Natural Resources Committee on June 20th, 2018

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you, Mr. Chair.

Thank you, Minister, for joining us.

In the 2017-18 budget, the Canadian exploration expenses tax credit for new oil and gas exploration drilling was cut, unless drilling is proven to be unsuccessful. An access to information request released emails that show that the finance minister did not consult you and you were caught off guard by it on budget day. I worry sometimes that you may be sidelined in decisions related to your portfolio.

For the purpose of these estimates, were you fully involved in the negotiations and decision for taxpayers to pay for the government's failure to exert federal jurisdiction, and for the existing Trans Mountain pipeline?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

You have a couple of questions there.

Your last question, was I involved—

[Shannon Stubbs, Conservative, Lakeland, AB]

Were you fully involved in the negotiations and decision?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

—in the negotiation?

No. The Minister of Finance led that with his team within the Department of Finance. I knew about the impatience of Kinder Morgan because they called me in New York City on a Saturday and said that 24 hours later, the following Sunday, they would be issuing a press release that would establish a deadline of May 31, because they were feeling pressure from their investors, given the uncertainty, because of actions that were taken by the British Columbia government.

[Shannon Stubbs, Conservative, Lakeland, AB]

Right, and certainly they had indicated that they might be at risk of abandoning the pipeline because of the lack of political and legal certainty necessary for them to proceed.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

Exactly.

[Shannon Stubbs, Conservative, Lakeland, AB]

Of the four and a half billion tax dollars that purchased the existing pipeline, it later became public that $3 million of the $4.5 billion is slated for bonuses to two senior executives.

Did you know that would happen in advance of the deal?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

No, and the Kinder Morgan company still owns the pipeline, and they will—

[Shannon Stubbs, Conservative, Lakeland, AB]

Do you support the concept of millions of tax dollars going to bonuses instead of to construction?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

Well, that is a decision taken by the company, which is entirely separate from government. Their shareholders have not yet approved the transaction. They are expecting that to happen sometime later in July or in August. Meanwhile, they're a company that is governed by the same rules as any other private sector company, and it's not the government's business to tell them how to spend their money.

[Shannon Stubbs, Conservative, Lakeland, AB]

I certainly think it will be your business to advocate on behalf of Canadians, given that $4.5 billion in tax dollars has been sunk into an existing pipeline unnecessarily. This major expenditure, of course, is not reflected anywhere in the budget estimates. There's also nothing here about construction costs of the new build for the actual expansion. Kinder Morgan estimated there would be a loss of $200 million a month for each month of delay, and their original, planned private sector investment was $7.4 billion, which they're now taking out of Canada.

I wonder whether you can estimate the overall cost to taxpayers of the actual new construction of the expansion.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

I know that the team at the Department of Finance did due diligence to determine the commercial viability of the project and were satisfied that it was commercially viable. Once the Government of Canada has secured ownership of the assets, that will be the time to determine the cost of construction and, of course, as a publicly controlled entity, in time, all of these expenditures will be made available to the public.

[Shannon Stubbs, Conservative, Lakeland, AB]

Okay. So construction, of course, was originally supposed to start in September 2017. On May 29, the finance minister said that construction would “start this week”. Expansion construction hasn't. Trans Mountain UCL confirmed that with my office last week.

When do you expect it to start, and what are the costs to taxpayers associated with further delays?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

We know that construction will begin as soon as possible. The permitting process continues. It is our hope that the pace of construction will pick up during the summer, even while it's still under the ownership of Kinder Morgan.

[Shannon Stubbs, Conservative, Lakeland, AB]

Hopefully it will at least even start, never mind pick up the pace.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

We understand, as you do, that delay is costly. In fact, it was the cost of delay led Kinder Morgan to find a way to step out of the project in the first place.

[Shannon Stubbs, Conservative, Lakeland, AB]

Because of legal and political uncertainty—

[Jim Carr, Liberal, Winnipeg South Centre, MB]

That is correct.

[Shannon Stubbs, Conservative, Lakeland, AB]

—and failure to exert federal jurisdiction. Of course, not one new inch of that expansion has been built to date. Can you explain how many jobs, and on what timeline specifically, the $4.5 billion public expenditure will create?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

That is going to be up to the crown corporation that will take ownership of the pipeline after the Kinder Morgan board has approved the sale. These decisions will be taken down the road. It's premature for us to comment on that.

[Shannon Stubbs, Conservative, Lakeland, AB]

So you can't, but I'm hopeful that you will be able to provide these answers to Canadians, since you've now forced them to become pipeline owners. Of course, the Bank of Canada predicts no new energy investment in Canada after 2019—which is very concerning—as a result of reduced Canadian competitiveness because of added costs and red tape. U.S. investment in Canada is down. Canadian investment in the U.S. is up. This flight of energy capital from Canada is a crisis.

The estimates show there is $2.1 million for the Canada summer jobs program for 2019-20. This year, anti-energy groups received summer jobs funding, including Leadnow, Tides Canada, and the Dogwood Initiative in Liberal and NDP ridings. They run campaigns specifically to block the Trans Mountain expansion through death by delay, and they attack Canadian oil and gas. Why are you funding these groups with tax dollars?

[Jim Carr, Liberal, Winnipeg South Centre, MB]

The previous Harper government funded some of these very same groups. We don't think that—

[Shannon Stubbs, Conservative, Lakeland, AB]

The requests are put in by members of Parliament, and the funding is all in Liberal and NDP ridings.

[Jim Carr, Liberal, Winnipeg South Centre, MB]

We believe that we don't pick and choose according to whether a group agrees with our policy and who should be given access to a very—

[Shannon Stubbs, Conservative, Lakeland, AB]

Except for the values test, but I hope Canadians can count on you to ensure that no public funds are allocated to anti-Canadian energy campaigns, given the importance of energy to the whole Canadian economy.

Are you aware of the corporate mapping project?