James Miller Williams is not among Canada’s most prominent historical figures, but he is among our most influential.
In 1856, this carriage maker from Hamilton, Ontario, bought a failed asphalt mine on a small property in nearby Lambton County; a year later he began producing kerosene there, using state-of-the-art techniques developed by Nova Scotia scientist Abraham Gesner. In 1858, Williams dug — not drilled, but dug — a water well 15 metres deep. Instead of finding water, he struck oil.
Williams had stumbled upon what would become the world’s first commercial oil well. Until then, oil and kerosene had been used mostly to fuel lamps. In the decades that followed, they would fuel the second wave of the Industrial Revolution, and by Confederation, James Miller Williams had been elected to the Ontario Legislative Assembly.
In Canada, oil and politics have been linked ever since.
Natural resources have shaped our country’s history from its very beginnings. Indeed, one of the few uniquely Canadian theories of political economy, the staple thesis, is based precisely on how natural resources have influenced everything from our economy to relationships abroad.
Our resources are a tremendous blessing — an indispensable advantage in the modern global economy. They can be a source of wealth and prosperity for generations to come. But just as Canada’s oil and gas sector has grown far beyond its roots in a small rural county in southwestern Ontario, so too must our vision for our natural resources become truly global in scope.
Canada’s energy sector has become a focal point where matters of international trade, foreign investment and sustainable development intersect. Development of our natural resources has become an issue of fierce debate — within our own borders and beyond. And that isn’t a debate from which we can afford to shy away.
New Democrats are ready to meet this reality with clear principles, clear priorities and clear goals: principles like polluter pay and the internalization of environmental costs; priorities like science-based environmental assessments and the enforcement of environmental laws; goals like promoting our own energy security and creating value-added jobs. Together these precepts would drive the decisions of a New Democratic government. They are vital not only to the protection of our natural environment, but to the future of our natural resource sector itself.
In the coming decades, the growth of Canada’s natural resource sector will be based on our access to global markets, and our access to global markets will in turn be based not only on global demand for our resources, but on the world’s assessment of whether that development will be sustainable.
Will using the air, the soil and the water as an unlimited free dumping ground be considered an acceptable business practice or an unfair trade advantage? What will our future look like if the world decides that the answer is the latter?
The lack of sustainability in some industries is already having a direct impact on their development. Projects that fail to uphold basic principles like polluter pay are being met with increasing hostility. The Keystone XL pipeline has been met with furious opposition in the United States. The European Union is considering action of its own to address the carbon intensity of fossil fuels — the European Fuel Quality Directive.
In the wake of President Barack Obama’s State of the Union address, US Ambassador to Canada David Jacobson said that American acceptance of projects like Keystone XL would be moved only by progress in addressing the environmental impacts of their development. That’s a warning New Democrats and industry leaders have taken to heart but that the Conservatives still fail to understand.
As has long been the case, government action continues to lag far behind the scientific consensus on the issue of climate change. Meanwhile, public support for the basic principles of sustainable development — like polluter pay — registers at near-universal levels in provinces across the country.
Yet, while both public opinion and scientific evidence point toward one path, our current government in Ottawa has taken quite another: gutting environmental assessments and making Canada the only country in the world to withdraw from the Kyoto Protocol.
The New Democratic Party has led the charge in the fight against climate change since we first raised the issue in the House of Commons in 1983. As minister of environment and sustainable development in Quebec, I introduced North America’s first comprehensive sustainable development law and amended our province’s Charter of Rights to include the right to live in a healthy and biodiverse environment.
My predecessor as leader of the New Democratic Party, Jack Layton, pushed legislation to mandate binding carbon emissions targets across all Canadian industries through the House of Commons — before Conservatives used a motley crew of bagmen, party hacks and defeated candidates in the unelected and unaccountable Senate to kill this bill adopted by Canada’s duly elected members of Parliament.
An NDP government would establish a comprehensive upstream cap-and-trade system to meet our international commitments to fight climate change and rigorously enforce environmental laws here in Canada.
Promoting prosperity and protecting our planet have become inseparable goals — not only abroad, but here at home. We’ve seen British Columbians move to block ill-thought-out pipeline projects such as the Northern Gateway Project. We’ve seen First Nations rise up in opposition to Conservative curtailment of environmental rights.
Conservatives have used abusive omnibus budget bills that allow little or no opportunity for reasoned debate to remove habitat protection from the Fisheries Act; eliminate protection for all but 97 of Canada’s lakes and rivers from the Navigable Waters Protection Act; and gut the Canadian Environmental Assessment Act, reducing the number of federal environmental assessments from 3,000 to 6,000 a year to just 30.
While Conservatives intended these changes to be a regulatory blank cheque for their friends in the resource extraction industry, even industry leaders are now realizing that they are, in fact, a poisoned chalice. Forward-thinking business leaders understand that their industries can flourish only if they have not only a regulatory licence, but a social licence as well.
That means adhering to the rules of sustainable development. It means full and public consultations with communities impacted by natural resource development. It means a thorough and trustworthy environmental assessment process. And, as the Supreme Court of Canada requires, it means working in partnership with Canada’s First Nations to ensure our resources are developed responsibly and with respect for their rights.
By contrast, the pipeline project that has become the centrepiece of the Conservatives’ development agenda within Canada, the Northern Gateway Project, has failed these tests on every front — from inadequate consultations with First Nations and local communities, to the proposal to run ocean supertankers through a narrow inlet on a pristine coast.
Northern Gateway is typical of the Conservative approach, and in more ways than one. Aside from environmental concerns, it represents the worst of the Conservatives’ “rip-and-ship” approach to resource development, designed to favour projects that export Canada’s raw resources to foreign markets.
The Conservatives’ single-minded focus on the export of raw resources — combined with their failure to internalize environmental costs — has contributed to an artificial rise in the value of the Canadian dollar that is hollowing out our other export industries — from forestry to fisheries, from manufacturing to agriculture. Ironically, even the Conservatives’ recent report to the United Nations on Canada’s progress in meeting our climate change commitments lists the economic shift away from manufacturing as one of the leading factors helping to limit growth in Canada’s greenhouse gas emissions.
The impact of this approach has been felt not only in manufacturing and other export industries, but within the natural resource sector itself. While the export of resources will always be an important part of our economic mix, the export of raw resources is not the obvious path to prosperity it is sometimes held up to be.
The cancellation of the Voyageur upgrader project is just the most recent illustration of this short-sightedness. Conservatives sat by as an $11-billion project to process raw bitumen was cancelled with seemingly no concern for the loss of tens of thousands of value-added jobs.
Conservative neglect doesn’t end there. Even with synthetic crude oil from Alberta trading for as much as $41 a barrel less than imported Brent crude oil on the east coast, Conservatives have continued to pull out all the stops to promote the export of raw resources while ignoring the potential for increased pipeline capacity from west to east.
Within a framework of sustainable development — including a cap-and-trade system and thorough environmental assessments — New Democrats would prioritize our own energy security and with it the creation of high-paying, value-added jobs, refining and upgrading our own natural resources right here in Canada — just as other resource-rich developed nations like Norway already have.
With unused refining capacity in eastern Canada already available, increasing west-east capacity is, in fact, a win-win-win — better prices for producers (and higher royalties for provinces), more jobs here at home and greater energy security for all Canadians.
Shouldn’t that be Canada’s top priority for natural resource development?
As we move to seize these opportunities at home, we must also foster the international trade and foreign investment relationships that will ensure we have the capacity to meet them. In the past two years alone, state-owned Chinese companies like PetroChina and CNOOC have invested more than $25 billion in the Canadian oil and gas sector. That trend is expected only to grow.
New Democrats support breaking down trade barriers, lowering tariffs and reducing protectionism. We believe that government has a role to play in creating the predictability and clarity that potential investors count on. But we also believe that our government must stand first and foremost for Canadian interests, rather than ideological purity.
In 2010, Parliament unanimously supported a New Democratic motion calling on the government to put forth a clear definition of the so-called “net benefit” test for foreign takeovers. Yet, more than two years later — to this day — Conservatives have still failed to act on that motion and are simply making up the rules as they go along.
Instead of clarity and vision, Canada’s foreign investment regime continues to be plagued by indecision and delay. This incompetence reached its peak late last year with takeover bids by Petronas and CNOOC. Here we had a pair of state-owned foreign enterprises bidding for a stake in one of Canada’s most vital sectors. In CNOOC’s case, its bid was the largest by a state-owned firm in our country’s history.
Instead of full and public consultations, the government offered deliberations in secret — with no clear rules or guidelines — and in Petronas’ case, an initial rejection announced in the middle of the night. It should come as no surprise — yet it is of great concern — that Petronas’ chief executive expressed regret last November for not having received any information on how his company’s bid would be evaluated.
As he told the Wall Street Journal: “At this point, the whole industry has no clue.”
Just a few weeks later, the Prime Minister reversed his position on Petronas and approved both the Petronas and CNOOC bids. Remarkably, he stood at the podium and warned of the dangers of state-owned investments in Canada’s natural resource sector, then approved two such investments moments later. But instead of clarifying the rules for foreign takeovers going forward, Mr. Harper only added to the country’s confusion and once again exposed his own.
What concerns New Democrats even more is the implications of the CNOOC/ Nexen deal once the Conservatives’ new Canada-China Foreign Investment Promotion and Protection Agreement (the Canada-China FIPA) is ratified.
This is an agreement negotiated by the federal government in complete secrecy — without any consultation or debate in Parliament — and that is intended to bind Canada’s hands for a full 31 years.
Under article 6 of FIPA, once a Chinese company is established in Canada, it must receive “national treatment” for expansion and operations — meaning it must be treated as if it were a Canadian company. These provisions would guarantee companies like CNOOC the unlimited right to buy up new oil leases and expand their ownership of our natural resources.
Unfortunately, Conservative ministers seemed to have misjudged the consequences of their own agreement, or perhaps simply do not understand the effect of its very clear provisions. When questioned about this agreement in Parliament, Conservatives replied that the Investment Canada Act would still apply to future takeovers, apparently not realizing the fundamental difference between acquisition and expansion.
It’s true that foreign investments by any country, including China, are still subject to Investment Canada Act, if they meet a certain threshold. But there are means to expand control of oil resources without triggering a review under the Act. In CNOOC’s case — with its foot already in the door and newly armed with the rights of a Canadian company — its ability to purchase new leases will not be subject to review and cannot be limited.
The consequences for our national sovereignty and our system of federalism — not to mention our economic potential — are stark. Perhaps that is why, despite the Conservatives’ stubborn defence of the Canada-China FIPA in public, they have still not ratified this agreement and brought its provisions into force a full 230 days (as of this writing) since it was signed.
That this entire negotiation took place in secret, with virtually no input from the public, is all the more distressing. The future of Canada’s natural resource sector — and, indeed, the impact that its development will have on our planet — should not be the subject of closed negotiations with industry insiders, but rather should be the concern of every Canadian.
Premier Alison Redford of Alberta has called for a “national conversation” about how we develop our country’s natural resources, and for the development of a national energy strategy. As leader of the Official Opposition and of the New Democratic Party of Canada, I echo that call.
For over 150 years, Canada’s abundance of natural resources has shaped our history and helped drive our economy. With the right vision, there is no reason they cannot help fuel our prosperity for another 150 years to come.
