TO HEAL A NATION
HERE’S HOW TO HELP THE OIL AND GAS SECTOR, NOW AND IN THE LONG TERM
Canada needs to become more secure by becoming more self-sufficient. In a new series, the Post examines how a country made wealthy by globalization and trade can also protect itself against pandemics and other unknown future shocks to ensure some of our immense resources and economic power are reserved for our own security.
Governments are quite rightly focused on our health and public safety. It is, and will be for some time, their obvious and essential priority. It should be ours as well.
But the economic devastation visited by COVID-19 in the near term and its forecasted long- term impact on our economy must also be part of our focus. We have an opportunity as a nation to become more self-sufficient, more agile and innovative, stronger on the other side of this.
The federal and provincial governments have been reacting as fast as they can to the immediate economic crisis being faced by families and businesses of all size. From EI- conveyed help to wage subsidies to eviction bans, governments have acted earnestly and urgently.
Might they also task a cabinet committee, an advisory council or a policy czar in an intentional effort to consider economic recovery — for the long term.
Credit to B. C. Premier Horgan, who announced the appointment of an Economic Recovery Task Force including business and industry leaders, senior government officials and leaders from First Nations.
Credit to Alberta Premier Jason Kenney, who over two weeks ago created the Alberta Economic Recovery Council including a broad spectrum of innovators, job creators and experienced policy hands, among them former prime minister Stephen Harper.
Kenney was not finished there. While continuing his government’s focus on COVID-19 response and public health, he also announced his government will take a $ 1.1- billion equity stake in the KXL pipeline to ensure it proceeds and that Alberta is ready to grab a bigger share of oil sales when both price and demand inevitably recover. That is long- term thinking even as the government deals with immense short- term challenges. Both can be done.
In fact, Alberta’s ambidextrous approach to both health and economy has not stopped it from leading all provinces in per capital COVID-19 testing, followed by my own province of Saskatchewan.
The pipeline acquisition, the enlisting of advisory councils and similar initiatives by government highlight the opportunity and the imperative to look beyond the crisis to the recovery, perhaps even to recommend resets of policy in certain sectors.
This is the case with Canadian oil and gas, first critically wounded as a bystander in the Russo- Saudi knife fight and then coldcocked by COVID-19. And here we are with a barrel of Western Canadian Select oil worth less than a six- pack from Saskatoon-based Great Western Brewery. Don’t get me wrong, it’s great beer, but even they would tell you this is just very wrong, in a foreboding, dystopian kind of way.
Last year (which was not even a particularly good year in the sector) Canadian oil and gas contributed $ 108 billion of Canada’s GDP, employed over 500,000 Canadians directly and indirectly, and contributed somewhere near its annual average of $ 8 billion in tax revenue to governments in Canada, to citizens of Canada. Year after year it is this country’s number one export.
A dumb question perhaps, but do we want this industry for Canada’s future?
For those who answer with the tired old nonsense that this is a dying industry and we need to move on from it, the International Energy Agency and other major forecasters foresee increased global demand for oil through 2050. If your answer to the above question is yes, then now is the time for governments at all levels to act. Perhaps we can even press a reset button in terms of federal energy policy.
Perhaps ( maybe this is the sodium of way too many bags of isolation Hawkins Cheezies talking) our federal government can use this current moment, this crisis, to state unequivocally that as long as the world needs and wants oil and gas, Canada should be a responsible and leading supplier.
On the wings of that dove we could then design a Canadian oil and gas economic aid package with the short, mid and long term in mind.
It might include things like:
Long term
❚ A stable and predictable regulatory environment with changes to or replacement of C- 69.
❚ The repeal of the tanker- ban Bill C- 49 to send a strong signal to the West and to the world that Canada wants to foster a positive investment climate for the sector.
❚ Something as simple and basic as very public and unequivocal support for the sector from the federal government accompanied by a declarative federal vision statement that understands and endorses Canada’s role as an environmentally responsible oil and gas supplier to a world that is going to continue to need it.
Mid term
❚ The federal government would do well to take the advice of Premier Kenney and reach out to its American and Mexican counterparts with a view to developing a North American response to Saudi Arabia’s obvious effort to crush the North American industry with predatory dumping, including the tariffs about which the Americans are publicly musing. A Canada/ Continental First energy strategic response is needed.
❚ Completion of the TMX pipeline. ( Credit here to the federal government for pressing forward on this project.)
Short term
❚ Finance Minister Bill Morneau’s announced intention to have the government fund a well completion program is something we called for back in 2016 and makes even greater sense now as a temporary way to put oilfield workers back to work. It would also be good for the environment.
❚ The federal government might consider tools like liquidity loans with rigorous criteria emphasizing strict repayment capability for approval.
❚ Provinces and local governments can help, too, with temporary bridging relief measures that might lower such operating costs as power rates and property taxes or provide temporary royalty breaks. The feds could help the provinces in this respect by triggering the fiscal stabilization mechanism for “have provinces” within the equalization program, providing them with deserved and needed funds.
A plan to help keep people on the job and companies from bankruptcy in the short and mid term combined with a long- term view and policy that is worthy of an industry so essential to the nation’s economy, is timely and possible.
You might reflect back favourably on the Harper government’s $ 14- billion economic aid package for the auto sector during the 2009 economic crisis?
Consider then that oil and gas contributes five times more to Canada’s GDP than auto manufacturing’s $ 20 billion.
Do we want this industry or not? Will we reject the opportunity that comes with this clear and present challenge?