and great answers to our questions. They will be very helpful to the committee.
I will suspend for about two minutes as we move in camera and as the room is cleared of those who are not allowed to be here for an in camera meeting.
[Proceedings continue in camera]