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Evidence of meeting #39 for Natural Resources in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was alberta.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Gil McGowan  President, Alberta Federation of Labour
Mimi Fortier  Director General, Northern Oil and Gas, Department of Indian Affairs and Northern Development
Michel Chenier  Director, Policy and Research, Northern Oil and Gas Branch, Department of Indian Affairs and Northern Development

8:50 a.m.

Conservative

The Chair Conservative Leon Benoit

Good morning, everyone.

We have our witness in Edmonton in the room now. We're ready to start. We are of course continuing our study on resource development in northern Canada. We're dealing with the energy section of that study today, starting that section.

We have two witnesses from the Department of Indian Affairs and Northern Development: Mimi Fortier, director general, northern oil and gas branch; and Michel Chenier, director, policy and research, northern oil and gas branch. Thank you both for being here today.

We have by video conference, from Edmonton, Alberta, from the Alberta Federation of Labour, Gil McGowan, president. Welcome to you, Mr. McGowan.

8:50 a.m.

Gil McGowan President, Alberta Federation of Labour

Thank you.

8:50 a.m.

Conservative

The Chair Conservative Leon Benoit

We will start with hearing from the witnesses in the order listed on the agenda. So we'll start with the Department of Indian Affairs, for up to ten minutes. Please go ahead.

8:50 a.m.

Mimi Fortier Director General, Northern Oil and Gas, Department of Indian Affairs and Northern Development

Thank you.

I think our name has changed recently in the last few months. It's Aboriginal Affairs and Northern Development Canada now. Thank you.

I am pleased to have this opportunity to share my department's perspective on oil and gas developments and future plans in Canada's north, where there is large oil and gas potential.

The federal approach to economic development promotes responsible oil and gas exploration and development, producing jobs for today and generating long-term social, cultural, and economic dividends for aboriginals and northerners well into the future. It also supports development that employs effective environmental stewardship practices. This ensures that development occurs in a way that respects the traditions of aboriginal communities and safeguards the Arctic's environment for the benefit of future generations.

The Department of Aboriginal Affairs and Northern Development is responsible for issuing rights in the Northwest Territories, Nunavut, and in offshore areas north of the 60th parallel. The northern oil and gas program operates under the Canada Petroleum Resources Act and the Canadian Oil and Gas Operations Act. The Minister of Aboriginal Affairs and Northern Development shares responsibility for both these acts with the Minister of Natural Resources. The National Energy Board is responsible for most of the application of the Gas Operations Act in Canada. Therefore, responsibilities are separated as follows: the economic decisions lie with the department and the minister, and the safety and environmental decisions lie with the regulator, the National Energy Board.

Officials in our offices work to create the conditions and positive investment climate that enable the private sector to successfully compete in the north. There's a well-established, market-driven oil and gas rights issuance process precisely to advance this objective.

The department relies on foundational relationships established in land claim agreements with aboriginal groups to support our management of hydrocarbon resources in the north. Prior to initiating each rights issue and cycle, our department undertakes consultations with aboriginal land claimants to seek their input on environmental and cultural sensitivities. We recognize that support by affected communities and aboriginal organizations is very important for those companies embarking on exploration programs on their newly acquired leases. For the past 25 years there has been an annual opportunity to obtain exploration rights through a competitive rights issuance process.

Community input and support is important in making these recommendations to our minister and obtaining ministerial consent. This process is equally advantageous for the business community. Industry tells us that the certainty of regular calls for rights issuance increases investment confidence in Canada's frontier lands.

Moreover, our government is working toward implementing devolution in the Northwest Territories. For the Yukon, the transfer of land and resource management responsibilities occurred in 2003. In Nunavut, we are continuing discussions towards devolution. Devolution will give northerners more local control of land management and resource development decisions. This will effectively bring natural resource decision-making closer to where natural resource development is being planned. It will also bring economic benefits.

If I may take another few minutes, I would like to turn to some of the more noteworthy oil and gas developments that are promising to reshape the north.

The year 2011 was the year that industry's rapidly growing interest in Canada's shale resources jumped 500 kilometres north of 60 to the central Mackenzie Valley. This was reflected in the issuance of new exploration licences in the Sahtu settlement region of the central Mackenzie Valley.

In June of last year, 11 new exploration licences were issued, based on bids of work expenditure commitments totaling $534 million over the next five years. By last fall, it was clear that petroleum companies acquiring these exploration licences were focusing on exploring shale formations, although there is also great potential for conventional oil and gas resources in the region.

New hydraulic fracturing technologies have the potential to make this vast reserve accessible, but this potential has to be proven by exploration before economics of shale development in this region can be evaluated. The department has organized information sessions so that northern communities are fully informed about shale gas exploration, the technology deployed, the regulatory processes, and regulations applicable for key issues such as water quality and use. The pace of development will be monitored and northerners will be provided with opportunities to raise and share their concerns. These activities currently represent the only oil and gas activities in the region outside of ongoing production operations at Norman Wells.

Renewed interest by industry in the area opens up new economic opportunities for employment, training and business.

Moving up to the Beaufort Sea and Mackenzie Delta, this region has proven to be particularly rich in petroleum resources, with more than 60 discoveries to date. Since 2007 several companies have been awarded deep-water exploration licences in the Beaufort Sea, with cumulative work commitments of almost $2 billion.

The events in the Gulf of Mexico two years ago resulted in a renewed public focus on safety and preparedness around the world. In Canada, the National Energy Board expanded an existing study to conduct a public review of offshore drilling requirements. You are probably aware of the NEB's December report. That report confirmed that the National Energy Board's regulatory regime can address matters related to safety of northerners, workers, and the environment. We're seeing renewed interest again this year. The industry has nominated six parcels, and the call for bids has just opened up and closes in September.

Only about one-fifth of the Arctic Ocean margin has been explored. Conventional oil and gas resources from the North account for approximately 33% of Canada's remaining conventionally recoverable resources of natural gas and 35% of the remaining recoverable light crude oil. Every year, the Northern Oil and Gas Branch submits an annual report on the administration of lands to Parliament. The latest report was submitted on May 2, 2012, and is available on the department website.

A key consideration in our consultations on oil and gas in the North is environmental stewardship. We need to provide public and departmental assurance that rights are issued responsibly, with due consideration for conservation issues and the north's environmental heritage. Science is important for supporting good decision-making.

We are always looking for innovative programs to advance responsible development and increase Canada's knowledge of the north. One example is the Beaufort regional environmental assessment, with funding of $21.8 million over four years. Its objective is to ensure that governments, the Inuvialuit, regulators, and industry are prepared for renewed oil and gas activity in the Beaufort Sea. These parties have all been at the origins of the assessment, right from its concept. Now in implementation, BREA is a unique partnership. It brings together Inuvialuit communities, industry, governments, academia, and regulators who work together to identify priorities and fund research in support of regulatory decisions. These are multiple benefits to this place-based partnership approach.

In conclusion, given the world-class oil and gas potential throughout the Arctic, it is important that this exploration continue responsibly and that northerners actively participate in and benefit from development.

Most of all, I want to reinforce the importance our department places on working in partnership. As the numerous examples I cited earlier demonstrate, it's the way we do business, because we know this is the key to long-term success. Through productive partnerships, we can unleash the extraordinary economic and social benefits of responsible oil and gas development for northerners and for all Canadians.

Thank you.

9 a.m.

Conservative

The Chair Conservative Leon Benoit

Thank you very much for your presentation, Ms. Fortier.

We will go now to our second witnesses, by video conference from Edmonton, from the Alberta Federation of Labour, Gil McGowan, president.

Go ahead with your presentation, please, sir.

9 a.m.

President, Alberta Federation of Labour

Gil McGowan

Thank you, Mr. Chairman.

Good morning. As Mr. Benoit said, my name is Gil McGowan. I'm president of the Alberta Federation of Labour. The AFL is Alberta's largest union organization. We represent 29 unions in the public and private sector, who, in turn, represent more than 145,000 working Albertans, including more than 25,000 people who work directly in our province's energy sector.

I'm here today because I'm profoundly troubled by the approach to the development of the oil sands that's being championed by the federal government. It's an approach some analysts have described as “an unmitigated growth strategy”. I call it a wild west “rip it and ship it” strategy for development.

Since winning his long-sought-after majority a year ago, Prime Minister Harper has made this new approach to development in the oil sands a central pillar in his government's plan for the future. It's an approach that's characterized by a commitment to quick regulatory approvals for resource extraction projects, quick approvals for pipelines to export raw bitumen, and quick approvals for employers who want to access to cheap temporary foreign workers to work those projects and pipelines.

The government's new approach is also characterized by efforts to demonize and denigrate anyone who raises concerns about the oil sands or how it's being developed. Critics are labelled as radical, as opponents of progress, and as enemies of Alberta. In a nutshell, the Prime Minister has put his government at the disposal of the energy industry. The government is no longer a watchdog looking after the broader public interest; it is now a cheerleader and facilitator for the narrow goals of industry. The tools and mechanisms of government have become the tools and mechanisms of industry, and anyone who gets in the way will either be ignored or run over.

As a labour leader on the front lines of development of the oil sands, I am both angry and alarmed by our country's evolving approach to growth in the resource sector. As a proud Albertan, I'm deeply offended by senior members of the Harper government who try to characterize people like me as hostile to the interests of Alberta and hostile to the interests of our key industry. It is not un-Albertan or un-Canadian to raise questions about what's going on in the oil sands. On the contrary, as someone who cares deeply about my province, I feel I have a duty and obligation to raise my voice in opposition to what I see in front of me. It is also not divisive or an unwarranted attack on the west to engage in a mature discussion about the future of the oil sands. In fact, if anyone is playing politics with this issue, it's the Harper Conservatives, who are deliberately trying to put any and all discussions of the oil sands as an us-against-them fight.

For our purposes this morning, I'll leave it to others to address the very legitimate environmental concerns related to development in the oil sands. Instead, in the brief time available to me I want to outline four reasons why I think the current industry-driven wild west approach to development of the oil sands is not in the long-term best interests of either Alberta or Canada. Then I would like to wrap up quickly by sketching an alternative vision for development, one that puts the interests of ordinary Canadians ahead of the interests of foreign-dominated oil companies.

The first reason why we're opposed to the current approach to the development of the oil sands is because of the negative effects it's been having on the labour market here in Alberta. The Alberta and federal governments have essentially approved every proposal for development that has come across their desks, to the point where there are now more than 65 multi-billion-dollar oil sands projects either approved or already under construction.

Employment in Alberta's energy and construction sectors has already exceeded the peaks of the last boom, and projected demand for labour is expected to continue growing rapidly. On the surface this may sound like a good thing, but all of this rapid development has a big downside. What happens when dozens of big energy and construction companies go looking for skilled workers at the same time? Labour shortages, that's what. These shortages lead to delays, the delays to cost overruns. The shortages also lead employers to scramble for more workers, starting with less experienced workers, and increasingly they're turning to temporary foreign workers, who are often poorly trained, unfamiliar with the language, and uncomfortable working in Canadian conditions. The result of this mad scramble to throw warm bodies on work sites is lower productivity, more mistakes, and an increased need to go back and fix things that weren't built properly, all of which, in turn, leads to higher costs.

One of the real perversities of the current situation is that this is actually making the labour shortage worse in the long run. That's because the rapid pace of growth and development means that employers are reluctant to let apprentices take time off to complete their classroom training, so they remain apprentices for far too many years.

Even more importantly, by making it easier and easier for employers to access temporary foreign workers, the Harper government has made the temporary foreign worker a first choice for employers instead of a tool of last resort.

The result is that employers are choosing temporary foreign workers over apprentice training, and in the process we're not doing enough to train the next generation of Canadian tradespeople, guaranteeing continued, ongoing labour shortages in the future. Needless to say, without training the next generation of tradespeople, we're locking ourselves into a future of skilled labour shortages and an ongoing reliance on migrant labour.

The second reason we're opposed to the current approach to development in the oil sands is that it discourages upgrading and refining, which we believe are the key to long-term job creation and economic growth in Alberta. Albertans have made their feelings clear on this issue. In poll after poll, an overwhelming majority of Albertans have said that they want to move up the value ladder instead of shipping more high-quality jobs in upgrading and refining down the pipeline, to such places as the United States and China.

Currently, about 62% of all bitumen is upgraded in Alberta. This creates thousands of jobs in operations and maintenance and generates billions of dollars in spinoffs. It sustains families and communities. But almost all of the new oil sands projects that are currently under construction are for extraction only, meaning that the proportion of bitumen upgraded in Canada is about to drop precipitously. Government estimates here in Alberta say that within the next five years we will drop below 50% of bitumen upgraded in the province.

Some will say that this is inevitable because the economics of upgrading and refining simply don't add up. But there's nothing inevitable about this situation from our perspective. The key concepts to keep in mind when trying to understand what's happening with upgrading are cost and price differential.

As we've seen, the rapid pace of development is driving up costs, meaning that only the lower-cost “extraction only” projects are attractive to developers. At the same time, by approving more bitumen export pipelines to the U.S. and potentially to China in an effort to chase higher prices, the government is actually killing our upgrading and refining industries. That's because the big competitive advantage that has traditionally been enjoyed by our industries here in Canada, which has allowed our industries to thrive, has been access to relatively inexpensive feedstock.

By focusing, as the Alberta and Canadian governments have, on removing the price differential between bitumen and conventional crude, these governments are effectively undermining our biggest competitive advantage when it comes to upgrading and refining.

So if the “market” is saying that upgrading doesn't make sense, it's because our governments have influenced that market in negative ways. Rapid development has led to cost inflation that discourages value-added construction, and overbuilding of bitumen pipelines shrinks the price differentials that sustain our Canadian-based upgrading and refining industries.

In a nutshell, the reason Albertans and Canadians are not seeing the kind of value-added developments they want is that their governments are stacking the deck against this kind of development by mindlessly following the lead of self-interested industry players.

The third reason that we oppose the current approach to development has to do with royalties. In this regard, we have to keep in mind that royalties collected by the government here in Alberta are tied to cost, and in particular at the front end of oil sands projects. If the costs are high and escalating, as they have been as a result of the unrestricted rapid development, that situation has a negative impact on the amount of money that can be collected in royalties, and of course this has an impact on the money that will be available to spend on things that Albertans and Canadians value, such as health care and education.

Just to wrap up, because I realize that my time is running out, governments in Alberta and Ottawa need to stop seeing themselves merely as cheerleaders for the oil industry. Instead, they have to understand that Canada's natural resources, whether it's the oil sands or other resources, belong to Canadians. They have to understand that there's a difference between the narrow interests of oil companies and the broader interest of the public. Most importantly, we feel that governments need to start following the advice of former Alberta Premier Peter Lougheed, who has said that we need to start thinking like owners.

Responsible owners would set a more reasonable pace for development in the oil sands. Responsible owners would demand long-term job creation and value-added industries. Responsible owners would also negotiate more aggressively for fair royalties for the sale of our collectively owned public resources.

Of course there is a fear that if we got more aggressive in terms of demanding more value-added job creation or more royalties, investment would decline in the industry. But we feel very strongly that this is not a serious concern, simply because only about 22% of available oil reserves in the world are open to investment and development by the kinds of private oil companies that work in Alberta. And fully half of those reserves are in Alberta.

That's what we, in the labour movement, call bargaining power. We can take a lesson from people like Peter Lougheed, people like Danny Williams, and even Sarah Palin, when she was Governor of Alaska. They took an aggressive approach to negotiating the best possible deal with energy companies, and the energy companies did not walk away from the table. In fact, all three of those jurisdictions enjoyed rapid growth and vibrant economies.

At the end of the day, there is an opportunity for us to move up the value ladder to create jobs, to set a more reasonable pace for the oil sands, and to make sure that Canadians benefit from the development of these very important resources in terms of both jobs and royalties. But it's going to take political will and a different direction than the one that has been set by this government to date.

Thank you.

9:10 a.m.

Conservative

The Chair Conservative Leon Benoit

Thank you very much, Mr. McGowan, for your presentation.

Mr. McGowan is the president of the Alberta Federation of Labour.

Just before we go to questions and comments, I want to note that yesterday, our third witness, Brendan Bell, who is chairman of the Northwest Territories Power Corporation, indicated that he wouldn't be here today. So we have the two groups of witnesses.

We'll start our questions and comments with Mr. Calkins, for up to seven minutes.

9:10 a.m.

Conservative

Blaine Calkins Conservative Wetaskiwin, AB

Thank you, Chair.

Thank you, witnesses, for being here.

I'm going to start my questioning with you, Ms. Fortier. The comment you made in your opening remarks about the more noteworthy oil and gas developments promising to reshape the north I thought was an interesting comment. We've heard from various witnesses who have appeared before this committee already, notably folks such as Mr. Cheechoo from the ITK, and so on, who have talked about some of the issues pertaining to and surrounding resource extraction development in Canada's far north.

I think most northerners view development as a positive thing. As you know, the current federal government policy is going to look at streamlining the regulatory process so that government can be more of an enabler, making sure, at the same time, that the right environmental considerations are taken and that there is a balance with aboriginal considerations. There is the duty to consult and so on.

When you say that it's going to reshape the north, what do you mean, exactly? There are a lot of things at play.

9:10 a.m.

Conservative

The Chair Conservative Leon Benoit

Ms. Fortier, go ahead.

9:15 a.m.

Director General, Northern Oil and Gas, Department of Indian Affairs and Northern Development

Mimi Fortier

Yes, there are definitely a lot of things at play. I agree.

There is a great deal of potential. There is vast potential, as I mentioned. About 35% of Canada's remaining conventional oil and gas lies in the north.

We have seen, obviously, cycles of exploration that have led to major discoveries. We have quite a high discovery rate, for instance, in the Beaufort-Mackenzie basin. You have a rich shale formation that has fed the rich Norman Wells oil field in the central Mackenzie Valley. They are exploring the economic potential of that shale formation. There have been 19 natural gas discoveries on high Arctic islands, and there have been concepts over the past decades to develop that resource.

If I could just go back, the aboriginal groups are engaged from a very early point. For instance, there's a great deal of leadership among the Inuvialuit to make sure that the aboriginal Inuvialuit are very informed. The industry often converses with the Inuvialuit far more than they do with governments. There is definitely aboriginal planning that goes into reaching agreements with the companies in terms of training, opportunities for employment, and business opportunities.

When you look at these major shifts in terms of the private sector interest, whether it be offshore exploration or shale exploration, there is a great deal of engagement with the local population. They want to make sure that they are not only able to take advantage of the opportunities but are also aware of the input they will have to provide the regulatory bodies later on in terms of the concerns and in terms of shaping the conditions of that development.

9:15 a.m.

Conservative

Blaine Calkins Conservative Wetaskiwin, AB

I think that was part of the concerns we heard from some of these groups, that they didn't have the capacity first of all to engage in the process, because a certain skill set is required there, but also from a training and labour preparation perspective it's not like the old days, when you simply hopped on the rig and drove out there and spudded a hole in the ground and started drilling. I mean, things have changed a lot.

I've worked on drilling rigs, I've worked on service rigs. As an Albertan, I think almost everybody has that opportunity to do that if they want to. It's a complicated thing. We're not only talking about oil and gas development either. There's all kinds of other mineral exploration.

What benefits do you see for the aboriginal communities there, as far as being able to fully participate and engage and realize the maximum potential?

9:15 a.m.

Director General, Northern Oil and Gas, Department of Indian Affairs and Northern Development

Mimi Fortier

There have been a lot of different ways they have done that. If I could jump to certain major opportunities, like the Mackenzie gas project, it brought with it a great deal of investment in training. A rig was brought to the Aurora College in Inuvik, for instance, for deckhand training, that sort of thing.

If you step back, they also participate in or form companies to do environmental assessment, and bring in some of the equipment to the supply service sectors and that sort of thing. But also, if you are familiar with the northern land claim agreements, the aboriginal groups themselves that fall under land claim agreements nominate members to boards that not only undertake environmental assessments, but also undertake land and water permitting. So they're very much engaged and familiar with much of the regulatory process involved in oil and gas, and mining, and that sort of undertaking in the north.

9:15 a.m.

Conservative

Blaine Calkins Conservative Wetaskiwin, AB

Thank you very much.

Mr. McGowan, I'll ask you a few questions. I noted from your testimony, as a proud Albertan that you claim you are, that you thought that perhaps the royalty regime in Alberta was ineffectual and wasn't producing the results you hoped. My colleagues to my immediate left here from Saskatchewan, Mr. Anderson and Mr. Trost, were giddy at the suggestion, because I think that was tried here a little while ago by Premier Stelmach, who had a majority government in Alberta and couldn't survive as the leader of his own party during the tenure of that majority because of some of the mistakes he made and some of the flip-flops in the decisions that he made. One of them, notably, was royalties.

I also noticed in your testimony that you used the word “I” a lot, which leads me to believe that the testimony that you brought here today are your opinions and your opinions only, unless of course you're speaking on behalf of the Alberta Federation of Labour. I would simply ask you, sir, are these opinions actually a consensus among your union membership, or are these simply your opinions?

9:15 a.m.

Conservative

The Chair Conservative Leon Benoit

Mr. McGowan, go ahead, please.

9:15 a.m.

President, Alberta Federation of Labour

Gil McGowan

The question makes me chuckle, because it is yet another example of the dismissive and bullying approach this government takes to anyone who doesn't share their views or their prescriptions for the future.

I can assure you, Mr. Calkins, that my comments do reflect the attitudes and opinions of the Federation of Labour. These issues related to royalties, pace of development, and development of value-added industries have been debated extensively at successive conventions of our federation that are attended by literally hundreds of union leaders and activists from across the province.

I know that Conservatives from Alberta like to give the impression that all Albertans think alike and that all Albertans are Tory blue and march in lockstep, but the reality is that's not the case. There is a very significant number of Albertans who share concerns about the pace of development, who think that decisions made by this government are moving us in the wrong direction.

9:20 a.m.

Conservative

The Chair Conservative Leon Benoit

Mr. Calkins, you're out of time.

9:20 a.m.

Conservative

Blaine Calkins Conservative Wetaskiwin, AB

Mr. Chairman, he hasn't answered my question. My question was about royalties.

9:20 a.m.

President, Alberta Federation of Labour

Gil McGowan

I'm happy to answer the question, Mr. Chairman.

9:20 a.m.

Conservative

The Chair Conservative Leon Benoit

You can try to tie it in later.

Thank you, Mr. McGowan.

I'll go to Mr. Julian for up to seven minutes.

May 10th, 2012 / 9:20 a.m.

NDP

Peter Julian NDP Burnaby—New Westminster, BC

Thank you very much, Mr. Chair.

Thanks to all our witnesses, and particular thanks to Mr. McGowan for coming in, because I know it was 6:30 Alberta time when you actually came to provide testimony to us. We appreciate you being here and we appreciate the clarity of what you've been telling us.

I know, because I'm often in Alberta, that the issue of temporary foreign workers is increasingly one Albertans are concerned about. These workers are not subject to the same rights that Canadians are. They're not allowed to bring their families or establish that kind of contribution to Canada they would like to make. They're brought in and then they're shipped right out, kind of like the rip it and ship it you're talking about for raw resources.

Can you give us an indication as to what extent it is a growing problem? Do you have numbers? The government seems reluctant to release the real numbers of temporary foreign workers working in the oil and gas industry in Alberta.

9:20 a.m.

President, Alberta Federation of Labour

Gil McGowan

The latest numbers we have are from the federal government. They only release numbers on an annual basis at the end of the year, so keep in mind that the numbers are a little bit old. As it stands right now, there are about 65,000 temporary foreign workers in the province. The majority of them are working in low-level service jobs for very low wages. They're the most easily exploited group of workers.

There are about 20,000 working in the oil sands and in construction. Those numbers are set to rise. In fact, just a couple of days ago I was talking to a project manager for a big construction firm, and he was saying that right now his company alone has about 2,200 temporary foreign workers working in the skilled trades.

As a result of the accelerated process for LMO approvals that was just introduced by the federal government about a week and a half ago, this guy is in the process of filling out paperwork for a dramatic increase in the number of skilled trades they're bringing in under the program. Just in his division of his construction company he envisions the number of temporary foreign workers jumping from about 2,200 to between 3,500 and 4,000 in the next year. That's for just one company. So we're on the cusp of what I think is a dramatic jump in the number of temporary foreign workers in Alberta, in general, but especially in the skilled trades.

From our perspective, that's what the new announcements on the temporary foreign worker program are all about. They're about paving the way for employers in the oil sands and related construction companies to get access to more temporary foreign workers, and very significantly also at a cheaper rate, because they say they can pay them as much as 15% less than the going rate for Canadian workers.

9:20 a.m.

NDP

Peter Julian NDP Burnaby—New Westminster, BC

Thank you very much, Mr. McGowan.

I would like to move on. I certainly know that the views you've expressed are shared by a lot of Albertans. I was knocking on doors in a number of sectors in the Edmonton region, and the issues of the loss of jobs because we're not adding value to the production of our resources and the loss in royalties came up repeatedly.

On value-added production, I'd like to ask you how many jobs will be lost between the present percentage of bitumen that's upgraded in Alberta compared to what the anticipated level will be—the number of lost jobs you see there.

Secondly, let's compare Alberta to a place like Norway, with a social democratic government and the same level of production over the same amount of time. I understand the Alberta heritage fund has $17 billion. The Norwegians put away $583 billion over that same period. I'm wondering what you think the Conservative government in Alberta did with the missing $566 billion. They weren't able to save it up in the responsible way that most Albertans certainly would like to see.

Those are my two questions: the loss of jobs, and what happened in Alberta, if other countries like Norway have been able to solidly establish a firm financial foundation for the future.

9:25 a.m.

Conservative

The Chair Conservative Leon Benoit

Go ahead, Mr. McGowan.

9:25 a.m.

President, Alberta Federation of Labour

Gil McGowan

The loss of potential jobs in upgrading and refining is truly staggering. We've hired economists to make estimates and projections, and just in the case of the proposed Keystone XL pipeline, which would take raw bitumen from the oil sands directly to refineries on the American gulf coast, we've estimated if that same volume of bitumen were instead upgraded and refined in Alberta, it would create between 30,000 and 50,000 direct and indirect jobs.

To look at it another way, I think it's useful to look at some of the value-added projects we have in Alberta already to see how many jobs they create. The one that comes most quickly to mind in my case is Suncor, which is unionized from top to bottom, and their members are members of our federation. Suncor in Fort McMurray alone employs about 5,000 people; about 3,000 of those people work directly in the upgrader. So if you build a mine without an upgrader or if you build in situ projects that are for export only, then you're missing out on 3,000 high-paying, family-sustaining, community-sustaining jobs, in the case of Suncor.

So when we talk about increasing the amount of bitumen going down pipelines to the U.S. and China, we're talking about whole communities, and it's not just the people who work directly in the refineries and upgraders. Each of those facilities, because they're major industrial projects, generate literally thousands of jobs in maintenance and construction every year, and thousands of spinoff jobs for suppliers and contractors that support those facilities. If you don't have the facilities, you don't have the operations jobs, you don't have the maintenance jobs, and you don't have the spinoffs. So the economic loss to Alberta and to Canada is staggering.

On the subject of royalties, I know people like Mr. Calkins like to dismiss arguments and like to suggest that the only reason that companies are investing in Alberta and in the oil sands is that we're giving away the resource. The reality is that these oil companies are coming to Alberta because they can make money. They're coming to Alberta because the price of oil is high and because the reserves are drying up all around the world and Alberta is one of the few areas in the world where there are reserves that can be developed in a profitable way. So whether we charge a small royalty, a medium-size royalty, even a large royalty, these companies would come, because we have what they want. We have what the world wants, and our government is simply giving it away without even trying to bargain.

One of the points I want to underline, as I'm not sure I made it clear in my presentation—

9:25 a.m.

Conservative

The Chair Conservative Leon Benoit

Thank you, Mr. McGowan. Time is up.

Mr. McGuinty, up to seven minutes, please.