Pierre Poilievre is right: Canada has a gatekeeper problem and it needs to be fixed. Chart #28 in the federal budget illustrates why.1A Plan to Grow Our Economy and Make Life More Affordable It shows predicted real GDP growth per capita over the next four decades, with Canada ranking dead last amongst its peers—38th of 38 countries, straight through until 2060, according to the OECD report on which that chart is based.2The Long Game: Fiscal Outlooks to 2060 Underline Need for Structural Reform
The Business Council of BC explains that young Canadians used to be able to look forward to growing real incomes over their working lives, but that’s no longer the case. If the OECD is right, Canadians can instead expect “a long period of stagnating average real incomes,” with a declining standard of living relative to other advanced economies.
When it comes to much-needed investment in the natural resource sector, the federal government’s preference for gatekeeping over growth is part of the problem. It’s worth looking at a few examples to bring the issue to life.
Regulatory processes have only gotten more burdensome since B.C.’s Site C hydroelectric project received environmental certification. Approved in the final year of the Harper government, the process was no picnic even back then.
The environmental assessment required a 15,000-page Environmental Impact Statement, stuffed into 27 binders measuring 17 feet long when lined up on a bookshelf. Within those pages was excruciatingly detailed documentation of everything from the expected—fish, birds, wildlife, air quality—to the less expected—”visual resources”, ancient “subsistence procurement sites”, “lithic scatters” (not stone tools themselves, but the tiny flakes of rock knocked off during the tool-making process).
Having withstood more than a dozen court challenges (adding even more costs and uncertainty), Site C has prevailed at least partly because it’s a public, ratepayer-funded project that is crucial to meeting climate targets.
Now imagine how prospects look for private investment in the much-maligned oil and gas or forestry sectors.
Demand for liquefied natural gas is growing and is expected to almost double by 2040.3“Overall, global LNG demand is expected to cross 700 million tonnes a year by 2040, a 90%
increase on 2021 demand. Asia is expected to consume the majority of this growth as domestic
gas production declines, regional economies grow and LNG replaces higher-emissions energy
sources, helping to tackle concerns over air quality and to help progress towards carbon emissions
targets.” https://www.shell.com/promos/energy-and-innovation/v1/lng-outlook-2022-media-release/_jcr_content.stream/1645193450373/184c9dd6d1f5348175c22ad38117dbcc95937f9a/shell-lng-outlook-2022-media-release.pdf At the same time, democratic countries are looking to reduce their reliance on Russian natural gas. LNG is also a means of combatting climate change, significantly reducing greenhouse gas emissions by displacing coal-fired generation overseas.4Liquefied natural gas exports from Canada to China: An analysis of internationally transferred mitigation outcomes (ITMO)
It is telling that, despite this context, oil and gas get no more than a few brief mentions in the budget, usually in the context of curbing emissions or transitioning away from the sector.
The government’s attitude helps explain why, when it comes to growing our exports, only LNG Canada and the Coastal GasLink pipeline that will supply it are under construction. The Pacific NorthWest LNG project was shelved after spending over three-and-a-half years in the process. In contrast, the Sabine Pass LNG project in Louisiana was approved in just over a year.
The Coastal GasLink project did all the right things. It began consulting with Indigenous groups a decade ago and achieved agreements with all 20 elected councils of the First Nations along the project route, many of whom see it as a way to lift their members out of poverty.
Yet the B.C. and federal governments have seriously undermined this work by working instead with disputed hereditary chiefs who have repeatedly blockaded the project while excluding elected leaders from the table. Progress on the project has been frequently and even violently interrupted, costing the company millions.
It’s the same story when it comes to forestry. The industry cites greater regulatory complexity and uncertainty as major challenges, and even B.C.-based forestry companies are investing their dollars elsewhere, to the tune of $10 billion in 2021 alone.
It was laughable to see the budget mention “lengthy regulatory processes” as one among a “unique set of challenges” facing Canada’s critical minerals industry. The fact is, the government has done nothing but add to the burden faced by the natural resource sector.
Since Site C’s approval, we’ve seen innovations like “Gender-based Analysis Plus”5Gender-based Analysis Plus in Impact Assessment (Interim Guidance) added to the impact assessment mix, guiding proponents to assess the “historical and current power structures that have shaped society and created inequalities” when simply trying to get their products out of the ground.
In 2018, a new federal Impact Assessment Act was implemented, which, in addition to expanding the list of impacts to be considered, tacks on a 180-day ‘planning process’ and adds multiple stop-the-clock opportunities along the way. It also increases the likelihood of referral to the onerous review panel process.
On top of this, the government has enshrined into law the UN Declaration on the Rights of Indigenous People, article 32(2) of which requires that states must work with Indigenous people to obtain “free and informed consent prior to the approval of any project affecting their lands or territories.” The real-world implications of this, and UNDRIP as a whole, are poorly understood and increase uncertainty.
It is hard to see how a future project like Site C, which obtained agreements with most, but not all, Indigenous groups in the area, could possibly be allowed to proceed. It is not even clear how projects like Coastal GasLink, which did achieve agreements with all elected councils, but not hereditary chiefs, would fare under this new framework.
So yes, Pierre Poilievre is right. When it comes to natural resources, governments at all levels seem more interested in adding gatekeepers than they are in facilitating growth. We need a course correction, and fast, if we are to have any reason for optimism about Canada’s economic future.