On May 28, 2024, ICBA Chief Economist Jock Finlayson was invited to present to the Senate Standing Committee on Energy, the Environment and Natural Resources on the Trudeau Government’s changes to Bill C-69 (colloquially known as the ‘No Pipelines Act’).
The Hansard video of Jock’s presentation (and answers to Senators’ questions) is HERE. Go to time codes:
- 19:38:34 – 19:46:03
- 19:55:53 – 19:57:11
- 20:03:17 – 20:04:49
- 20:09:53 – 20:11:05
Jock’s opening remarks are below:
Thank you for the opportunity to appear before the Committee today on behalf of the Independent Contractors and Businesses Association (ICBA). ICBA is the largest construction association in Western Canada, with 4,000 members and client organizations as well as a sizable and steadily growing health and employee benefits business that currently provides extended health, insurance and retirement services to over 170,000 Canadians.
Construction has a vital role in moving Canada forward in a fast-changing, increasingly competitive world. It is the country’s fifth largest industry and accounts for 8% of employment – almost 1.6 million jobs. In 2023, construction investment spending amounted to more than a tenth of Canadian GDP. The construction industry’s contributions to economic prosperity and community wellbeing became more apparent in the last few years as citizens, policymakers and business leaders were forced to grapple with the consequences of supply chain bottlenecks, infrastructure “deficits,” a nation-wide housing shortage, and escalating building and development costs.
The foundation for Canada’s prosperity traditionally has rested on hard work, resilience, entrepreneurship, fairness, and sensible public policy. In the decades since the Second World War, Canada leveraged these assets to build one of the world’s most successful countries. However, stresses in our economy are raising concerns about Canada’s ability to compete and generate long-term prosperity. As documented by the C.D. Howe Institute, the Fraser Institute, and the OECD, among others, Canada is losing ground to peer jurisdictions on many core metrics of economic well-being – including GDP per person, productivity growth, business start-ups, business investment per worker, and overall competitiveness. In terms of government regulation, we have earned a reputation as a complex and costly jurisdiction in which to develop large-scale projects in industries ranging from transportation, mining, and energy to many categories of private and public sector infrastructure.
For a country with Canada’s advantages and resources, that’s not good enough. We need to do better, particularly at a time when our population is expanding, the geopolitical environment is deteriorating, energy costs have become a major concern, and Canadian policymakers are striving to reduce carbon emissions while also expanding electricity production and transmission and kick-starting the development of a domestic critical minerals industry.
The Committee is examining proposed changes to the Impact Assessment Act (IAA). Like many business groups, ICBA had grave reservations about the IAA when it was adopted by the current government in 2019. We intervened in the Supreme Court of Canada’s review of the IAA, in support of the legal position of the government of Alberta and certain other provinces. The court found parts of the IAA unconstitutional, owing to significant jurisdictional overreach by the federal government.
Bill C-69 (Division 28 of Part 4 of the budget implementation Act)
The government’s response is a package of amendments to the IAA included in its 663-page omnibus budget bill that the Senate is now considering. We do not believe the amendments will fix the problems with the IAA.
According to one of Canada’s leading law firms, “the proposed amendments offer minimal changes, and may leave the IAA once gain ripe for constitutional challenges.”[1] While the changes will modestly narrow the scope for federal involvement in project assessments, they are expected to give rise to new uncertainties and confusion for proponents and provincial governments interested in advancing industrial and infrastructure development in their jurisdictions.[2]
ICBA is not necessarily opposed to the very limited IAA amendments in the 2024 budget omnibus bill, and in this brief presentation we offer no specific comments on the proposed changes to the Act. Instead, we wish to emphasize the need for a more significant overhaul of project assessment and environmental permitting in Canada. This is essential if Canadian policymakers are serious about addressing the country’s “infrastructure deficits” and committed to moving forward with plans to achieve “net zero” by 2050.
The current Canadian project assessment regime – along with some of those maintained by the provinces – inhibits private sector investment, hinders industrial and infrastructure development, and will slow efforts to build a low-carbon economy. As noted in a recent policy analysis:
“It has not been easy for Canadian companies to plan and complete major projects…recently. Hydroelectric dams, pipelines, mines, rail hubs, and port expansions…are inherently complex and tough to build….policy has made these projects extraordinary hard to get approved, let alone completed in our…country.” [3]
The federal government, in advancing the IAA, claimed that the updated system for considering proposed projects would foster greater certainty and result in improved timeliness. The evidence so far indicates that these goals have not been met, as documented in a 2023 report from the Canada West Foundation.[4] The federal government itself seemed to acknowledge that Canada has a significant problem with major project development. The Minister of Natural Resources has repeatedly complained that it shouldn’t take 12-15 years to develop a new mine. In its 2023 budget, the government pledged to release a “concrete plan” to improve regulatory and permitting processes by year-end. That goal wasn’t met. The 2024 budget included promises to reform the regulatory system to accelerate major project development. The amendments to the IAA in the budget omnibus bill are part of that commitment.
These amendments, if passed and implemented, are unlikely to make a material difference to the business climate surrounding project development in Canada.
Private sector interest in investing in large industrial and infrastructure projects has dwindled since the mid-2010s. Natural Resources Canada reports a substantial decline in the “major projects inventory” that the department maintains. The decline is not limited to the oil and gas industry; it extends to mining, electricity and other natural resource industries.[5] According to government statistics, the number of projects completed dropped by 36% between 2015 and 2023.
There are of course various reasons for this concerning trend; policy and regulation are only part of the explanation. But it is hard to avoid the conclusion that investors and corporate decision-makers in some key economic sectors have become less keen on Canada as a jurisdiction in which to deploy capital for new projects. This is particularly true in the natural resource and infrastructure industries. That should worry us all. Natural resources make up around half of Canada’s total exports of goods and services combined. In Western Canada, they supply 70-85% of international exports (depending on the province). As a trade-dependent nation, Canada also relies heavily on world-class infrastructure to move goods and to connect our industries and workers to global markets. We should be looking to establish assessment and permitting systems that enhance the commercial success of our leading trading industries and allow significant projects to proceed in a timely manner. On this score, Canada continues to fall short.
[1] Bennett Jones LLP, “Impact Assessment Act Amendments Announced: Many Questions Still Left Unresolved,” May 6, 2024.
[2] Ibid.; and Osler, “Amendments to Impact Assessment Act released – triage or major surgery,” May 2, 2024.
[3] Charles DeLand and Brad Gilmour, “Canada Needs More Major Project Investment: Here Are Some ideas,” C.D. Howe Institute, Intelligence Memo, April 16, 2024.
[4] Canada West Foundation, Federal Impact Assessment Act Under Review: Measuring Progress on Projects & Timelines, May 2023.
[5] Heather Exner-Pirot, “The smoking gun for Canada’s weak economic growth? A collapse in energy and resource investment,” The Hub, May 24, 2024.
