The last few decades have shown an unmistakable link in Canada between low increases in productivity (real GDP per hour worked) and low real income growth per capita. The OECD predicts that from 2020-2030, Canadian productivity growth will be near last of 40 advanced economies and income growth will be absolutely last. The OECD predicts from 2030-2060, Canada will be absolutely last in both measures.
However, there is opportunity to do better if, and likely only if, governments reform key policies. Broadly, our archaic, inefficient and extremely complex taxation system demands comprehensive reform, something last achieved in the 1960’s. And another long-standing problem, interprovincial trade barriers, remain present and serious, and need to be finally and decisively eliminated.
Increases in productivity ultimately result from private sector investment in better facilities, equipment and training. To invest, companies request simpler and less onerous regulation and more competitive taxation. For resource and energy projects, experts advocate for swift and predictable project reviews. Governments have ignored these calls, instead relying primarily on financial incentives and giveaways.
In an opinion piece in the Globe and Mail, Jackie Forrest, Executive Director of the ARC Energy Research Institute, in a different context, argues that for Canada, “to achieve its ambitious emission-reduction goals, the review process must become more streamlined, fast and predictable. If not, companies will not invest in Canada, and the country’s climate goals will not be met.” Construction of major projects in Canada is a lengthy process, she says. “It can take more than 10 years from start to finish – if it begins.”
She offers four examples where the review process was demonstrably not, “streamlined, fast and predictable”. The Enbridge Northern Gateway pipeline, the Teck Frontier Oilsands project and Pacific Northwest LNG, she says, illustrate the risk. Each project “undertook a four-to eight-year regulatory process”, only to have approval denied or to be forced to withdraw after incurring $500 million to $1 billion in costs. And the risk is not restricted to oil and gas, says Forrest; it also afflicts clean energy projects and mines like the New Prosperity Gold-Copper Mine, denied approval after a multiyear review.
The clean (hydro-powered) LNG project, Energie Saquenay, in Quebec, was rejected in 2021 by both the Federal Liberal Government and the Quebec CAQ Government. Quebec argued the project would not aid the transition to greener energy or reduce greenhouse gas emissions. If this argument was not parochial and irresponsible then, it undoubtedly is in 2022. After the German Chancellor in vain tried to secure Canadian LNG, Quebec’s Economy Minister, in November, confirmed the LNG project is “dead”. Germany is being forced to reopen five lignite coal-fired power plants, the dirtiest power plants of all.
Development in the Ring of Fire in Northern Ontario – an area rich in the minerals required for battery production and electrification – is stalled. Hundreds of millions of dollars have been spent by mining companies since 2006, reports the Globe and Mail, but no mine has opened. Wyloo, an Australian mining company, is seeking to develop a mine for battery-grade nickel. Wyloo’s chief executive said in November that it, “should be a national priority to get the Ring of Fire developed.” He is right. China dominates supply of many critical minerals. Canada and our allies urgently need an alternate source.
A major road is required to open the Ring of Fire region for development. Incredibly, six environmental and road studies are evaluating that one road project. The Globe and Mail says an Ontario First Nation leading one study has applied to extend it to early 2029. As well, in 2020 the Federal Natural Resources Minister ordered an environmental study on the impact of mining on the whole region. Two years later, it has not begun, because the stakeholders cannot agree on the terms of the study. The review process is undeniably broken. It is a juggernaut, which effectively prevents major projects being built in Canada.
Various ministers, including Prime Minister Trudeau, have spoken of the importance of “fast tracking” the production of critical minerals and energy projects. But they have done nothing. What company will seek to build such projects in the future? The final decision is often made by the cabinet, Forrest says; the decision is political, and thus is not predictable and comes with great risks, many years later. Finally, the process is inordinately expensive. The federal government needs to fix this mess, now!
If Canada is to avoid the abysmal pattern shown in the OECD productivity and income forecasts, provincial and federal governments must substantially restructure taxation, regulatory and project assessment policies. Canadians’ standard of living depends upon it.
Bruce W Uzelman
I grew up in Paradise Hill, a village in Northwestern Saskatchewan. I come from a large family. My parents instilled good values, but yet afforded us, my seven siblings and I, much freedom to do the things we wished to do. I spent my early years exploring the hills and forests and fields surrounding the village, a great way to come of age. My parents owned a successful general store. My siblings and I were required to help out in the business, no choices allowed there!
I attended the University of Saskatchewan in Saskatoon. I considered studying journalism at one point, but did not ultimately pursue that. However, I obtained a Bachelor of Arts, Advanced with majors in Economics and Political Science in 1982.
My career has consisted exclusively of small business, primarily restaurant and retail. I was originally based in Alberta, and then BC, first in Summerland, then Victoria and finally Kelowna (for over 20 years). I was married in Alberta, and we have two daughters, who have returned to Alberta as adults for career reasons, as did my now ex-wife. My daughters are successful, and now have families of their own.
I have maintained a healthy interest in politics throughout my adult years, and wish to put that and my research skills to work as a political columnist.