Weyburn – Saskatchewan Oil and Gas Show chair Del Mondor put a number of questions to Saskatchewan Premier Scott Moe and Alberta Premier Jason Kenney in a forum before a packed curling rink on June 5. The pair had just signed a memorandum of understanding to align service rig regulations between the two provinces. After lobbing a few softballs, Mondor finished with a question about national unity.
Kenney, whose went to school in Wilcox and used to play hockey in Weyburn, said he wanted to “deepen the natural alliance between these two great provinces as champions of the resources industries, the Western Canadian economy, jobs and growth.”
He thanked Moe, the cabinet, former Premier Brad Wall and “all of the Saskies for having stood alone, in the federation, for the last several years, as the great defenders of the Western Canadian economy and the resource industries. And now, I’m pleased to tell you, that help is on the way.”
Moe added that in the last couple months, he’s seen a change. “This is quite telling, with respect to our nation, and with respect to many of our hardworking families across Canada who are starting to realize exactly what it is that is creating wealth for our families. It is industries like agriculture. It’s industries like the energy industry, the manufacturing industries that support what I call the wealth generating industries. You’re right, Premier Kenney, it has been lonely at times.”
Moe thanked the people in the room, across the province and the nation for the support.
Mondor asked what are the economic prospects for each province. Moe said, with regards to the energy sector, “I truly hope our toughest days are behind us.”
“Really, all of our industries in Saskatchewan, and I would say by extension, across Canada, really need three things. I call them the three T’s. We need a tax and regulatory environment that is competitive, here in Saskatchewan. We need the ability to transport those goods that we produce, that we harvest and manufacture to countries around the world. And last but certainly not least, we need trade agreements with countries around the world. Saskatchewan does business with about 150 different countries each and every year. So we need trade, we need transportation, and we need a fair tax and regulatory environment.
“We need the three T’s. I won’t comment on the fourth T that we most certainly don’t need here,” he said.
“Who could he possibly be referring to?” Kenney said, regarding Moe’s oblique reference to Prime Minister Justin Trudeau.
He went on, “Let me just be blunt. Alberta has been through four very difficult years of economic decline and stagnation. There’s just now point in sugar-coating this. Our economy today is four per cent smaller than it was four years ago. The average disposable income is down 6.5 per cent over those four years. We still have nearly 200,000 unemployed people.
“There is, as I predicted in the recent Alberta campaign, a lot of credible evidence that we may have slid back into a technical recession for the first half of 2019 in Alberta, which is why there was a sweeping vote for change, to elect a government with a mandate focused on getting Alberta back to work, to turn Alberta, once again, into a job-creating engine, restoring investor confidence and showing Alberta is open for business.
“So, the bad news is evident. The good new is that Albertans, are, like Saskatchewan folks, natural optimists. They just need a reason for their natural optimism. And I think on election day, they started to get one. We have sensed that. We just picked up, everywhere, signs of renewed confidence that things are moving again.
“A lot of people had frozen business decisions. They weren’t hiring. They weren’t purchasing new equipment. They weren’t making those deals,” Kenney said. But the small business confidence index increased 14 per cent in the last four weeks, he noted. The real estate industry has picked up as well.
“It’s critical that we restore investor confidence. We’ve seen the flight of tens of billions of dollars, of job-creating capital investment, fleeing Alberta over the last four years. Most of it, going from Alberta’s oil and gas sector to the oil and gas sector south of the border. It hasn’t done anything to reduce energy production, or emissions, for that matter. In fact, it’s generally money that’s gone to jurisdictions with generally lower environmental standards, and certainly no carbon taxes,” Kenney said.
“So we need to restore investor confidence. I’ve already been to Bay Street twice, and I can tell you major investors are paying attention,” he said, adding there will be some friendly competition with Saskatchewan. This will include lowering taxes in Alberta, the removal of Alberta’s carbon tax, and red tape reduction.
“We don’t only have a price differential. We have a regulatory differential. You can get a well license in west Texas in a month. It takes up to up to 18 months in Alberta right now. Quite frankly, Saskatchewan, you are eating our lunch on approval timelines. We intend to catch up, Scott.”
Competitiveness
Mondor asked a question from SHOP, the Saskatchewan Headquartered Oil Producers, of which he is a member. He asked about competitiveness, saying, “What can we do, in our provinces, that we have control of, to increase our competitiveness, not just between Alberta and Saskatchewan, but between all jurisdictions in North America?”
Moe responded, “One, is within our jurisdiction, two is how we work together, as we just did, with the signing of the memorandum of understanding. Then the third would be, ultimately, to ensure we have like-minded provinces standing together to resist some of the outside forces that are being imposed on our industry, and an number of our industries. I think we’re totally aligned with a number of premiers across the country.”
Referencing Alberta’s technical recession, Moe said, “We have essentially, in this nation, been doing that to ourselves. It’s policy decisions that are putting us into that type of conversation where we’re in a room where we’re even going to utter those words.”
He noted the U.S. has 3.6 per cent unemployment, and that investment is heading south of the border.
“At 3.6 per cent unemployment, that’s the lowest level since 1969. There’s no reason for us to be talking about technical recession in Western Canada or anywhere in this nation. There’s cause for us to have a much broader conversation about how do we produce our products sustainably and competitively, how do we ultimately get them to market, and ultimately, how do we do we preserve that market share that we have in those countries all around the world.”
Moe referred to the recent waterflood incentive, and an oil processing incentive that is coming. “We need to continue to work on the things we can control within our jurisdictions, working closely with our industries, in Saskatchewan, and in Alberta. It’s the energy industry, the agriculture industry. Increasingly, the manufacturing industry, and the technology industry is coming into play as well. You have the oilsands in Alberta, we have potash mines here in Saskatchewan. There are some differences in how we create our wealth, but we align on so many more industries then we actually have any differences on. It’s important for us to work together, but to pay attention within our jurisdictions.”
On competitiveness, Kenney replied that tax cuts, taking the corporate tax rate from 12 to eight per cent over installments will put Alberta ahead, unless Saskatchewan tries to catch up. “This is one way to bring job-creating capital back to our economy,” he said.
Legislated timelines for project approvals is another area. Kenney noted it took five years for Imperial Oil to get approval for a cutting edge multi-billion dollar SAGD project. “Get moving at the speed of business rather than the torpor of bureaucracy will be a critical part of this,” he said.
He added that the province of Alberta will ask rural municipalities to do their part, to “row in the same direction, creating jobs and growth, rather than killing the goose that lays the golden egg of job creation in our economy.”
Kenney said if the federal government isn’t aligned with them, they will be undermined.
TMX
Both premiers expected the Trans Mountain Expansion project to be approved, as indeed it was two weeks later. Moe said, “We need a few more. The conversation about an east-west corridor needs to happen.”
He said he never understood why the federal government needed to buy that project.
Kenney said, “Let’s pull the camera back. After the cancellation of Northern Gateway, the killing of Energy East, surrender to Obama’s veto on Keystone XL, and you’re going to hear from Vivian Krause later on. Our approach, in Alberta, is to move from a tactical approach, where we’re constantly on the defence for market access, for pipelines and resources, to a proactive and strategic posture. To move from the apologetic and defensive to a assertive and proactive, in defence of a resource and our way of life.
“That begins with acknowledging why we are so landlocked now. This is the consequence of a 15-year-long, foreign-funded campaign, which has spent tens of millions, hundreds of millions of dollars, in a campaign to landlock Canadian energy, and we must admit, that campaign has been massively successful.
“We keep looking to the next thing. It’s not about the second cabinet approval of TMX, it’s about the construction of it, the war in the woods that’s been threatened by the foreign-funded forces of obstruction, and the forces of economic decline.”
Kenney said the same leaders of this obstruction wrote Bill C-69, the Impact Assessment Act, and Bill C-48, the Oil Tanker Moratorium Act.
“All of these things are connected,” he said. It’s about putting those groups on defence, which is why the government of Alberta is funding a “war room” to counter these efforts.
“We are going to put the other side on the defence, and for once, be on the front foot, defending our way of life.”
National unity issue
Mondor asked, “Is the pipeline issue a national unity issue?
“Yes,” Kenney said matter of frankly, before breaking briefly into French. He thanked Quebec City MP Gerard Deltell for standing on that stage and saying the majority of Quebecers prefer ethically produced Canadian energy to OPEC dictator oil.
“This is, and should be, a national unity issue.
“This country was united only because our leaders had the vision to complete the transcontinental railway, national infrastructure that would arguably be impossible to build today according to today’s rules and politics. We need to capture that pioneer spirit of those who went before us who built things, who dreamed big, who understood how to develop, responsibly, the resources of this country in a way where we could share our prosperity.
“Let me just say this: Albertans and Saskatchewan folks are very generous. Alberta, in particular, has contributed over $600 billion, net to the confederation, through equalization and other transfers, since 1957. And we do not begrudge our friends in the rest of Canada receiving the benefit of that wealth. We are proud to have played that nation-building role, to help schools and hospitals in Quebec in Atlantic Canada and elsewhere be built because of our innovation and resources. All we ask, now, is the right and the ability to develop those resources, so we can continue to help, to lift up those Canadians in other parts of the country.
“And to do that, it means we must have market access. We must have the infrastructure to get a fair price,” Kenney said.
“I would just say, in closing, it’s not just about nation-building. It’s the right thing to do for the world. Because the International Energy Agency projects that there will be a growing demand for oil and gas through at least 2040. We’ve seen a 10 per cent growth in consumption in oil over the last decade alone, up by 10 million barrels per day, much of that furnished by production from south of the border, because there’s no carbon taxes. But also from increased production from some of the world’s worst regimes.
He pointed out, “Either we abandon global energy markets to some of the world’s worst regimes, to the socialist dictatorship in Venezuela, to Vladimir Putin’s Russian autocracy, to regimes in the Middle East that treat women like property instead of people, to regimes that spread extremism and conflict around the world. Either we hand them a monopoly on these markets, to continue fueling instability, or we help supply much of that growing demand. It’s not just to supply Canada. I believe it’s the right thing to do, morally. The world needs more Canadian energy.”
Moe added, deadpan, “Ditto.”
He then said, “I absolutely agree. The construction of pipelines, not a pipeline, the construction of pipelines, the real conversation around our ability to get our products to market, whether it be our energy products, our sustainable energy products, when you compare those products to any other energy product around the world. The ability to get our agricultural products, our timber products, to market, for Saskatchewan, for all Canadians, is beneficial.
“So most certainly, the conversation around our ability to actually supply the world with the products we have, and they’re not only natural resource products. We have another product we are supplying the world, and that’s innovation,” he said, noting to carbon capture and storage, solar panels on wellsites and other.
“We have something to offer all Canadians, not just through the sharing of our wealth through the equalization program, but through the sharing of access to our products and having the ability to add value to our products like Saint John, New Brunswick,” he said.
That means not just processing it in New Brunswick, but shipping Canadian oil overseas to offset other nation’s oil.
“To answer your question, is this a national unity crisis, I would put two comment to that: Yes, it is. And I fully believe us as a nation are going to put on our big-boy pants and have a proper conversation to get through it,” Moe concluded.
