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2012/15

Notes for a Speech by

The Honourable Joe Oliver
Minister of Natural Resources

At the

Economic Club of Canada
Moving Forward with Canada's Natural Resources

January 27, 2012
Toronto, Ontario

INTRODUCTION

Thank you very much, Ken. It’s really good to be back in Toronto and to speak to the Economic Club.

Before I start, I want to acknowledge my colleague, Stella Ambler, the Member of Parliament for Mississauga South.

When Prime Minister Harper asked me to lead Natural Resources Canada last May, I did not imagine how urgent and current some of the issues would be and how much they would capture the public imagination.

Since then I’ve been on an ambitious schedule to promote Canada worldwide as a secure and reliable source of natural resources and a great place to invest and do business.

I’ve taken this message to China, Japan, the UK, France and to half-a-dozen major cities in the United States, including New York and Washington.

And just this week, I’ve spoken to audiences and consulted with stakeholders in Vancouver, Calgary and here in Toronto.  We’ve talked about Canada’s natural resources future and the need to enhance our regulatory system. And as I assured those audiences, I can now assure you as well: if we act wisely today, the future is very bright indeed.

STRENGTH OF CANADA’S RESOURCE SECTORS

Natural resource sectors underpin Canada’s economy. Together, energy, mining and minerals processing, and forestry account for close to 10 percent of Canada’s gross domestic product, and growing.

In 2010, these sectors directly employed over 760,000 Canadians in communities throughout Canada, including remote and Aboriginal communities. Last year, Ontario’s natural resource industries directly employed over 220,000 people.

Looking to the future, our resource sectors are poised to have an even greater positive impact on our economy. We can see potential investment of $500 billion in new energy and mining projects over the next decade, some of them right here in Ontario. And that’s the same as a company with the revenues of Apple Computer moving to Canada every two years. 

This investment will be right across Canada and across numerous fields. From the local grocer to the cornerstone owner to the manufacturer of resource equipment to the financial services agent, they all have interest in our resources. 
While the opponents of resource development say it only helps the "rich" companies, Canadians who are intimately involved in our resource sector know differently.

Canadian manufacturing workers know it is about that new work creating machinery for our resource sector, pensioners know it is about that promising investment that will help create a more secure retirement and Canadians know it is about creating the economic growth required to provide the social services we depend upon. 

The stakes are enormous. 

Right now for example, the energy sector is generating employment in almost every part of our economy. The oil sands alone are responsible for close to 400,000 direct and indirect jobs: in skilled trades, in manufacturing, clerical jobs, the financial sector — everywhere.

And according to the Canadian Energy Research Institute, if you include proposed pipelines expansion and projected increases in oil production, the oil sands will support on average 700,000 jobs across Canada over the next 25 years on an annual basis.

Most analysts would say the energy sector has become the engine of Canada’s economy as we emerge as a global energy superpower. That's good news for Alberta and for Canada — and it's good news for Ontario as well.

Today, about 35,000 people in Ontario are working in jobs linked to the oil sands. If projected development occurs, it’ll mean an additional 15,000 jobs per year in Ontario over the next 25 years.

The Canadian Energy Research Institute says Alberta’s oil industry will buy some $65 billion worth of goods and services from companies in Ontario over the next 25 years.

This is great news for the Ontario manufacturing sector.  We know that the manufacturing sector has been hit hard by the global financial crisis, especially by the downturn in the American economy.  For decades, Ontario manufacturers have exported to our neighbours to the South. 

Now, there is a new customer for Ontario’s manufacturing products – the energy sector in the west.  

The energy sector can help replace the manufacturing jobs lost due to the downturn in the US economy. 

The pipelines that carry Canadian oil and gas to North American markets are in effect a separate industry in themselves as well as major generators of significant economic activity across the country.

These pipelines aren’t necessarily built in Alberta.  They can be built by skilled tradespeople working in Ontario manufacturing plants. 

And speaking of the skilled trades in particular, let me make it clear that these are good, high-paying, skilled jobs, many of which are unionized. 

They are jobs that create significant secondary employment after projects are completed for maintenance and repairs and they are jobs which contribute to Canada’s skilled and mobile workforce.

Yesterday the Building Trades Union said the following about the types of jobs that will be created by major construction projects such as the Northern Gateway pipeline:

“The jobs being created are not the just the jobs on immediate construction; they are the permanent operations and maintenance jobs that last the lifetime of the project. These are jobs for 50 years not one or two pipeline seasons.”

Then there's the benefit to government revenues. Over the past five years, the oil and gas industry has contributed an average of $22 billion a year to government revenues — $22 billion a year to help pay for everything, from education and health care to roads and bridges.

The economic spin-offs of the energy sector truly support the quality of life of all Canadians.

But the way ahead is not easy. We are obviously disappointed with the recent U.S. announcement regarding the Keystone XL pipeline, but we are hopeful that this project will be approved in the future based on its merits.

Still this decision dramatically underlines the importance of diversifying our markets to help ensure the financial security of Canadians and their families for decades to come.

We need to get around pipeline bottlenecks leading to U.S. refineries. And that’s why our Government remains a strong supporter of the Keystone XL. We also need pipelines to the Canada’s West Coast.

That’s just for oil. The expanding economies of Asia are also obvious markets for Canada’s natural gas, and a new liquefied natural gas export terminal is set to start construction in Kitimat, B.C.

NEED FOR REGULATORY REFORM

However, we can't take these and other potential investments for granted. It is not some foregone conclusion that requires us to just sit back and watch it happen.

The hundreds of thousands of new jobs that they represent to cities and communities in Ontario and across Canada are just too important to our future.

As the Prime Minister stated yesterday at the World Economic Forum, “the wealth of western economies is no more inevitable than the poverty of emerging ones, and that the wealth we enjoy today has been based on – and only on – the good, growth-oriented policies, the right, often tough choices and the hard work done in the past.”

And that’s why our Government is committed to making Canada one of the best places in the world to invest, and we are doing just that through Canada’s Economic Action Plan.

We've put the key ingredients in place: competitive taxes, a resilient economy and non-discriminatory policies. We've put Canada at or near the top in just about every category. Forbes magazine recently named Canada the best place in the world to do business.

But when it comes to resource-based projects, there's no question that the regulatory environment is a major factor in our ability to attract investment and get the job creation going.

We need to bring our regulatory regime up to the same competitive standard and here’s an example why.

Canada is the world’s leading producer of uranium. Australia is our biggest competitor. Australia recently approved a major uranium mine expansion in less than two years. Similar projects in Canada have taken at least twice as long. I don’t think that we can afford to give our competitors in Australia that kind of head start.

We know what has to be done to make the most of our resources. We are making progress and have taken important steps to getting the federal regulatory house in order. We are headed in the right direction, but we still have a long way to go to be competitive.

Our current system remains a patchwork of overlap, duplication and nonsensical complexity. Together, these can lead to unnecessary and unpredictable delays, which hurt Canada's reputation as an attractive place to do business.

We believe reviews for major projects can be accomplished in a more timely and predictable fashion, without compromising environmental protection. 

We want a system that is fair and efficient; that considers the viewpoints of all stakeholders, including Aboriginal communities; that reviews the evidence dispassionately; and then draws objective conclusions, based on science and the facts, to inform decision-making.

About two weeks ago, I released an open letter to the media expressing my concerns about the shortcomings of Canada’s regulatory process and the potential for interference from special interest groups outside of Canada. Judging by the response in the media, my letter definitely touched a nerve.

And that’s good. Because my intention was to get people talking about our regulatory process — to realize that the current system is not perfect — to see that it can be improved.

Right now, we see a process that is open to abuse by those who oppose economic development on purely ideological grounds. We need a process that won’t be subverted, but could be relied upon to produce practical and environmentally sound results.

To ensure the responsible development of our natural resources, Canada needs a modern, predictable and rigorous regulatory system. This is critical to our nation’s prosperity in both the short and the long term.

I’m not alone in seeking regulatory reform. At our meeting last summer, federal, provincial and territorial energy and mines ministers singled out regulatory reform as the key to realizing the full potential of Canada’s natural resources.

And the ultimate goal is simple: one project, one review, in a clearly defined time frame.

I know that it is possible to make regulatory decisions in a reasonable amount of time without compromising the rigour or standards of the process. However, the process in its current form often drags on for far too long.

The Mackenzie Gas Pipeline Project underwent a complex process of environmental assessments and regulatory hearings that took more than nine years.  Meanwhile, up to 7,000 potential jobs were left hanging.

AREVA’s Midwest Uranium Mine in Saskatchewan entered the environmental assessment process nearly six years ago. And it’s still under review.

The Canpotex Potash Export Terminal at the Port of Prince Rupert has been in the environmental assessment process for more than two years — numerous steps remain.

These are just some examples of projects that have become entangled in the regulatory review system. Going forward, beginning-to-end timelines, enforceable timelines, are needed to improve the predictability of the process.

Thousands of other projects large and small are caught up in the review process across Canada — everything from the installation of solar panels and dock repairs to the approval of a temporary pond hockey rink on Lake Louise.

It certainly begs the question as to why these small projects that pose minimal risk to the environment are being reviewed in the first place.

Our resources should be invested where it matters most, that is, on larger projects that potentially have the most environmental impact.

So our Government is going to take steps to help rectify this, and has taken steps. We have implemented a number of innovations to enhance the performance of the regulatory system for major projects — and we have done so without compromising environmental protection.

The Major Projects Management Office at Natural Resources Canada and targeted changes to the Canadian Environmental Assessment Act through the Economic Action Plan begin to address some of the key problems. But we recognize there is more to do.

The really fundamental modernization we need requires system-wide legislative changes — and lots of them. 

We must develop a regulatory system appropriate to the 21st century, one that balances efficiency with effectiveness, and one that positions our economy for jobs and growth in a socially and environmentally responsible way.

A thorough, effective and efficient system is simply a matter of national interest, and that is why our Government, as part of our Economic Action Plan, is committed to putting such a system in place.

RING OF FIRE

We know that Canada has tremendous potential when it comes to natural resources, particularly in mining.

Canada is one of the largest mining nations in the world producing more than 60 minerals and metals.

In addition, Canada is the world’s largest producer of potash, second-largest producer of uranium, and among the top producers of primary aluminum, cobalt, nickel, platinum group metals, titanium concentrate and zinc.

With the help of Canada’s stock exchanges, Canadian-listed companies are responsible for about a half of all global equity raised for mineral development. In fact, almost 60% of the world’s publicly listed mining companies list in Canada on Toronto's TMX.

And we are discovering even greater resource potential as we continue to explore our expansive country, particularly in our North, where we believe there is immense mineral and hydrocarbon wealth.

In a fundamental way, the regulatory system, both north and south of 60, will determine whether Canada will be successful in attracting investment, developing resources, building new infrastructure and supporting our manufacturing and service sectors while also protecting the environment. The potential economic benefit on individuals and their families in this room, this city, this province and this country cannot be overstated.

A new regulatory system will also mean great things for Ontario, a province that is rich in minerals and metals resources. 

In fact, there’s a very good example in northern Ontario, which illustrates the complexities in approving major resource projects and I’d like to spend a moment talking about the Ring of Fire. It is a relatively new mining region in the James Bay lowlands.

This area is attracting significant investment, and it could make Canada a major producer of chromite and ferrochromium for value-added products such as stainless steel and specialized alloys. The region could also potentially replenish Canada’s dwindling reserves of nickel and copper.

For Ontario, this area is of strategic importance since it could open up the entire region to greater prosperity. It has significant potential to create wealth through taxes and royalties for government.

It creates jobs and skills development for the thirty-one local Aboriginal communities and leads to improvements to infrastructure.

Twenty-six exploration companies are currently working in this area. They have mineral claims covering almost 500,000 hectares.

Private sector estimates indicate that the chromite resources there could be worth as much as $50 billion. And there are estimates for deposits of base-metals and platinum-group metals worth as much as $10 billion. There may also be deposits of gold, iron and other minerals in the region. 
     
Now I don’t have to tell you that the James Bay is a remote region. There are no roads, no railway and no power lines. So, everything needed to support development must go through approvals and then it must be built.

All of this, of course, means thousands and thousands of jobs but there are many, many challenges to overcome; however, the good news is investors are on board.

Currently, two projects have been proposed that are expected to create up to 2,000 jobs at any given time.  

The Cliffs Chromite Project is proposing to build a 30-year open pit and underground chromite mine with ore processing capabilities.

Noront’s Eagle’s Nest Project is proposing a 10-year nickel-copper and platinum-group metals mine, also with on-site processing.

Both projects are currently undergoing environmental assessment.

There’s no question that the federal and provincial governments will have to collaborate in many areas if these two mines are to succeed. Infrastructure planning and development; value-added opportunities; targeted measures to facilitate mining development; environmental assessment; Aboriginal capacity-building — these are just a few of the matters that must be dealt with.

Major infrastructure will be needed: access corridors, electrical transmission and community-based infrastructure. The Government of Ontario is also considering options for a new power transmission line. There’s potential for both new road and railway access. Such infrastructure would easily amount to hundreds of millions of dollars.

It is my hope that these projects will pass through
our federal and provincial regulatory systems and processes smoothly — but as I said earlier, the track record on major projects shows room for improvement. 

We have to wonder how many would-be investors have seen Canada’s regulatory process and decided to put their money elsewhere — somewhere their money could go to work a little faster.

These are the fundamentals that we need to get right. We need to bring our regulatory regime up to a competitive standard. We have to ensure proper and thorough environmental reviews of major projects but we must put an end to unreasonable delays — delays that can jeopardize the viability of projects and harm our reputation as an attractive place to do business.

Again, I’d like to reinforce with you the fact that our Government is strongly committed to providing a regulatory regime in which all stakeholders can have confidence. I believe the fallout from the U.S. decision on the Keystone XL pipeline has made the importance of this reform abundantly clear.

We will continue to work with the provinces, territories and industry on ways to reduce duplication, tighten timelines, and make other improvements to the regulatory processes for resource projects.

We will also continue to work with aboriginal communities.  Just this week at the Crown-First Nations Gathering in Ottawa, the Prime Minister renewed his ongoing commitment to developing economic opportunities for First Nations – and will stand by that here in Ontario and across the country.

We will also ensure meaningful consultation with affected communities.  And we’ll do all this and more in the context of continued growth.

CONCLUSION — UPCOMING BUDGET AND FOCUS ON ECONOMY

We’ve all seen how resilient Canada’s economy has been since the 2008 recession.

Canada continues to outperform the economies of most other countries, and both the IMF and the OECD predict that Canada's economic growth will be among the best this year.

So it’s clear that we are doing things right in Canada. We've set a solid foundation for growth and for a strong economy in many ways: by lowering personal and corporate tax rates, paying down debt, containing expenditures, reducing red tape, and promoting free trade and innovation.

These are the economic fundamentals, and our Government will continue to focus on them and on prudent fiscal management with the ultimate goal of returning to a balanced budget over the medium term. Finance Minister Flaherty will certainly have more to say about this when he tables the federal budget.

From the beginning, our Government has been primarily concerned with job creation and economic growth — making sure the conditions are right to support the quality of life that Canadians desire. Today, I believe it’s clear we’re on the right track and we’re succeeding.

Thank you.