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Video: Energy and the Canadian economy

Posted by Bob Rae on November 15, 2012 | No Comments

Today I delivered a speech to the Canadian Club of Toronto and laid out my views on Canada’s resource development, but my message was one for all Canadians: that now, more than ever, we have a need for national leadership to guarantee that Canada becomes a responsible, sustainable, innovative energy and economic success story.

The federal government has a vital role to play in promoting development in all regions, balancing growth across the country and refusing to embrace the ideologies of extremes. Unfortunately, under the Harper Conservatives, there has been no national vision and no federal leadership. In this vacuum the conversation has become polarized, and if we are not careful, Canada will get left behind.

In this speech I underlined the importance of what many Canadians already know; specifically, that we need the federal government to act as a catalyst to bring provincial, territorial, municipal and Aboriginal governments to the table, and lead essential discussions on clean technology, foreign ownership, carbon-pricing and sustainable development of the oil sands. In addition, we need to engage in a full partnership with Aboriginal peoples if we are to break down the marginalization and poverty that has unfortunately become a persistent problem.

Canada’s resource wealth – and the oil sands in particular – is a great advantage, but like anything, risks being exploited for short-term gain and then squandered. This is where the federal government must work with its partners across the country to ensure that the speed of development keeps a human pace – and that we are able to create sustainable jobs and communities in conjunction with sustainable resources. We must also guarantee the full participation of First Nations, Inuit and Métis people from the outset in order to achieve success in all resource development projects.

Above all, Canadians need and deserve a sensible, thoughtful discussion – free from partisan rhetoric – that reflects our shared desire to see our resource wealth developed responsibly.

The time for this discussion is now. While some prefer to opt for simple slogans, like “Dutch disease,” “energy superpower,” or “job killing carbon tax,” I remain confident Canadians understand the immense repercussions if climate change is further ignored. Let us join together in our aim for Canada to be a leader, not a laggard, in making energy production deeply sustainable.

As Canadians, we see the promise and potential in resource development, but we want a government that is an active partner with the provinces and balances environmental stewardship, science and development. Nothing less than the future of our economy is at stake.

I look forward to continuing this national conversation with Canadians over the coming months.

Bob Rae

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  1. Avatar of Brian Dugdale Brian Dugdale said on

    Excellent speech Mr.Rae. We need to have a Government that will discuss the important issues with Canadians. We are citizens, adults and should be informed so we can have input for the countries progress.
    Sadly,this government does not choose to treat us as adults but as
    parts of various voting demographics. Thank you for reminding all of us what we should expect,no,demand of our Government.
    Warmest regards,
    Brian Dugdale

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  2. Avatar of Keshav Chandra Keshav Chandra said on

    My concern about resource development is summarized in the following article. We should not partner a deal with a country which does not respect human rights, is completely undemocratic and a dictatorship. Also exercises double standard in internanional trading principles. Something that conservatives must address before letting in ownershio by a communist politcal party to own resources which will be developed to the detriment of Canadian interests, and in favour of the national interests of the dictators in Beijing:

    http://www.calgaryherald.com/news/national/China+just+another+trading+partner/7555412/story.html

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  3. Avatar of Keshav Chandra Keshav Chandra said on

    I am not a true grit? Wow! But I will speak the truth as I know it!

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  4. Avatar of Keshav Chandra Keshav Chandra said on

    Yes, there have to be a steady development of energy resources. The problem is that it will lead to government intervention of some sort. Such clearly would be frowned upon by the Albertans. They all want to make a fast buck and run. This issue is not an easy one to decide.

    On the one hand there is national interest on the other business interest. Businesses don’t care about patriotism or nation’s heritage. It is the buck which speaks and holds sway.

    So how do you do it without disturbing the industry?

    Can there be an incentive scheme which can regulate extraction of energy from the ground?

    May be the federal government should give up tax revenues to support slower development of energy resources as an incentive? In other words they don’t have to dig up as fast to make the same kind of money? Not an easy formula to concieve. In other words a tax write off in exchange for slowing the growth of energy production such that export of energy is reduced to a rationed level?

    That is the only way I see the Federal Government can put it’s money where the mouth is.

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  5. Avatar of Keshav Chandra Keshav Chandra said on

    I say liberals don’t have it. They don’t get it. no one is ready to discuss bread and butter issues. They are all aristocrats with hands in their pockets full of counter productive idealism.

    Come on liberals let us talk about the economy and energy issues. Come out of the wood work and be counted.

    Bob Rae is simply found to be crying out into the wilderness of the downtown financial district with his socialist agenda. Yes. the buildings are beautiful, and full of professionals vending money and fishing for profits. That is great!

    There appear to be no liberals on this website who are interested in bread and butter issues! Why?

    Was that the reason we lost out in the market place of votes?

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  6. Avatar of David Tetreau David Tetreau said on

    Firstly resources belong to the provinces – it is in our constitution.
    Secondly 50% of resource revenues are already taken into account when determining transfer payments (along with 100% of other revenues).

    As Liberals we should not be looking for ways to take revenue away from successful provinces. I think we would make more headway and be doing more for Canada if we were to take a look at how to make other provinces successful at using their own resources. We need ideas on this.

    It must be noted the federal government, under the Liberals, actually put money into the oil sands when they were first being developed. A somewhat risky bet at the time but the dividends for Canada, not just Alberta, have been great. Perhaps something along these lines, perhaps making some of the transfer payments conditional on putting in place provincial policies that encourage resource development should be proposed?

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  7. Avatar of David Tetreau David Tetreau said on

    With respect to foreign investment and in particular Chinese state owned company investment in Canadian companies it is a hard call to make. To be sure the Chinese government has many human rights abuses but the developed economies of the world have been rather naive in how they engage the regime.

    The Chinese have dangled their huge market in front of us and we, the developed world, have let our companies invest willy-nilly. We have taken no coordinated action and if Canada were to just go it alone we would just be shooting ourselves in the economic foot. The National news, a few days ago, made a claim that if China’s economic growth were to fall to 5% if would cut the Canadian growth rate in half! They but that many of our resources!

    So our choices are either
    — let the deal go through and keep treating human rights and pollution controls and CO2 emissions and many other things as separate issues that are not tied to trade.
    — or deny the deal, anger the Chinese royally, and watch our meager economic growth slow even more.

    Don’t forget resources and commodities such as oil are a business and will have their ups and downs. Just the other day their was a report out of the USA saying they would reduce their imports of oil to 0% within 10 years. Can you imagine? If this were to unfold what it would do the price of oil and the oil sands?

    Given all of the above I say let the Chinese invest at the current high prices because they may just be scrambling to sell it back to us at a lower price in a few years.

    As a side foreign policy initiative we should also be talking with the rest of the democratic world wrt to how to move human rights, and promote democracy, possibly somehow tying it to trade if that is what is required. We need to do it in concert though – not as one off actions.

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    • Avatar of Keshav Chandra Keshav Chandra said on

      Chinese are buying our natural resources from what I understand. We have a deficit in the trade account from what I understand. In other words we buy more from them than what they buy from us. Natural resources are being used to balance our deficit. I beleive trade deficit is around 80 billion dollars. In other words we are buying lot more of their consumer products than we sell natural resouces which offset the imbalance.

      So if their economy falters and our income falls as a result then presumably we buy less of their consumer goods. Something they would have to seriously consider. To be honest I am fed up seeing everything I buy is made in China. I don’t trust their grocery products whether they were grown under dubious circumstance of pesticides dirt and what have you. Their milk products caused lot of deaths in China and it impacted those who bought Chinese milk or related products as someone there put a chemical which was seriously harmful to health. They have discontinued its use, but the apprehension remains.

      Foreign companies operating in China are owned 51% by the communists. So we are simply levering our investments to their advantage while we don’t have any such policy that if oil sands are owned by a foreign government then 51% ownership is by Government of Canada by definition.

      If they will not buy our oil then India can which has zero stake in Canada’s oil patch. In the old days the nuclear supply dispute overshadowed the trade side of agreements between India and Canada. However, the Chinese were exempt from that requirement. The good guy gets shot in the foot first according to rules!

      I think your argument is one of inciting fear among Canadians in order to increase sale of our natural resouces to China. Chinese are not playing by the free trade rules anyhow.

      I refuse to be captived by fear to agree with such an unnatural unfree trade with China.

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  8. Avatar of David Tetreau David Tetreau said on

    Many comments in the talk about engaging our First nations people. Exactly. They should rightly benefit from economic development especially where they are close to those developments. If you look to the oil sands companies who have had some success in getting some economic benefits flowing to the natives I think they would have valuable insight. Some of them have had success and I am sure a lot of involves training and probably some cultural sensitivity.

    Simply put the Liberals need to propose policies that promote training and work co-op programs for under-priviledged groups.

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  9. Avatar of David Tetreau David Tetreau said on

    Foreign investment is good for our economy and we still have control over the resources. The company would still be in Canada and would still need to abide by Canadian rules and regulations for everything from labor relations to the environment. I am not sure why there is so much angst over the issue. We used to worry about American ownership and seem to have gotten over that. Diversifying where our investment comes from can only be good in my opinion.

    Still since Canadian companies are not allowed any investment in the Chinese oil sector it seems like this could be a great bargaining chip to win other concessions.

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    • Avatar of Keshav Chandra Keshav Chandra said on

      David:

      One issue about china is that they do not play by the free market economy rules. Were this a private chinese company trying to buy into the oil patch I likely would not have much of an objection. That is the difference.

      They have rigged the foreign excahnge in their favour by setting rates which destablizes trade in their favour and to our economic disadvantage. we buy there consumer goods cheaper than they are in the free market place. It places additonal burden on our businesses to compete with their goods. Such setting of rates is a market subsidy. It is seriously dtrmental to our economy and businesses. Our governments do not own these businesses at 51% to set prices.

      Chinese are playing unfair trade practices and thwarting competition.

      Why should our manufacturing industry be burdened by subsidized competition from China? It is very bad for Ontario’s industry. We are becoming a third world country–especially Ontario.

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  10. Avatar of David Tetreau David Tetreau said on

    Keshav,

    Canada has restrictions on foreign ownership in some industries. China does too and it isn’t as straight forward as the Chinese government owns 51% of every company.

    The reason manufacturing has moved to China is competitive pressure. In the absence of other barriers capital/companies look for the greatest return on their investment — and as far as manufacturing goes the main requirements are a well behaved labor force, a cheap labor force (which China has in abundance), and a good enough infrastructure to get goods to market. Pollution and human rights play little role in where the capital moves. Comparative labor costs are available on the web and China is far cheaper than the developed economies of the world. Interestingly enough, as China has developed, they have lost jobs to even lower cost countries (Vietnam and the Philippines for instance).

    Sure enough the Chinese, as will almost any country, will try to rig the system to their advantage. If it is bad enough we can bring a case against them at the WTO since they have now joined that organization.

    What sort of strategy should Canada follow?
    1) Pursue unfair trade practices through the WTO where it is warranted.
    2) Work to change the world trade policies, at least with respect to trading with us and our developed world allies, such that there is a level playing field. This means pollution means something, this means labor rights, this means other factors that China may tilt in their favor.

    But taking unilateral action will just hurt our country.

    One advantage we have is our freedom and our relative lack of corruption. We also have a huge country with lots of resources and a smart labor force. We need to use thsoe advantages. Develop our resources industries and figure out the best most economical most environmentally friendly to do it. Do value added processing where it is competitive. But subsidizing manufacturing of consumer goods will not work.

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  11. Avatar of David Tetreau David Tetreau said on

    To get more back on topic.

    The manufacturing sector in Canada and the rest of the developed world is in decline because of globalization — not because Alberta has successfully developed its oil sands.

    The Nexen deal represents just 3% of the oil sands so it is really of little consequence if the Chinese, or anybody else for that matter, own 100% of that particular company. This is because to get the resource they still need to follow Canadian rules and employ Canadians.

    The energy sector is one of the few advantages that Alberta has going for it so it is only natural for them to want to make the best use of it. Canada is structured such that provinces own their resources, not Canadians – but Canadians in general do benefit from the extra economic activity and through transfer payments when provincial resources are developed. The federal government’s role is more in the environmental area.

    Due to the environmental impact of the oil sands, Canadians, and especially Albertans, since it is situated in their province,should be questioning the pace at which it has been developed.

    Alberta’s royalty regime has encouraged oil sands development to such an extent that the environmental impact, especially from a CO2 emissions point of view is undeniable. The royalty regime has encouraged development to such an extent that the market is now scrambling to build routes to export the bitumen.

    The royalty regime is in effect subsidizing the oil companies. Is the royalty regime perhaps too generous to the oil companies? Could the pace of development be slowed by adjusting that framework? What is the appropriate pace of development?

    As a national party the Liberals should be looking to influence public opinion in Alberta by bringing these facts to light — not looking for ways to insult and penalize Albertans.

    As Canadians we should be asking to what extent we handicap our economy by signing on to agreements like Kyoto when our biggest trading partners the US and China did not sign the agreement?

    What is our long range vision – a no carbon economy? Is signing on to agreements like Kyoto the best way to achieve that long range vision?

    We should not be looking to just penalize some regions for being successful. To what extent do current policies reward failure? What policies will encourage all regions to be successful? Don’t all Canadians want jobs and prosperity and some security? Lets get all regions as successful as Alberta and then lets use some of that prosperity to move us towards a long range vision. Success is maintaining and improving our position in the world – failure probably looks something like Argentina (was it NDP like policies that brought that country down?)

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