On October 23, 2018, President and CEO Martha Hall Findlay gave the following speech to the Downstream Engineering and Construction Conference, in Calgary, Alberta
Good afternoon, and thank you for inviting me to speak today.
I should give you some idea of what I do and why I’m here. I run the Canada West Foundation, a non-partisan, public policy think tank, focusing on issues important to the West – although our view is that what is good for the West is good for the whole country.
We focus on three areas: Human Capital, where we’re doing some fabulous work on competencies, that ever-elusive way of fitting the right people with the right jobs, but based on what they are actually capable of doing – including some neat work evaluating the varied competencies of displaced oil, gas and coal workers and determining where those competencies can be applied.
We also have a Trade and Investment Centre, which – with Donald Trump, NAFTA, the new USMCA, the Trans-Pacific Partnership, opportunities with China – is really busy.
Our third area of focus is Natural Resources. And we have, of course, done a lot of work on energy and pipelines in the last while. Also, although I was a corporate lawyer and senior executive for a long time, I also dabbled a bit in politics – serving as a Member of Parliament for a few years, so I bring a bit of a combo-perspective on some of these issues.
I have been asked to speak about the Trans Mountain pipeline expansion – TMX – and the lessons we, we hope, have learned.
But the story of the challenges of TMX go back to Northern Gateway. That was a story of one federal government getting increasingly cold feet, and then another simply denying it outright.
First, a bit of context: In the last few years, a great many people have become very concerned about climate change. This is, in itself, a good thing. By far the preponderance of evidence suggests that it is a serious problem, and that humankind needs to change the way we do things. Around the same time, more and more people became more aware of the challenges facing Indigenous communities, and more and more Indigenous people were becoming far more vocal about standing up for their rights. This too, in and of itself, is a good thing. However – both of these movements were happening at a time when there was no real outlet for the discussion; and without that, frustration, and no real outlet for raising awareness and finding solutions. Nothing was happening at the federal level. All of a sudden, pipelines and the NEB hearings on Northern Gateway became a lightning rod. But the NEB wasn’t set up to deal with the hundreds and even thousands who wanted to be heard – and you all remember the media clips of doors being shut, RCMP being brought in, commentary that the NEB was ‘refusing to listen’, that people weren’t being allowed to be heard. Not true, but it seemed to all fall into the NEB’s lap – and the Northern Gateway project paid the political price. We have ALL been being paying the economic price since then – and will continue to do so unless we actually do learn from some of the hard lessons.
Why does the real TMX story start with Northern Gateway? Because of the precedent its denial set. With public perceptions changing, the incoming federal government simply denied it. It had achieved approval from years of thorough regulatory process, subject to 209 conditions – which, had it proceeded with those conditions being met it would have been a world-leading example of how to do things well, something we should have had the opportunity to be proud of. Instead, the PM made an offhand crack that the Great Bear Rainforest was no place for a pipeline. All while, astoundingly, claiming that they were not “picking or choosing” projects – while quite clearly picking two and denying the third. Yes, the Federal Court of Appeal had ruled that the federal government – NOT the proponent, the federal government – had not met its duty to consult. It made it clear that doing so was doable, just that it needed a bit more work. But the feds simply walked away – and by not even bothering, insulted a good many Indigenous communities, because the duty to consult must not be only with those who oppose, and with Northern Gateway there were many who wanted to see it proceed – and who indeed missed out on serious economic opportunity when it was cancelled. But they weren’t heard.
The decision to deny the Northern Gateway project will go down as one of the biggest mistakes in Canadian history, not only for its own failure and the extraordinary costs both to the proponent and to the Canadian economy, but for the precedent that it set. It had not been the Harper Conservatives that had approved it – it had been the Canadian government. But the new government came in and flipped. Then, to put salt on that wound, a number of prominent politicians suggested that Canadians didn’t trust either the NEB or the process itself and started saying things like a government can grant a permit but a community grants permission, and used the fraught term “social licence.” It was downhill from there.
Fast forward to the then new Horgan/Weaver government in BC. They had made it clear from the beginning that they would “use every tool in the toolbox” to stop the TMX – apparently unencumbered by the previous BC government’s approval. Here again – it was not the Christy Clark Liberals who had approved it (with their infamous 5 conditions – another issue for another time…) – it had been the BC government. But that didn’t matter – after all, the feds did the same thing with Northern Gateway, right?
Now we see the same thing in Ontario with the new Ford government throwing out the cap and trade system that Ontario was part of with Quebec and California. And Jason Kenney is threatening to reverse carbon pricing here if he wins the next provincial election.
This is not a partisan issue. I’m pretty sure I’ve criticized at least three different political parties… It is a CANADIAN problem.
And this brings us to the biggest lesson that we have NOT learned: Whereas investment, both foreign and domestic, is critical to the Canadian economy – particularly a smaller, trade-dependent economy like ours – this kind of behaviour is scaring much of it away. Investors don’t mind tough environmental regulations, they don’t mind ensuring Indigenous participation in resource successes – what they cannot abide by is uncertainty.
And proof that we have NOT learned this lesson is Bill C-69. How many in the room have heard of Bill C-69?
I am going to speak a bit about Bill C-69 because it is important – and dangerous as is – for the whole country, for our economic prosperity – not just energy, but because of its potential effect for ANY major infrastructure, in ANY part of the country – and its potential to make our already bad investment climate even worse. If we can’t get much of anything built now, C-69, unless it is seriously changed, will only make things worse.
Bill C-69 would replace the NEB with a new energy regulatory body called the Canadian Energy Regulator, but no longer with project approval responsibilities; replace the federal Environmental Assessment Act, 2012 with a new Impact Assessment Act, and replace the federal Environmental Assessment Agency with a new Impact Assessment Agency, with a broader, full – impact assessment mandate. It purports to shorten timelines for project approvals, but there are serious flaws, some of which would almost certainly make those timelines even longer than what we have. And it retains – even enhances – the kind of political discretion that we saw at work with Northern Gateway.
One of our major issues with C-69 is the part that would replace the NEB with a new CER. I know that a lot of people here were really upset with the TMX FCA decision. But we at the CWF took a different, much more positive view. The FCA addressed two main things: that the feds had not fulfilled their duty to consult (they should have learned from the FCA on the Northern Gateway, but didn’t). Yet the court went out of its way to say that what was still needed was certainly doable, and most certainly not a “veto.” On the NEB, it said that it needed to include project-related shipping in the report to Cabinet. To be clear, the NEB had already looked at the issues, but did not believe they were obliged to include that in their report. The court, again, went out of its way to show that what was still needed was doable and shouldn’t take much more time. The positive piece here is what the court didn’t say – in effect, the court has confirmed that the NEB’s overall process – very detailed – is acceptable. Jurisprudentially now in Canada, we have the certainty so desperately needed. We know that the NEB process is good and with the last bit should not be challengeable on its face. If we throw out the NEB now, and replace it with an entirely new body and an entirely new process, we will open the whole thing up to square one in terms of court challenges – which will get us right back to the problems we have seen with TMX. Not only are we not learning that lesson, we’re doing the opposite.
I don’t have enough time to go into more of the C-69 details here, but we have done a lot of work on this, and continue to do so – feel free to check out the Canada West Foundation website, cwf.ca and just search C-69. Or, feel free to contact us. It is in the Senate now, and we need all of the voices possible to be heard.
No development is risk free.
Whether it is a railway, a highway, a pipeline, a windfarm, a transmission grid – or a flood mitigation plan – one must analyze and balance the costs and the benefits (including probabilities of any risk). Collectively, we need to ensure best practices in terms of safety and the environment, including prevention, mitigation and the like, and ensure that Indigenous rights are respected. But I am an environmentalist – and I KNOW that we can harness our natural resources in truly environmentally and socially sustainable ways. But we need to learn from hard lessons, and we need to insist that our decision-makers – of every political stripe – do things differently.
Thank you very much.