After several months of delays, Canadians have finally heard about the first five projects to be “approved” by the Carney government as priorities to be sped through the usually turgid and snail-paced regulatory morass by the newly hatched Major Projects Office. The chosen projects have all already been started in one way or another, which makes sense as they should have a faster development time than things that have not yet been launched.
As many expected from “net zero” Prime Minister Mark Carney, there is no oil pipeline on the list. Although Carney continues to tease us by dangling the possibility of an oil pipeline at some point in the indefinite future, many observers doubt this will ever happen. Alberta Premier Danielle Smith, who has pushed hard for not just one oil pipeline, but several, said she remained hopeful that a pipeline would be prioritized in future and claimed to have a very productive meeting with Carney last week. Time will tell, but as most analysts have stated, the quickest way to reverse Canada’s economic decline is to green light a bunch of fossil fuel projects. The absence of a pipeline in the early stages is not promising.
There was one fossil fuel project among those prioritized, and that was an extension of the Kitimat LNG facility in British Columbia, which just started to ship liquid natural gas overseas this past June. There has been ample evidence for years that LNG is in great demand around the world and represents a greatly improved emissions impact as compared to fuels such as coal which are extensively used in Asia. Unlike former prime minister Justin Trudeau’s ill-informed comment, there is indeed a massive business case for Canada’s LNG exports. Expanding the existing facility at Kitimat makes a lot of sense.
However, considering Carney’s claim that all of these projects must have a major positive impact on the Canadian economy, it is worth looking at the current status of the Kitimat plant. At present, it is foreign-owned by Shell (40 per cent), Petronas (25 per cent), PetroChina (15 per cent) Diamond LNG Canada Partnership (15 per cent) and Korea Gas Corp (5 per cent). The Diamond LNG Canada Partnership may sound promising but turns out it is wholly owned by Mitsubishi from Japan. So, 100 per cent of this facility is foreign-owned. Will Canadian taxpayers be required to pitch in to expand this facility so that all of these foreign companies can benefit? We don’t know, but it’s an important question that must be asked.
Also, the construction of the original Kitimat facility was largely done with foreign content. Large modules for the plant were manufactured in China, then shipped over to Canada to be assembled. Canadian manufacturers were not consulted, but many have stated that they would have been perfectly capable of manufacturing these modules if they’d been given the chance. As well, it has been reported that much of the staff of the LNG facility are foreign nationals or temporary foreign workers, not Canadians. Although it is a good idea to expand the existing facility and enable more Canadian LNG to be exported, there should be some guarantees that its construction will be done by Canadian businesses and Canadian workers. So far, nothing like that has been mentioned, but these conditions should be a prerequisite for the project.
So often, we hear from government that there were no Canadian bidders for a particular project, so they were forced to go with a foreign provider. This was the case with the BC Ferries being contracted to a Chinese shipbuilder. But the reality is the Canadian and provincial governments often don’t bother to check out Canadian possibilities for work on these projects. Other countries often ensure they patronize their domestic suppliers, such that a particular industry is developed and able to provide goods and services on procurement projects in future. If our governments continue to write off Canadian businesses by claiming no one in Canada put up their hand, that will merely ensure that these types of projects will always be contracted out to foreign suppliers to the detriment of our businesses, workers and economy.
The other projects named on the priority list were two mines, a port expansion in Northern Quebec and a small modular nuclear reactor project in Ontario. All of these projects appear commendable on the surface, but it remains to be seen if the benefits will largely accrue to Canada and if they turn out to justify their priority status over such things as pipelines which are proven winners.
In Carney’s announcement on these projects, he notes how they should attract a great deal of investment back into Canada after years of both foreign and domestic private investment fleeing because of government roadblocks. Yet Carney’s government is keeping in place the majority of the Trudeau-era laws like the oil and gas emissions cap, B.C. tanker ban, industrial carbon tax and the Impact Assessment Act that have driven so many investors away. If the Liberal government wants to be credible in attempting to attract investment, they should jettison all of these bad policies.
It is hard to see how the government’s cherry-picking of a few projects will be much of an incentive to investors. The very fact that it is the government doing the picking, not the private sector being incented to invest because the business case is sound, is problematic as governments overall have an abysmal track record at winner-picking. Projects that are prioritized by government are usually more driven by political considerations, such as which political party’s riding the project is located in and which businesses of the favoured partisan persuasion will benefit. This is why government winner-picking typically fails, as economic criteria are rarely the deciding factors.
The jury is still out as to whether these projects will see their way to completion in an accelerated approvals process or be bogged down by opposition from the many groups who love to try to obstruct them. That will test the Carney government’s willpower to override the inevitable First Nations, environmental groups and others who will oppose the projects. Canada is in dire need of some success on the economic front to counter the last decade of decline. Unfortunately, the flawed, government-driven approach of the Carney government does not appear to be the best way to achieve it.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
