Thank you very much.
Evidence of meeting #99 for Natural Resources in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was data.
A recording is available from Parliament.
Evidence of meeting #99 for Natural Resources in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was data.
A recording is available from Parliament.
9:25 a.m.
Executive Director, Canadian Association for Renewable Energies
Thank you very much.
9:25 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
A headline from the Financial Post for April 1, 2018, reads, “Investment dollars are already flowing out of Canada in 'real time', RBC CEO warns”. Below that is written, “Dave McKay says a 'significant' investment exodus to the U.S. is already underway, especially in the energy and clean-technology sectors.” The article states:
The head of one of Canada's largest banks is urging the federal government to stem the flow of investment capital from this country to the United States—because, he warns, it's already leaving in “real time.”
RBC president and CEO Dave McKay discussed some of his biggest concerns about Canadian competitiveness, particularly those related to recent U.S. tax reforms, during a recent interview.
Ottawa has come under pressure from corporate Canada to respond to a U.S. tax overhaul that's expected to lure business investments south of the border.
McKay told The Canadian Press that a “significant” investment exodus to the U.S. is already underway, especially in the energy and clean-technology sectors.
The flight of capital, McKay added, will likely be followed by a loss of talent, which means the next generation of engineers, problem solvers and intellectual property could be created not north of the border, but south of it instead.
'We would certainly encourage the federal government to look at these issues because, in real time, we're seeing capital flow out of the country', McKay said.
We see our government going around the world saying what a great place Canada is to invest — yes, it is a great country, it’s an inclusive country, it’s a diverse country, it’s got great people assets.
'But if we don’t keep the capital here, we can’t keep the people here — and these changes are important to bring human capital and financial capital together in one place.'
Since the election of U.S. President Donald Trump, Canada's investment landscape has been dealing with deep uncertainty related to the ongoing renegotiation of the North American Free Trade Agreement.
But many point to Trump's recent U.S. tax measures as potentially more dangerous, fearing that dramatic corporate tax cuts in the U.S. will eliminate Canada's advantage.
Canada's competitiveness challenges go beyond the high-level, tax-rate changes in the U.S. bill, McKay said.
For instance, he pointed to another important element he said is encouraging capital to flow out of Canada—a change that enables U.S. companies to immediately write off the full cost of new machinery and equipment.
'The acceleration of that in the U.S. completely changes the investment returns that you see on major investments,' said McKay. 'I think that alone may shrink competitiveness.'
Tax expert Jack Mintz said the U.S. change allows firms in all sectors to expense the full cost of new equipment. In comparison, he said, Canada has a two-year write-off for equipment for just the manufacturing and the processing sectors.
Mintz, a University of Calgary professor, said he believes the expensing of capital investments is encouraging a lot of companies to shift their investments to the U.S.
Although the business community pressed federal Finance Minister Bill Morneau to take specific steps in his February budget to address the competitiveness concerns, their efforts went unrewarded. Indeed, Morneau has had to defend the budget against complaints it didn't do enough to protect Canada from the U.S. tax changes.
A spokesman for Morneau did the same, arguing that Canada's corporate tax rates remain competitive and that the country has led the G7 in growth.
'There will be no knee-jerk reactions from this minister, and we are doing our homework,' Daniel Lauzon wrote in an email. 'This includes listening to, and hearing from, the business community on how the competitive environment is evolving.'
John Manley, president of the Business Council of Canada, said the issue of competitiveness was 'absent' from the federal budget.
'We're always in this difficult competition to attract investment and to retain investment—and it's not be taken lightly because investment can move quickly,' Manley said.
Regardless of the cause, some experts are seeing signs in the economic data that suggest capital is already flying south.
BMO chief economist Douglas Porter said it’s too early to draw conclusions, but the fact the Canadian equity market and currency have both been on the weak side this year supports the possibility that capital is leaving the country.
The Canadian dollar is one of the few currencies in the world to weaken against the U.S. dollar this year, and for no immediately apparent reason, Porter said.
None of the provincial budgets released so far took steps to improve Canada’s competitiveness, such as tax relief, he added.
There you have economist after economist, and a former Liberal cabinet minister from the 1990s, explaining the path forward for the government, explaining to the government that if you do not make Canada a competitive place in which to do business, investment will go elsewhere. It's already happening in real time. Shortly after that, the brain power will follow for those good-paying jobs.
To me, that is something that is extremely concerning. That is something the finance minister continues, time after time, to ignore. Even yesterday in question period we were talking about it, when the finance minister was asked a question about a statement on the Liberal Party website about balancing the budget in 2019. He said we're still on track. But report after report says it's going to be 2045 before this gets balanced, despite new revenue sources coming on with new taxes squeezing more and more out of the pockets of hard-working Canadians, Canadians who are being charged more for the everyday activities in their lives: driving to and from work; getting their kids to sports, music, or dance; going from point A to point B, especially in rural communities where transit is not an option, or rarely an option, where vehicles are relied on to get places, where natural gas is not an option, where most people heat their homes with oil or propane, where those people struggling to get by are being forced to pay more. As the tax is applied throughout the marketplace, the price increases will cascade throughout it.
We're seeing it in Ontario. Over and over again, people are being forced to make a decision on whether they pay their electricity bill or their rent; do they eat or do they get their prescriptions? On the lower end of the scale, they continue to get hurt the most.
That is all due to terrible government policy, yet the solution we hear, especially in Ontario, and it's creeping up to the federal scene because many of those same workers, those political staffers, went from Queen's Park right here to Parliament Hill, is yet another government program, not allowing government to clear the path and get out of the way. Report after report has said, had the government done nothing here in Ontario, we'd be in a much better situation. I'm sure businesses and manufacturing would say that. I have no doubt that everyone at this table from Ontario has met with some manufacturers and talked to them about the hardships they are facing.
This shows how important it is that we talk about the investment that is leaving Canada in real time. This is a serious concern, Mr. Chair. It's extremely concerning.
I'm going to read a story from the National Post that lays out the case of why it should be Kinder Morgan that actually builds the pipeline.
You're actually lucky. You are saved from that. It seems to have disappeared from my news feed, but I'll get you another one.
It was done by Andrew Coyne and actually layed out the case as to why Kinder Morgan was the right company to build this project. I will just read you the latest here.
Oh, there we go. Thank you, Shannon.
This is from from May 18, 2018.
Andrew Coyne: The Liberals need a pipeline to be built, and they need Kinder Morgan to build it.
Just to recap: In the quest to ship Alberta crude to overseas markets, the federal Liberals are down to one pipeline, having killed off Northern Gateway and allowed Energy East to die.
That pipeline, the Trans Mountain expansion, is now itself in considerable doubt, in part owing to the Liberals’ previous encouragement (previous, that is, to coming to power) of its most determined opponents: by their delegitimization of the National Energy Board, which approved it; by the prime minister’s apparent endorsement of the extra-legal doctrine of “social licence;” and by his apparent endorsement of another position found nowhere in law: that First Nations have a right, not just to be consulted, but to approve or disapprove of projects on lands to which they claim title.
It gets worse. With just one pipeline left to build, and having done their best to ensure it won’t be built, the Liberals — having since declared (since, that is, coming to power) that in fact it will be built — are now down to one company to build it. One, or maybe none.
The company that was going to build it, Kinder Morgan, last month said it will not proceed without some assurance that it can proceed — that it will not be subject to such delays, owing to the obstructionist tactics of the NDP government of British Columbia—
Sorry, Richard.
—as to make the whole thing uneconomic. It must have such assurance, the company says, by May 31.
9:35 a.m.
An hon. member
But they don't represent the majority view.
9:35 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
That's right.
Poll after poll shows that British Columbians clearly are in favour of this pipeline. It's a shame that the Green Party with less than 4% of the vote can control the fate of our country.
9:35 a.m.
An hon. member
It's nothing to do with the Green Party.
9:35 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
Well, I would tend to disagree with that, Richard. I think the NDP would have...but that's another story. We'll save that for debate.
9:40 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
Where was I? Oh, yes:
It’s not clear the Liberals can offer Kinder Morgan the kind of assurance it needs—not by May 31, at any rate. The B.C. government has since referred a series of questions to the province’s Court of Appeal asking whether it has authority to block the shipment of bitumen through the province; even if it is ultimately rebuffed, that is not going to happen before May 31.
The Liberals, meanwhile, have promised legislation clarifying and affirming federal jurisdiction over interprovincial pipelines, so as to deprive the courts of any wiggle room for the usual...finding of shared jurisdiction....The legislation, however, has yet to be produced. With just four sitting days left in the month, it is equally unlikely to be passed in time.
As we found out, there is no legislation coming forward, as was asked many times, especially as I mentioned, in the year and a half the opposition has been asking for a plan.
So the best the Liberals can offer Kinder Morgan is a series of promises of what will happen after May 31: we’ll pass the legislation, we’ll win in court, and we’ll compensate you for any delays. The finance minister this week described this as...insurance...against the costs of B.C.’s political gamesmanship. How much this might amount to he did not say, with good reason: he can’t. It’s a matter to be negotiated with Kinder Morgan.
This is true.
Whereas the Liberals cannot walk away: they’ve committed, publicly...to the proposition that “the pipeline will be built.”
It put the Liberals in a bit of a bind. They do not have a plan. There was no legislation coming forward. Decisions were made today on how we move forward.
I'll fast-forward through the article here. That went to my point.;
Another possibility being floated is the...federal Infrastructure Bank. You’ll recall the point of the bank was to be at arm’s-length from political interference, and thus able to raise funds from private investors on strictly commercial terms.
Now, we all know that the Asian infrastructure bank is building pipelines in Asia but yet not in Canada, which I find quite concerning.
It appears that the B.C. NDP solicitor general has said that legal challenges will not stop. Now the finance minister has just asked that it wouldn't, and would not confirm whether Kinder Morgan is in the national interest, which is mind-boggling as well.
We can move forward with this. We have Senator Black's bill. It has passed in the Senate. We could start dealing with this immediately. It's not as if this has surprised anyone.
9:40 a.m.
Liberal
Nick Whalen Liberal St. John's East, NL
Are you guys really saying this is necessary, that you actually need to pass legislation?
9:40 a.m.
Liberal
9:40 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
Clearly, my friend, we were asking for a plan for over a year and a half, and now we get to the point where we have to nationalize a project that did not require anything. Did we need to get to this point? No, Mr. Whalen. No, we did not need to get to this point, my friend, my running partner.
Back when I ran, I was in better shape.
9:40 a.m.
Liberal
9:40 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
I was talking about the investment.
Nick and I had some good conversations back when I used to run. Actually, Nick and a bunch of others were some of the first members of the parliamentary running group, but I won't go too much into that.
9:45 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
We'll get back into it. We keep saying that. That fell by the wayside long ago, at least for me. I can't speak for—
9:45 a.m.
Liberal
The Chair Liberal James Maloney
Mr. Schmale, even your own colleagues are questioning the relevance of what you're saying right now.
9:45 a.m.
Some hon. members
Oh, oh!
9:45 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
Chair, they question me all the time, all the time.
Let me talk about why the Kinder Morgan pipeline is so important to our country. I know I touched on it a bit already but I will continue.
The Trans Mountain expansion project was proposed, in response to requests from oil companies, to help them reach new markets by expanding the capacity of North America's only pipeline with access to the west coast.
These shippers have made significant 15- and 20-year commitments that add up to roughly 80% of the capacity in the expanded Trans Mountain pipeline. On November 29, 2016, the Government of Canada granted approval for the Trans Mountain expansion project. Earlier, on May 19, 2016, following a 29-month review, the National Energy Board concluded the project is in the national Canadian public interest and recommended that the federal Governor in Council approve the expansion. These approvals allow the project to proceed with 157 conditions. In addition, the British Columbia Environmental Assessment Office issued an environmental assessment certificate for the Trans Mountain expansion project.
As mentioned, the original Trans Mountain pipeline was built in 1953 and continues to operate safely today. The expansion is essentially a twinning of the existing 1,150 kilometre pipeline between Strathcona County, near Edmonton, Alberta, and Burnaby, B.C. It will create a pipeline system with the normal capacity of the system going from 300,000 barrels a day to 890,000 barrels per day.
It's expected that it will cost—well, we'll see—an estimated $7.4 billion. It will create benefits including new short- and long-term jobs, job-related training and opportunities, and increases in taxes collected by all three levels of government. During the construction phase, the equivalent of 15,000 people will be working on the pipeline expansion and the expansion will also create the equivalent of 37,000 direct and indirect induced jobs per year during operations.
The combined impact on government revenue for construction in the first 20 years of expanded operations is $46.7 billion, revenues that can be used for public services such as health care and education. British Columbia receives $5.7 billion; Alberta receives $19.4 billion, and the rest of Canada receives $21.6 billion. It will be approximately 980 kilometres of new pipeline; 73% of the route will use the existing right of way. Sixteen per cent will follow other linear infrastructures such as telecommunications, hydro, or highways, and 11% will be new right of way. This will include 193 kilometres of reactivated pipeline. Twelve new pump stations will be built.
Nineteen new tanks will be added to the existing storage terminals. There will be three new berths built at the Westridge marine terminal in Burnaby, once the new berths are completed and in service. The number of tankers loaded could increase to 34 a month.
So, why expand? This again goes to how the cancellation could affect—or nationalize now—Canada's oil and gas sector.
9:45 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
If you want me to, I can.
Are you next?
Who's next, just out of curiosity?
9:45 a.m.
Conservative
