In the weeks following U.S. President Donald Trump’s initial tariff threat, Canada has experienced a renaissance of hope that it could become the free-trading energy superpower it was always meant to be; that by dreaming big and diversifying our exports, we could punch above our weight in the global economy and create a more prosperous future for our children.
Canadians, and their leaders, should use this as an opportunity to set aside political and regional differences to further our shared national interests. Just as our first prime minister, Sir John A. Macdonald, realized the “National Dream” of building a transcontinental railway through the rugged and untamed Northwest Territories to fend off American manifest destiny, we have an opportunity to build towering skyscrapers to house our people and businesses, and pipelines that bridge the frozen tundra of the Far North and feed our energy resources to the rugged coasts on both sides of this vast country. And we can largely do it without massive public spending.
On Monday, Trump indicated that his administration is “moving along” with plans to implement 10 per cent tariffs on Canadian energy exports and a 25 per cent levy on all other products. Those sanctions could be compounded by 25 per cent tariffs on steel and aluminum that may be applied on top of existing duties, thus raising the cost of Canadian metals by 50 per cent.
Although Americans will be unable to fully replace Canadian energy and metals with domestic alternatives any time soon, we can expect demand for our products to soften south of the border, creating an excess supply of resources that can be exported to other markets and used to build much-needed infrastructure here at home. This can be done without raiding the treasury and significantly increasing our national debt. But it will take a concerted effort by all levels of government to create a stable business environment that will attract investment.
Those now arguing that new pipelines to bring oil and gas to the East and West coasts are nothing more than a pipe dream often point to the Trans Mountain pipeline, which the federal government purchased in 2018 for $4.5 billion and ended up coming in $26.8 billion over budget. But they forget that Kinder Morgan was willing to build the line with private capital before it was met with fierce opposition, costly court battles and a regulatory environment mired in red tape.
A mere decade ago, private investors were lining up to build the infrastructure this country needs to get its energy resources to markets in Asia and Europe. Calgary-based Enbridge Inc., for example, was planning on spending $7.9 billion to build the Northern Gateway pipeline to bring oilsands bitumen to a terminal in Kitimat, B.C. But soon after getting elected in 2015, Prime Minister Justin Trudeau instituted a new law banning oil tankers off the coast of northern British Columbia and rejected previously approved plans for the line.
And Northern Gateway was not the only one. Other scrapped pipelines include: TC Energy’s $12-billion Energy East pipeline, which would have brought western Canadian oil to refineries and ports in New Brunswick; Pacific Northwest LNG, a $36-billion plan to build a liquefied natural gas pipeline and export terminal in Prince Rupert, B.C.; and the Mackenzie Valley Pipeline, which was to be built by a consortium of multinational energy companies and Indigenous communities and would have connected the vast natural gas resources of the Far North to existing pipelines in the south.
A 2020 Financial Post investigation found that Canada had lost out on nearly $150 billion worth of energy infrastructure projects, most of which were cancelled around 2017, as the Liberals instituted new regulatory regimes and emission targets that made them uneconomic. Even now, large pipeline companies are warning that the business case for projects like Northern Gateway and Energy East no longer exist. But that could change if the federal and provincial governments create a streamlined regulatory environment and pledge to work with, rather than against, private investors to get infrastructure approved and built.
On a recent earnings call with investors, Enbridge CEO Greg Ebel suggested his company may be willing to invest in Canadian infrastructure in the future, but it would take “co-ordinated federal and pan-provincial legislative and regulatory action,” including legal guarantees, reformed environmental policies and more Indigenous participation. Ultimately, investors need to be assured that if they are going to spend millions planning large projects, they will have a reasonable chance of coming to fruition.
In order to convince them that Canada is a good place to invest, the federal government should work to ensure that First Nations communities and provinces see economic benefits from new energy infrastructure, or use its constitutional authority over trade and commerce to bring provincial governments into line. It should go back to countries like Germany, Japan and Greece, all of which begged us to sell them LNG following Russia’s invasion of Ukraine, and ink deals that would provide companies with reliable export markets.
This is a strategy that can work in other areas, as well. Over the coming weeks, the National Post and its sister papers across the country will be running a series, titled “How Canada Wins,” which will explore solutions to the challenges this country faces. One of the best ways to do this, as far as I’m concerned, is to use government as a guiding hand to help cut through political and regulatory obstacles, but to ultimately leave the heavy lifting to the private sector.
Canada, for example, has been plagued for years by a lack of housing, which has driven up costs and put the dream of home ownership out of reach of many Canadians. Yet much of this is driven by nit-picky municipal zoning laws that prevent high-rise buildings, nanny suites and laneway housing in many areas, along with provincial restrictions, such as Ontario’s ban on developing the Greenbelt.
A concerted effort on the part of all levels of government to remove onerous development restrictions and issue building permits as quickly as possible would help get shovels in the ground. Reforming the immigration system to bring in more skilled trades and working with post-secondary institutions to promote skills training would provide the construction industry with the required workforce and create domestic demand for Canadian resources, such as lumber and metals.
At the same time, Canada should redouble its efforts to promote freer trade. At home, the provinces should work within the Council of the Federation and other forums to finally rid the country of inter-provincial trade barriers and ensure that professional accreditation and other regulatory standards adopted by one province will be recognized throughout the Dominion.
Governments should likewise immediately take steps to wind down our system of supply management. Not only does it serve to raise the cost of food for all Canadians, it has been a perennial sticking point in virtually every trade negotiation. Removing supply management — and the associated tariffs on foreign dairy, poultry and egg products — would reduce the cost of living, thereby offsetting some of the harm caused by any retaliatory tariffs we put in place, and allow us to forge freer trade agreements with our allies.
Canadians are an industrious and entrepreneurial bunch. We have a skilled workforce, a thriving auto industry, world-class agriculture and vast resource wealth. But our historical focus on the American market has allowed us to grow complacent. We now have an opportunity to improve our federation by breaking down internal trade barriers and putting aside petty regional squabbles to work toward a shared national vision. We have a chance to increase our access to global markets and attract investment that will bring jobs and wealth to our country.
Best of all, we can do all this with minimal public spending — all we need are leaders who are willing to lead the way and let the world know that Canada is once again, to borrow a phrase, “open for business.”
National Post
[email protected]
Twitter.com/accessd