Over the past few days, we’ve seen a spike in concern trolling editorials about the state of natural resources projects in Canada, predicated by Petronas’ decision to cancel the Pacific NorthWest LNG plant in BC. And reading through these editorials, be they from John Ivison, the National Post editorial board, or Licia Corbella (well, that one I’m not bothering to read or link to because she’s a fabulist who doesn’t deserve clicks), but the effect is the same – woe is Canada’s energy sector because of too much government regulation. They also claim that the excuse of market conditions is just political cover.
The problem with that, however, is that it doesn’t actually take the facts into account – it’s merely asserting their pre-existing narrative onto the situation, which is why it’s well worth your time to read Andrew Leach’s exploration of the economic case and conditions for why Pacific NorthWest didn’t go ahead. And when people like Ivison say that projects are going ahead in the US and Australia, Leach explains why (and it has a lot to do with pre-existing infrastructure that BC doesn’t have). So yes, there is a very big market reason why the project was cancelled, and perhaps these editorialists should actually read up on just what that is before they make facile pronouncements, because trying to force a narrative onto the facts is doing a disservice to Canadians.
Those new foreign investment rules unveiled by Harper along with the Nexen and Progress Energy decisions will likely have an impact beyond the oil sands – but it’s clear as to how just yet. What it will likely do is involve state-owned enterprises in more joint ventures and having them become minority shareholders to conform to the new rules. Economist Stephen Gordon looks at the economics of investing in the oil sands and why there is a need for foreign investment (and why most of the fears about foreign state-owned enterprises are overblown).
Oh, and those theories that Harper put these markers around state-owned enterprises as a marker for future trade negotiations with China? Paul Wells wonders about the logic of that considering that Canada-China FIPA that’s sitting there, unratified…
On the F-35 file, certain critics say that the promised industrial benefits (currently pegged in the $9 billion range, down from the $12 billion originally stated) aren’t likely to materialise, which is a ticking time bomb for the government. To date those industrial benefits have amounted to less than $500 million.
The last sitting Monday of the year was a bit scrappy, but not to the point of rancour. All three leaders were in the House, which I am taking to be a sign that the House will rise before the week is out. Thomas Mulcair angrily read off a trio of questions about the Nexen takeover and accusing Harper of not respecting the rule of law. Harper responded by assuring him that the decisions were made under the current laws and that going forward there would be no more acquisitions by state-owned companies. Matthew Kellway was up next to ask about the leaked numbers from the KPMG audit of the F-35s and demanded an open competition. Ambrose insisted the secretariat was doing just that, and reminded him that the more years you add to the lifecycle, the higher the cost figure grows. Bob Rae pressed on about F-35s, repeating previous government statements about their necessity. Harper gave the party lines about how no money was spent on acquisition and that the CF-18s needed to be replaced. For his final question, Rae asked for the terms and conditions of the CNOOC and Petronas purchases to be made public. Harper reminded him that it was not yet the proper time to do so, as there are confidential commercial concerns.
The government has decided to allow both the CNOOC-Nexen and Petronas-Progress Energy takeovers go through, but with the warning that henceforth, no more state-owned enterprises will really be allowed to invest in the oil sands barring “exceptional circumstances.” And the fact that Harper himself held a press conference and took questions for thirty minutes – something he never does – means that this was really a Very Big Deal. And yes, the NDP are opposed, in case you were wondering. In advance of the decision, Macleans.ca had a Q&A that explains the review process and what it all means. Here’s a look at Nexen’s market share in Canada. Andrew Coyne notes how big of a mess the foreign investment rules are going forward.
As the renewed firestorm over the F-35s continues – John Ivison now reporting that the KPMG report says they’ll cost nearly $46 billion to purchase – word has it that the government will have four independent monitors to vet the process, including the retired RCAF commander of the Libya mission, and University of Ottawa professor Philippe Lagassé – not that this is confirmed yet. Lagassé, incidentally, also wrote an op-ed yesterday that highlights the systemic procurement problems at DND, and concludes that the Canadian Forces won’t be able to fully recapitalise its fleets and assets unless they get a significant budget increase once the deficit is slain. John Geddes notes that a panel is one thing, but the hard work of what plane to get is quite another. Andrew Coyne says that the entire debacle has proved to be a failure for democratic accountability, as every mechanism we have to ensure it has been evaded, subverted or ignored.
With Stephen Harper off answering audience questions at the Canadian American Business Council’s fall policy conference, and John Baird over in the United Arab Emirates discussing the Gaza situation with his counterparts, it was up for grabs as to whose turn it was to be back-up PM du jour. So when Thomas Mulcair got up to read a pair of questions on Harper and Jim Flaherty contradicting each other’s deficit rounding error numbers, we found out that Tony Clement was the day’s designated hitter, who informed the House that it was their objective to balance the budget by 2015, and the NDP wants to raise taxes. Mulcair moved onto a question about why Harper wasn’t meeting with premiers in Halifax, what with the “fiscal cliff” looming and all, by Clement reminded everyone that the NDP wants to raise taxes. Peggy Nash tried to press after why Harper wasn’t meeting with the premiers, but this time Ted Menzies got to respond, reminding her that Harper meets with the premiers regularly. Bob Rae was up next, asking about a Calgary infrastructure project that was to have benefitted from an arrangement with P3 Canada, only to have the rules changed once the project was completed (and incidentally, this happened a year ago, and in the scrums afterward, Rae openly admitted that yeah, he’s asking these questions because there’s a by-election in Calgary Centre and god forbid there be politics in the House of Commons). Menzies accused Rae of having incorrect information, but did congratulate him on his concern for Calgary, and only wished that the Leader of the Official Opposition felt the same. For his final question, Rae asked about the situation in Gaza and working toward a cease-fire, to which Peter MacKay responded with a reaffirmation of the right of Israel to defend itself.