Natural Resources Committee on May 29th, 2018

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Okay, I'll end.

[The Chair, Liberal, James Maloney]

They're in your hands.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

How about I go another 15 minutes? Is that fair?

That would give 10 minutes and a couple of rounds of questioning.

I'll go 15 minutes more, if that's okay, Chair.

[The Chair, Liberal, James Maloney]

Less than that.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I can go less than that. Okay, I'll wrap it up.

Is everything okay?

[Nick Whalen, Liberal, St. John's East, NL]

I was just going to say that Scott Simms' rule from PROC is that in this situation, with unanimous consent, we could let the witness give her testimony. When she's done, Mr. Schmale can resume his speaking time.

[The Chair, Liberal, James Maloney]

Let's let him finish in 15 minutes and—

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I forgot about the Simms rule.

[Nick Whalen, Liberal, St. John's East, NL]

There's no unanimous consent.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Although it's not official, Chair, the Simms rule, from our good friend from Newfoundland, if we had an unofficial ruling—

[The Chair, Liberal, James Maloney]

We're already speaking about a motion that's premised on something that's no longer going to happen, so why don't we just finish this and then carry on?

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Okay.

Let's talk about investment leaving Canada, because I think that goes to the core of it after the federal government has had to bail this out.

I already mentioned RBC's chief economist on how we are dealing with this. We right now have quotes being sent out via Twitter. This one comes via @DonMartinCTV, referring to finance minister Bill Morneau, “It's gonna take decades to collect $7.4 billion to finance the Trans Mountain expansion pipeline from tolls collected from oil exporters using the much smaller existing pipeline. Not sure how Morneau can suggest there's no fiscal hit on the government bottom line.”

Paul Wells from Maclean’s also mentions finance minister Bill Morneau, “Morneau is dead certain the expansion will have value for investors, which makes me wonder why he is also eager to get rid of the pipeline instead of keeping it as an appreciating federal asset.”

I actually disagree with that totally.

Next we go to Tonda MacCharles—I don't know who that is—who also references finance minister Bill Morneau, “Morneau is asked who pays if there is a spill. Morneau dodges; says what you're asking is if there is value? There is value there....we believe [the private sector] will purchase that value.”

Well, again, going back to investment within the energy sector, especially here in Canada, if we are seeing the dollars continue to leave, and if we are then seeing the brains continue to leave, then I mentioned the effect as it cascades throughout the market, whether in mining or other major infrastructure projects. I think that does significantly worry many investors. It's happening.

I have a piece of paper here that lists quote after quote from investors and from people in the marketplace, the energy sector, and the trades. I don't have time to read them all, but they talk about the May 31 deadline quickly approaching. There were a lot of questions on whether or not they would actually make that deadline. We know that the deadline has been met, but not with moving forward with the private company; it was with having taxpayers take this off their shoulders.

This is from David Smith. I'll just paraphrase here as I pick and choose. I was going to read them all, but we don't have that much time. Talking about Kinder Morgan, he said that it has become clear that this particular investment may become unattainable for a private party to undertake. David Smith said that on April 9.

Clearly there are questions on this, at the end of the day. Will a private company see value at the end of this? Who will get this built now? And do we need the federal government to continue guiding projects that have gone through the process of being approved?

I want to read another article. It talks about how the Kinder Morgan project causes significant issues within the investment community. This article talks about the B.C. government launching several legal challenges against the project, including the attempt to control the shipment of oil through the province, and the federal government's approval of this project:

According to Kinder Morgan, these legal challenges and the uncertainty they've created led the company to conclude—

As we know already, that set the May 31 deadline into motion:

—that it can't risk the billions of dollars in resources needed to complete the project until the uncertainty about the pipeline's future is resolved.

That is according to this article:

Put simply, the B.C. government is undermining the rule of law by effectively dismissing the federal government's authority and its regulatory agencies, which have already approved the pipeline, adding to the many government policy choices that signal to domestic and foreign investors and entrepreneurs that Canada is not hospitable to investment.

Indeed, anti-investment policies are in vogue across the country. Ottawa and several provinces have raised tax rates on personal income, corporate income and payroll; introduced new regulations on carbon, resource projects and labour; and generally increased the costs of doing business....

The cumulative effect of such policies, along with Ottawa's strong anti-business rhetoric, has struck a harsh blow to Canada's investment climate. Adding salt to Canada's self-inflected wounds is sweeping tax reform in the United States that has wiped out Canada's nearly two-decade business tax advantage over the U.S., and also made the U.S. personal tax system even more attractive for skilled workers.

It's no wonder investors are turning their backs on Canada, as the Royal Bank of Canada's CEO recently put it, “in real time we are seeing capital flow out of the country”.

But Canada's investment project problem is not simply anecdotal. The overall data paint a concerning picture. Business investment (excluding residential structures), is down nearly 20 per cent since the third quarter of 2014. Stats Canada's latest survey on investment intentions for 2018 found that private-sector investment is slated to fall again this year—the fourth consecutive annual decline. Meanwhile, foreign direct investment (FDI) in Canada has plummeted since 2013. And for the first time since data has been collected, in 2017 foreigners sold more Canadian assets than they bought.

That's the first time since data has been collected. In 2017, again, people investing in Canada sold more Canadian assets than they bought. The article continues:

Declining business investment, coupled with the fact that Canada now has the second-lowest level of business investment as a share of GDP among a group of 17 industrialized countries, should be of great concern to Canadians given the positive effect investment has on economic growth and overall living standards. If investment in Canada keeps falling, Canadians will be economically worse off in the future.

It concludes with this:

Although Kinder Morgan's Trans Mountain pipeline is just one project (albeit a large one), its termination—

—this article warns—

—would symbolize a broader investment problem in Canada—one that is exacerbated by harmful government policies.

That was published on April 10, 2018, and it is from everyone's favourite research institute, the Fraser Institute. I know it's a favourite of mine. It is a very reputable firm.

You can find that article on the Fraser Institute's website. I just want everyone to have a gander at that because the article points out quotes that are already being made by professionals and investors already in the industry.

This article is from the April 29, 2018, edition of the National Post. The headline reads, “The 'slow bleeding' of corporate Canada is about to get underway and only Bill Morneau can stop it.”

Obviously, this was done a month ago and that was when we thought maybe a plan to keep private investment going in this country was a top concern.

The chief executive of a large Canadian company said he was at a Vancouver board of trade dinner this week.

“The level of foreign investment has never been so low and continues to fall off a cliff. There is a real, genuine, honest, non-partisan concern that Canada is so completely out of touch with the real world,” he said.

The CEO said his contemporaries in corporate Canada speculated that a number of companies, including Enbridge, the country’s fourth biggest company by market capitalization, are set to decamp.

“The rumour is they’ve been planning to move for a while and the U.S. tax changes sealed the deal,” said the disillusioned CEO.

I will scroll down here because I'm running out of time.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Could we get the abbreviated version?

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Yes. I'm trying to pare this down. I have a lot to go through and I only have five minutes to do this, so I'm going to—

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

It was five minutes when they called me back in here.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Let's see. I'm going to talk about—

[Marc Serré, Liberal, Nickel Belt, ON]

This is going to be the good part.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I'm good. I'm going to skip that article because it is a long one.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Are you going to reference the Calgary Sun?

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I can, if you want. You have to look at all sides, T.J., my friend. I read the Toronto Star. It pains me, but I read it.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

What about the Huffington Post?

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

What's that? Sorry. I didn't hear you. I was concentrating.

[Marc Serré, Liberal, Nickel Belt, ON]

I was just trying to make a joke.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

No, no. I'm all up for jokes, here.

I'm just finding the article.

Suncor Energy has said they are going to invest $50 billion over five years in the United States in their energy sector. This is an investment that will help the employment rates in the United States using the laws of supply and demand and organically raise wages across the marketplace as companies compete for the best workers. You're going to see quality of life increase because of this private sector investment. You're going to see new markets accessed where Canada is going to lose out. We could already be exporting off our east coast even more if it wasn't for energy east. It would have brought thousands upon thousands of jobs to the east coast.

We continue to allow tankers from other countries, many from foreign despots like Venezuela and Saudi Arabia, to access our east coast. We can all take a look at what's happening in Venezuela and how the rise of crippling socialism has crushed that country, as well as the nationalization of the oil sector and the agriculture sector. Credit has crushed that country. Again, it's not the government that's starving; it's the people on the street begging for food who can't keep their lights on, but the government has their lights on.

Here we have a private company, Kinder Morgan, that wants to use investor dollars to build a pipeline to access growing markets in Asia. Now we have an issue with the government failing to lead on this file and creating a situation where Kinder Morgan had to set a deadline. There was no plan to get this project built. It was put forward, except for the fact that now, in order to get it built, we have to nationalize this project. That, Mr. Chair, is an unfortunate demonstration of the lack of leadership of the Prime Minister on this file.

I'm hoping that I have talked enough, and I'm right on time. I hope I will convince my colleagues across the way. Maybe I have Nick and maybe Marc. He has his happy tie to vote in favour of this motion.

[Ted Falk, Conservative, Provencher, MB]

It's a great motion.