Pipeline spat ‘frustrating’: Morneau

Federal finance minister restates position that project ‘makes sense’

B.C. and Alberta’s dispute over Kinder Morgan’s Trans Mountain pipeline expansion project “is one of those frustrating things that happens in a democracy,” federal Finance Minister Bill Morneau told a Vancouver audience Tuesday.

“But we have to deal with it,” Morneau said during a breakfast discussion with the Business Council of B.C. while repeating federal government support for the project.

Making sure Canadian resources can fetch world-market prices is the best way of attracting investment, Morneau said, though he also promised new ways of finding public consent for such projects.

“We’ve said clearly we believe that the Kinder Morgan pipeline makes sense in order to reach that objective,” Morneau told reporters afterward.

The minister was in Vancouver to talk about his 2018 federal budget, with $21 billion in new spending and an $18-billion deficit, which he characterized as continuing investments in Canada’s long-term capabilities while the economy is strong.

The crowd at Vancouver’s Fairmont Pacific Rim hotel, however, was more interested in shorterterm concerns such as American tax changes, a potential trade war with the U.S. and the competitiveness of British Columbia’s resource sector.

“Particularly in British Columbia, we are a highly resource-dependent economy, and making sure we have a streamlined approach (to regulation) is critically important,” said session moderator Susan Yurkovich, CEO of the Council of Forest Industries.

That means setting effective timelines for environmental reviews before getting to yes-or-no decisions, which can give project proponents more certainty, Yurkovich said.

Morneau said while some in the audience might be skeptical of the overhaul the government is proposing to give its environmental review policy, he is hopeful a new process that deals with conflicts upfront will yield better decisions.

“The frame we’re coming at is that we have to acknowledge there will be interveners in a project,” Morneau said, and that by “acknowledging that upfront is the smarter way to get at it.”

If critics are more likely to feel their voices are being heard, that can only make projects more secure, Morneau suggested.

“It doesn’t make sense to continue on the path of what we’ve been doing for the last decade, which wasn’t actually getting us to project certainty,” Morneau said.

That certainty is vital to the competitiveness of industry in

B.C., business council CEO Greg D’Avignon said.

“The competitiveness of Canada and British Columbia is really at risk,” he said in an interview.

B.C.’s economy has benefited from a fair exchange rate with the U.S. dollar and low interest rates that gave a big boost to housing growth and related retail sales. However, if that spending diminishes, “you’ll start to find the foundation of the economy in B.C. and Canada are quite weak,” D’Avignon said.

Morneau was also pressed on why the government didn’t respond in his budget to big U.S. corporate tax cuts that slashed corporate rates to 21 per cent from 35 per cent. Morneau said his department is keeping a close eye on how the U.S. implements those cuts, which upon closer analysis don’t appear to be so steep, averaging about 25.8 per cent south of the border compared with Canada’s existing 26.8 per cent rate.

“I’m not trivializing the change, because it’s significant,” he said, “but it’s important to point out it’s not (as deep) as people are saying.”

Morneau added that the government hasn’t ruled out making its own tax changes.

On a potential trade war with the U.S., Morneau shed no new light on how Canada will react to U.S. tariffs on steel and aluminum, although the European Union has laid down its own plan of retaliation.

“We see ourselves as being an important part of the U.S. supply chain … We’re clearly putting forward the position to the U.S. that we believe Canada should be exempt from tariffs on steel and aluminum,” he said.