RNNR Committee Report

Official Opposition – New Democratic Party of Canada

Dissenting Opinion - Standing Committee on Natural Resources

Cross-Canada Benefits of Developing the Oil and Gas
Industry of the Energy Sector

New Democrats recognize the importance and major contribution of the oil and gas sector to Canada’s economy. However, as Canada’s Official Opposition, we favor an approach to Parliamentary Committee studies that offer objective and balanced analyses contributing to sound resource management. We are appreciative of all of the witnesses who took the time to share their perspective and expertise. The Majority Report of the Committee provides a reasonable summary of their testimony. Regrettably, the testimony was constrained by the limited scope of the study as proposed by the government, which prevented a net benefit assessment of the oil and gas sector. Few witnesses were invited to testify on current or potential risks or costs associated with the sector. The Majority Report consequently fails to provide meaningful or balanced direction for public policy.

The government has espoused that “responsible” resource development requires balanced consideration of both economic development and environmental protection, as well as enhanced consultations with Aboriginal peoples. Yet by design, this study was limited to a narrow review of economic benefits of the sector. Inclusion of testimony by a broader range of witnesses on associated risks or challenges faced by the oil and gas sector could have offered more credible and constructive advice for sound and balanced federal policy.

New Democrats believe that sound federal oil and gas policy, as with all natural resource and energy sectors, must be premised on optimizing long-term benefits to Canada. This includes not only addressing our own energy needs, but providing Canadians with stable, well-paying jobs over the long-term. It is also essential that we require use of the best available, clean and energy efficient approaches and technologies to minimize the environmental footprint. Regretfully, the study was limited in focus to the short-term benefits of exploiting these resources absent parallel consideration of the associated economic, social and environmental challenges.

A more balanced review could have afforded the Committee the opportunity to hear testimony on these factors. A number of witnesses expressed concern with the short-sighted “rip and ship” approach of the Conservative government, which fails to offer value-added benefits in upgrading, or refining raw resources creating jobs for Canadians. Notably, recent budgets have either revoked or weakened environmental laws, gutted energy and environmental review processes, and compromised the independence of the National Energy Board (NEB).

In a 21^st century economy, a progressive, realistic and responsible policy must also factor in the true costs of resource exploitation and apply a policy framework addressing those challenges to ensure sustainability. The study could have benefitted from testimony on strategies to address social or environmental issues while still creating employment.

“For some reason, we can't have a rational, nuanced conversation about the benefits and costs—and I underline the word “costs”—of developing this important resource. For too many people in government and industry, “you're either with us or against us”. If you raise a question about pace, or royalties, or value-added development, or, heaven forbid, the environment, then you are painted as a simpleton, or, worse, some kind of traitor to Canada and its core industries. This has to stop.”
Gil McGowan (President, Alberta Federation of Labour)

A number of witnesses testified that the current extraction model for the oil and gas sector delivers only a fraction of its potential value to Canadians. While Canada’s capacity for processing oil and gas has been diminishing, Conservative policy has consistently endorsed the shipping of larger and larger amounts of unprocessed bitumen, with diminishing returns and harmful extractive technologies. Robyn Allan (Economist), Michael Priaro (Professional Engineer) and Gil McGowan (President, Alberta Federation of Labour) testified that a clear deterioration of Canada’s capacity for domestic added value in the  sector translated into a loss of direct and indirect jobs impacting every region of Canada.

“According to a study from the Alberta government itself, which we had to pry out of their hands using freedom of information legislation, we get far less for our heavy oil than other nations with comparable resources. We get less than Norway; that's perhaps no surprise. We get less than Russia; we even get less than Angola.”  
Gil McGowan (President, Alberta Federation of Labour)

These witnesses presented a compelling case for adopting an alternative policy framework that helps create jobs in manufacturing, science and financial services by ensuring that oil and gas development is, at least in part, refined and processed in Canada. For example, as was pointed out, it is bewildering that Canada, the 6th largest oil producer, finds it necessary to import around half of its domestic fuel requirements. The Official Opposition believes that the Government of Canada has a responsibility to promote domestic energy security over the long-term for Canadian consumers.  We are disappointed that the current government is more focused on spending millions of taxpayer dollars on government advertising abroad rather than pursuing means to create jobs in Canada through cleaner, more efficient energy solutions.

The Canadian economy will achieve higher value if it transforms oil and gas resources into finished products, which mean more money and jobs for every region of Canada. As Trevor Harrison (Professor and Director, Parkland Institute, University of Lethbridge) pointed out, the agenda of multinational companies in Canada, which dominate the oil and gas sector, is to create a supply chain that minimizes Canadian value-added and solidifies the “rip and ship” approach. This pressures the Canadian economy to export increasing volumes of low added-value bitumen. This view was echoed by Robyn Allan:

 “When it comes to non-renewable resources rapid extraction and export is exploitation, not development. Development means enhancement, value-added, wealth generation and societal improvement—some form of contributing to a better state because of economic activity.”  
Robyn Allan (Economist)

The Official Opposition supports an energy strategy that would place oil and gas development as part of a larger resource policy framework integrating clean energy objectives with a long-term goal of building a balanced, sustainable economy.

The Official Opposition recognizes the fundamental importance of developing Canada’s vast natural resources in a responsible and sustainable way, while seeking opportunities to develop, use and promote environmentally friendly technologies. Unlike the Conservative government, New Democrats do not see a conflict between developing clean energy and developing fossil resources. Normand Mousseau (Professor, Université de Montréal, Department of Physics) presented the view that Canada has a huge variety of natural resources and needs a comprehensive sustainable energy strategy based on both renewable and fossil resources, a strategy developed by the federal government in consultation and cooperation with the provinces, territories, first nations, industry and the public.

A sound Canadian energy strategy would incorporate the basic principles of sustainable development – economic, social and environmental security. Such a strategy would take a long term view on how to develop our vast natural resources so as to not only secure maximum benefit for all Canadians into the future, but also preserve the integrity of our environment for future generations:

“It has to be part of a strategy that means everything to us; that means we're going to be developing this resource knowing that at some point there's an end, so we prepare for that end in the transition process. We develop it knowing we have some responsibilities to the world, that we're not growing it to an extent that is not sustainable, that our strategy includes not only the extraction of the resource, but the refining, and marketing, and we accept responsibility for emissions in all of that, and come up with a target that is achievable.”
Roland Lefort (President, Local 707A, Unifor)

Whereas the Conservative government has chosen to focus entirely on fossil fuel resources, the Official Opposition believes a sound natural resource and energy strategy would focus also on the benefits to Canadians of developing renewable sources. For example, gas may be viewed as a transition fuel as we progress towards a cleaner, renewable energy sources. Renewables can reduce emissions levels in the extraction of oil and gas. Céline Bak (President, Co-Founder, Canadian Clean Technology Coalition, Analytica Advisors Inc.) presented evidence to the Committee to show that the clean technology industry offers a huge potential in terms of job creation, including opportunities for the oil and gas sector. This view was echoed by Sarah Dobson:

“The scenario of lower oil demand and thus lower oil prices coupled with fast-growing demand for clean energy needs to be acknowledged by the Government of Canada in its policy choices and economic planning. By shifting our focus towards investing in sectors such as clean energy, we can build the kind of diversified economy we need to be competitive in a global low-carbon economy.”
Sarah Dobson (Economist, Alberta and the North, Pembina Institute)

Andrew Leach, (Associate Professor, Author, Alberta School of Business, University of Alberta) demonstrated that industry is considering the risks associated with expected constraints on the use of carbon-based energy sources around the world. He made a clear case that Canadians deserve a similar assessment of the risks, compared with the benefits that arise from oil sands development and climate change policies. The Official Opposition believes that a more balanced approach that considers the effects of climate change and the need for government responses is warranted.

 Sustainable development of the oil and gas sector should not rest solely on consideration of short-term commercial interests and the quarterly reports of those who are extracting and exporting the resources. According to testimony shared by Chief Alan Adam, Athabasca Chipewyan First Nation:

“Not only are the first nations not benefiting from it, but I don't think Canada and Alberta are benefiting from the natural resources in the area because of the fact that we're continuing to let this non-renewable resource be extracted at a fast rate right now, and we can't comprehend the magnitude of the environmental disaster that's going to erupt from it.”
Chief Allan Adam (Chief, Athabasca Chipewyan First Nation)

As a result, the Conservative government’s Majority Report does not adequately reflect the concerns of this witness, who made a strong case against the lack of level playing field experienced by First Nations with respect to equal partnership in energy decision making and project management:

“Everybody across Canada thinks that the First Nations are benefiting from the oil sands development in this region. We have to argue, and we have to lobby hard with industry in order to obtain contracts in this region. In more ways than one, the First Nations, with regard to our traditional territories, are being overlooked with respect to how economic prosperity would be moved forward.”
Chief Allan Adam (Chief, Athabasca Chipewyan First Nation)

The focus of the standing committee should have been broadened to include critical Aboriginal related issues such as revenue-sharing, benefit-sharing, resource access, or legacy measures, which are important for creating useful partnerships and for the sustained development of the oil and gas industry.

New Democrats have repeatedly stressed the importance of full inclusiveness and recommend, once again, that Aboriginal communities be considered as equal-partners and be involved in all aspects and at all levels of resource development decisions to respect their inherent rights and treaty rights. We regret that the Standing Committee on Natural Resources once again failed to uphold their duty to adequately consult and reflect the perspective of Canada’s Indigenous peoples.

By only considering the benefits to oil and gas developments in Canada – and none of the risks – the Conservative government has completely abandoned objective analysis and its responsibility to ensure that the public interest is at the forefront of natural resources policy in Canada.