By Marla Orenstein
Published in the Hill Times
December 3, 2018
Something really interesting has happened.
In the November fall economic update, the federal government promised to build in “efficiency and economic growth” as an integral part of regulators’ mandates, and to enshrine in legislation that the “economic impacts of new, revised or cumulative regulations are key considerations for regulators.”
That’s great news. It is aligned with recommendations that have come from the government’s own Economic Strategy Tables, the Advisory Council on Economic Growth and the Canadian Chamber of Commerce. In all cases, these reports concluded that Canada is burdened with an inefficient and complex regulatory system that adds cost, delays projects and is not conducive to innovation. The business community has been saying this for ages. This is a very welcome initiative.
But there’s just one big problem: Bill C-69, the biggest piece of legislation to affect major energy projects—and all major infrastructure projects—for the next decade, takes exactly the opposite approach. It stands as a glaring example of how not to craft efficient and effective regulatory processes and it completely ignores economic impacts.
Instead of including economic growth as an explicit consideration when approving projects, the bill buries economic considerations within a nebulous “sustainability” clause. This stands in stark opposition to the way the bill mandates that project approval explicitly consider adverse environmental, health and social effects, impacts on Indigenous groups, and climate change—all of which are important, but the government has now acknowledged the importance of including economic impacts.
Rather than promoting efficiency, the bill introduces changes that are likely to lead to delays. The timelines—while on paper shorter than the current system—have too many opportunities for political considerations to stop the clock. In addition, by introducing a different regulator for energy projects, new processes and undefined language, it bakes in the likelihood of new court challenges that may drag out for years.
Finally, instead of providing the certainty of a process that is independent of the winds of political change, the bill opens the door to political flip-flopping by enabling political discretion to override independent regulatory decision-making. Political override on major energy projects (starting with the federal reversal of the Northern Gateway approval) have resulted in the investment community, both domestic and foreign, losing confidence in Canada’s ability to make decisions on major projects. Political discretion is problematic regardless of partisanship—it also concerns environmental activist groups, who worry that it may work against their interests in future.
And these changes are delivered in an obtuse and complex 392-page omnibus bill—again, the antithesis of the government’s promise to “simplify” regulations.
It is clear that the parts of government that drafted Bill C-69 were not part of the same conversation that prioritized enhancing competitiveness. The bill—with major implications for the economic health of this country—was introduced by the minister of the environment, while the minister of finance and the minister of natural resources seem to have sat on the sidelines. It was reviewed only by the House of Commons Environment Committee, but not by the Finance Committee or Natural Resources committee. So the results should not be surprising.
The fiscal update’s focus on a nimble and effective regulatory system that protects the environment and the health and safety of Canadians, but also puts economic growth as a key consideration, is a welcome sign. This is exactly the direction that the country needs to move in if we want to be competitive within the shifting global landscape.
But if the government is serious about implementing the changes it outlines in the fiscal update, it must start with Bill C-69.
The introduction to this initiative includes the statement that government will “take immediate action in response to business recommendations.” Business, particularly the now hard-hit energy sector, is saying pause Bill C-69, and come back with proposed legislation that follows your own new—excellent—regulatory initiative.
Marla Orenstein is the director of the Natural Resources Centre at the Canada West Foundation.