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The Honourable Joe Oliver, P.C., M.P
The Saint John Board of Trade
Saint John (New Brunswick)
December 11, 2012
Thank you so much. Good afternoon, ladies and gentlemen.
My thanks to the Saint John Board of Trade for the opportunity to meet with you all today.
I want to recognize as well Premier Alward, Premier of New Brunswick, and my colleague Rodney Weston, Member of Parliament for Saint John, who has done so much to represent and advance the interests of the constituents in this great city.
Let me start by saying it’s a pleasure to be here in the Maritimes and here in Saint John — a region and a city that serve as examples of the important role Canadian natural resources plan in communities right across this country.
I want to also thank Mr. Arthur Irving for an exceptionally interesting trip to the refinery and I’ll get into that a little bit later in my comments.
Saint John has two mills, a deep water port, three electrical generation facilities in the region and Canada’s largest refinery, to say nothing of the vital Canadian resource that is processed at the Moosehead Brewery.
Mining, energy and forestry account directly for close to 20% of nominal GDP in Atlantic Canada and some 13% of nominal GDP here in New Brunswick. Across the region, natural resource industries provide direct employment for some 45,000 Atlantic Canadians.
Those numbers don’t include the indirect benefits — benefits like the jobs natural resource industries support through the purchase of goods and services from other sectors, from machinery and equipment to construction, engineering, legal, financial and other services.
The opportunities to grow those numbers — the opportunity to create new jobs, growth and long-term prosperity for this city, this region, and our great country — has never been greater.
It’s no secret that the global economy is undergoing a fundamental shift — and Canada must capitalize on this changing reality.
The United States, far and away our largest trading partner, is experiencing a slow recovery from the 2008 recession. Most of the Eurozone is also facing difficulties, with some individual countries struggling with especially severe economic and fiscal problems.
At the same time, while they have also felt the impacts of the global recession, the economies of countries such as India and China continue to expand at a rapid rate.
The OECD — the Organization for Economic Cooperation and Development — recently predicted that China will overtake the U.S. as the world’s largest economy as early as four years from now.
To fuel this kind of growth, China and other rising economic powers in the Asia-Pacific region and elsewhere need resources.
Energy, for example: China has already surpassed the U.S. as the world’s largest consumer of energy. India is now the third-largest consumer of energy in the world and when I was there in October, the Minister of Power told me that the demand for energy is already greater than the country can supply — the electricity shortfall is around 8%, with peak shortages as high as 12%. Over the next 25 years, India aims to quintuple its energy supply.
They’re looking to Canada’s east coast — which is actually closer to India than the east coast of the United States or the west coast of Canada. They have huge natural gas needs that the Canaport LNG export terminal is well positioned to meet. India needs minerals, fertilizer, and other products that can be produced and shipped through the Port of Saint John, creating good, well-paying local jobs and fuelling growth for business.
Looking south of the border to our main customer — the U.S. — oil and gas production is on the increase for the first time in years.
In the 2012 World Energy Outlook, the International Energy Agency tells us that the global energy map is being re-drawn, with North America leading the charge.
The IEA forecasts a really significant trend, with critical implications for Canada: the United States will become oil self-sufficient by 2020 due to a resurgence in oil and gas production.
In the next 20 years, North America will become a net exporter of oil and gas, thanks to the application of new technologies.
The IEA also predicts that global energy demand will continue to grow by more than one-third by 2035. China, India and the Middle East will account for 60% of that increase.
These trends underscore the importance of diversifying Canada’s energy exports to take advantage of emerging opportunities and to help meet growing global energy needs.
Many of the oil and gas jobs here in Canada depend on exports. Currently, 99% of Canada’s crude oil exports go to the U.S. and 100% of our natural gas exports go there as well. To preserve those jobs — the jobs in Canada — we must diversify our markets. If we do not take heed of warnings that we diversify our markets for energy — by building energy infrastructure like pipelines — then our resources will be stranded and we will lose jobs and businesses in Canada. However, if we do capitalize on the changing global reality, the opportunities for Canada are immense.
We will advance new projects with the United States, but we must take steps to protect our economy in the long term and that’s what our agenda aims to do.
The U.S. market is not going to disappear and they’re certainly not going to be self-sufficient in oil for some considerable period of time. But demand will not keep pace with our anticipated growth in production.
It’s also critical to government. Taxes and revenues from the oil and gas sector contributed $22 billion last year to government revenues to support critical social programs like healthcare and education.
However, our oil is selling at a considerable discount right now. We’re losing some $50 million every single day — $18-19 billion every year because our resources are landlocked.
We have to connect our pipeline infrastructure to our ports on the east and west coast.
I see a future in which oil that is produced in Alberta and Saskatchewan can travel by pipeline to refineries like the Irving Refinery here in Saint John. Our government wants central and Atlantic Canada to have access to cheaper Canadian crude rather than more expensive foreign sources of oil. Our government wants refineries like the one here in Saint John processing Canadian crude, expanding their operations and creating more jobs for New Brunswickers and all Canadians.
Our government believes that Canada’s thriving ports can be a gateway to the world and to our future prosperity. We believe that the port here in Saint John has the potential to serve as a critical hub for oil, gas and other resource exports.
Our objective is to see Canadian oil production grow, driven by domestic and foreign capital, and to ensure that our resources reach foreign markets. We’re committed to this objective and we intend to see it through.
That is why our government believes that a pipeline travelling from western Canada to eastern Canada is in Canada’s national interest.
I see a future in which oil that is produced in Alberta and Saskatchewan can travel by pipeline to refineries like the one in Saint John. Our government wants to see central and Atlantic Canada having access to cheaper Canadian crude rather than more expensive foreign sources of oil. Our government wants to see refineries like the one here processing Canadian crude, expanding their operations and creating more jobs for New Brunswickers and all Canadians.
And our government believes that Canada’s thriving ports can be a gateway to the world and to our future prosperity. We believe that the port here in Saint John can serve as a critical hub for oil, gas and other resource exports. That is why our government believes that a pipeline travelling from western Canada to eastern is in Canada’s national interest.
The opportunities extend beyond energy. Surging economies need all kinds of natural resources to sustain their growth.
Few countries are as well-prepared to seize these opportunities as Canada.
First, we have the resources — vast forest resources and an increasingly competitive and innovative industry to deliver Canada’s forest products to a rapidly urbanizing world.
Canada has also assumed its place as a mining powerhouse and for good reason. There are over 200 active mines in Canada, producing more than 60 minerals and metals. Additionally, we have enormous potential for mineral development in our northern territories, where we are stepping up development.
We have a reliable electricity supply to power those projects. Our electricity supply is among the cleanest in the world. Nearly three-quarters of our power comes from low-emission sources including hydro and nuclear — a percentage that will increase as Point Lepreau continues to move towards full capacity in the next few weeks. Wind is by far the fastest-growing source of electric generation in Canada. The Bay of Fundy is helping Canada demonstrate the potential for tidal power.
We have the resources, but we need investments to develop those resources.
According to research done by my department, as much as $650 billion could be invested in more than 600 major resource projects that are underway or planned in Canada over the next 10 years.
Those dollars mean billions in new revenue for governments — revenues that help to fund the delivery of healthcare and education and all the other programs and services that have made Canada’s quality of life the envy of the world.
Making Canada the most attractive destination for investment has been a priority for our government from the beginning. Our approach to fiscal management is achieving the results we expected.
By keeping our commitments to lower taxes, reduce debt, improve regulatory efficiency, and promote free trade and innovation, Canada’s economy is now recognized as one of the most stable and resilient in the entire world.
The combination of our resource wealth and a strong financial system have made us one of the leading centres for the global mining industry.
Canadian exploration and mining companies operate in more than 100 countries, with total assets of almost $150 billion. There are over 1,600 mining companies listed on the Toronto Stock Exchange and the TSX Venture Exchange.
Added to the need for strong fiscal management, our Government recognizes that for Canada to be truly competitive in the global market and to attract new investments, we need an effective regulatory process.
Our plan for Responsible Resource Development will ensure Canada’s regulatory regime for major projects is among the most efficient, effective and competitive in the world. This plan reduces duplication in the review process. It also strengthens environmental protection by focusing on major projects and strengthening enforcement.
Our government’s plan also has an entire component dedicated to ensuring Aboriginal consultations are consistent, accountable, meaningful and timely. Together these measures will ensure Aboriginal peoples are more fully engaged in the environmental assessment and regulatory permitting process from beginning to end and the duty of the Crown to consult is met effectively and meaningfully.
We’re making good progress on our plan, which puts in place firm timelines for the completion of federal reviews that will ensure greater certainty for those investing in Canada’s natural resource sector. We’ve also added new measures that enhance environmental protection including new regulatory requirements for oil tankers and increasing inspection of pipelines by 50%.
Our Government believes that we do not need to choose between economic development and environmental protection. We can — we must — do both. Canadians deserve and expect nothing less from their government.
In the light of growing trends, the Government of Canada has determined that foreign state control of oil sands development has reached the point where further state-owned control would not be of benefit to Canada. Going forward, the Minister of Industry will find the acquisition of control of a Canadian owned oil sands business by a foreign state-owned enterprise to be of net benefit only in exceptional circumstances. The Canadian oil sands are of global importance and immense value to the future economic prosperity of all Canadians.
However, that does not affect the fact that Canada is open for business and continues to welcome foreign investment. I want to make two points regarding foreign investment.
First, the Canadian government strongly encourages capital investment in Canada from the private sector. That is why we have accepted the great majority of foreign investment proposals and there are some important examples in New Brunswick that I’ll elaborate on shortly. That is why we will continue to accept those that meet our tests.
Secondly, we will advance trade and investment agreements to achieve reciprocal treatment abroad for Canadian investors. Our objectives are to see production grow in the oil sands and other sectors of the economy driven by domestic and foreign capital and to ensure our resources reach foreign markets. Foreign investment will continue to support our overarching goal of fostering jobs, growth and long-term prosperity for Canada and all Canadians.
From a provincial perspective, New Brunswick is in a very strong position to benefit from the opportunities in natural resources. The Fraser Institute’s annual review of more than 800 international mining companies ranked New Brunswick the number one place in the world for mining investment.
Survey respondents pointed to New Brunswick’s competitive tax regime; fair, transparent and efficient legal system; consistency in the enforcement and interpretation of environmental regulations; and minimal uncertainty in land claims. New Brunswick is setting an example for the rest of Canada.
Potash Corporation of Saskatchewan is investing more than $1.5 billion in the Picadilly Project near Sussex. By 2014, potash shipments through the Port of Saint John are expected to more than double to as much as 2.5 million tonnes a year. Forest-dependent communities like Nackawic and Atholville have seen the benefits of attracting international investment. Without the Aditya Birla Group of India, there’s no telling whether those pulp mills and those jobs would ever have come back. The company has shown a real commitment to those communities with significant investments to convert the mills to dissolving pulp for its rayon business.
Here in New Brunswick, you are also working with Hebei province of China to help develop an energy efficient wood frame building industry. This is consistent with our government’s work to continue to showcase the advantages of wood frame construction in helping China and other Asian markets meet their housing challenges.
Ladies and gentlemen, the dramatic increase in demand for energy and other natural resources around the world presents Canada with a once-in-a-lifetime generational opportunity — an opportunity that our plan for Responsible Resource Development aims to take full advantage of.
With a wealth of resources, a stable open economy and a modern efficient regulatory system no country is better prepared to take advantage of the opportunity — and to set the foundation for a new era of jobs, growth and prosperity for all Canadians from coast-to-coast-to-coast.
Thank you very much.
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