From Resource Works

Tej Parikh of the Financial Times‘s says Canada has the minerals but not the plan

Tej Parikh is the economics editorial writer for The Financial Times, a British daily newspaper. He joins our Stewart Muir for a Power Struggle interview. And we include in the following report some points from a guest column by Parikh in Canada’s National Post, which carried the headline ‘How Canada can unlock its economic superpower potential.’

Parikh begins the Power Struggle interview with this: “There’s an enormous economic potential here, very much the same geographic advantages that have underpinned America’s economic emergence over the last 100 years. . . . Given everything we understand about the advantages that countries need to grow, why is Canada not doing better economically?” He added: “When you break it down and you look at why income per capita in Canada has perhaps not increased as fast as we might expect on the basis of those advantages, it really kind of breaks down to three components. One is investment, so how much capital goes into the country?

The second is labour, and not just the amount, the size of the workforce you have, but how well you utilize the workforce. And then the third component is something that economists like to call a total-factor productivity, which is essentially your innovative ability and your ability to bring together capital and people. “And when you look at Canada as opposed to other large economies . . . you begin to see that actually there are a lot of restrictions in Canada, not just because of its vast geography but because of regulation, that it actually can’t combine its capital and labour as productively as it could.

“It’s about creating those supply chains and critical minerals that the Western world is currently short of. Given it (Canada) has these vast raw material resources, there is a massive scope for it to become even more integrated into Western supply chains in particular and to become a supplier of these things.” From Parikh’s National Post column: “The country is energy independent, with the world’s largest deposits of high-grade uranium and the third-largest proven oil reserves. It is also the fifth-largest producer of natural gas.Canada boasts a huge supply of other commodities too, including the largest potash reserves (used to make fertilizer), over one-third of the world’s certified forests and a fifth of the planet’s surface freshwater. Plus, it has an abundance of cobalt, graphite, lithium and other rare earth elements, which are used in renewable technologies. “But the nation has lacked the visionary leadership and policy framework to capitalize on its advantages.”

Watch the full interview here:

From the Fraser Institute

By Niels Veldhuis and Jason Clemens

The Carney government’s signature legislation in its first post-election session of Parliament—Bill C-5, known as the Building Canada Act—recently passed the Senate for final approval, and is now law. It gives the government unprecedented powers and will likely make Canada even less attractive to investment than it is now, making a bad situation even worse.

Over the past 10 years, Canada has increasingly become known as a country that is un-investable, where it’s nearly impossible to get large and important projects, from pipelines to mines, approved. Even simple single-site redevelopment projects can take a decade to receive rezoning approval. It’s one of the primary reasons why Canada has experienced a mass exodus of investment capital, some $387 billion from 2015 to 2023. And from 2014 to 2023, the latest year of comparable data, investment per worker (excluding residential construction and adjusted for inflation) dropped by 19.3 per cent, from $20,310 to $16,386 (in 2017 dollars).

In theory, Bill C-5 will help speed up the approval process for projects deemed to be in the “national interest.” But the cabinet (and in practical terms, the prime minister) will determine the “national interest,” not the private sector. The bill also allows the cabinet to override existing laws, regulations and guidelines to facilitate investment and the building of projects such as pipelines, mines and power transmission lines. At a time when Canada is known for not being able to get large projects done, many are applauding this new approach, and indeed the bill passed with the support of the Opposition Conservatives.

But basically, it will allow the cabinet to go around nearly every existing hurdle impeding or preventing large project developments, and the list of hurdles is extensive: Bill C-69 (which governs the approval process for large infrastructure projects including pipelines), Bill C-48 (which effectively bans oil tankers off the west coast), the federal cap on greenhouse gas emissions for only the oil and gas sector (which effectively means a cap or even reductions in production), a quasi carbon tax on fuel (called the Clean Fuels Standard), and so on.

Bill C-5 will not change any of these problematic laws and regulations. It simply will allow the cabinet to choose when and where they’re applied. This is cronyism at its worst and opens up the Carney government to significant risks of favouritism and even corruption.

Consider firms interested in pursuing large projects. If the bill becomes the law of the land, there won’t be a new, better and more transparent process to follow that improves the general economic environment for all entrepreneurs and businesses. Instead, there will be a cabinet (i.e. politicians) with new extraordinary powers that firms can lobby to convince that their project is in the “national interest.”

Indeed, according to some reports, some senators are referring to Bill C-5 as the “trust me” law, meaning that because there aren’t enough details and guardrails within the legislation, senators who vote in favour are effectively “trusting” Prime Minister Carney and his cabinet to do the right thing, effectively and consistently over time.

Consider the ambiguity in the legislation and how it empowers discretionary decisions by the cabinet. According to the legislation, cabinet “may consider any factor” it “considers relevant, including the extent to which the project can… strengthen Canada’s autonomy, resilience and security” or “provide economic benefits to Canada” or “advance the interests of Indigenous peoples” or “contribute to clean growth and to meeting Canada’s objectives with respect to climate change.”

With this type of “criteria,” nearly anything cabinet or the prime minister can dream up could be deemed in the “national interest” and therefore provide the prime minister with unprecedented and near unilateral powers.

In the preamble to the legislation, the government said it wants an accelerated approval process, which “enhances regulatory certainty and investor confidence.” In all likelihood, Bill C-5 will do the opposite. It will put more power in the hands of a very few in government, lead to cronyism, risks outright corruption, and make Canada even less attractive to investment.