Prime Minister Mark Carney walks to his first news conference since winning the federal election in Ottawa on May 2.Adrian Wyld/The Canadian Press
Mark Carney is riding a wave of national support for building big resource and infrastructure projects in the face of U.S. economic aggression.
“We are going to build, baby, build,” the Liberal Prime Minister said in his victory speech after Monday’s election, promising to make Canada an energy “superpower” and to push major projects forward at a pace not seen in generations.
But speeding up the sclerotic system for approving mines, pipelines, energy projects and transportation infrastructure won’t be easy, experts say.
It will mean whipping the bureaucracy into shape, tweaking contentious environmental legislation, getting buy-in from Indigenous groups and ensuring that there’s private-sector interest in the first place.
And it means avoiding the pitfalls that have left dozens of projects in limbo and seen billions of dollars flushed down the drain on initiatives that never got off the ground.
“He has to walk a very fine line between doing it fast and doing it right,” Michael Wernick, a former clerk of the Privy Council and Jarislowsky chair of public-sector management at the University of Ottawa, said in an interview.
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“If you set a foot wrong on whether you have the jurisdiction or authority, or if you have violated a sort of a sense of due process, the courts will send you back to square one. You saw that with the Harper government when they tried to force pipelines.”
The Liberal election platform laid out an ambitious plan to cut major project approval timelines down to two years, delegate more authority to provinces to conduct impact assessments, and introduce new financing tools to attract private capital. This would be overseen by a new Major Federal Project Office – a type of organization that harks back to the Harper era.
Unlike his opponent in the election, Conservative Party Leader Pierre Poilievre, Mr. Carney plans to keep the Impact Assessment Act – the 2019 legislation that governs environmental assessments for major projects.
The bill was intended to speed up approval timelines, compared with the previous legislation. But so far, only one project out of dozens – the Cedar LNG project in Kitimat, B.C. – has made it through the whole process. And in that case, the impact assessment was delegated to provincial regulators.
Michael Fortier, a partner at the law firm Tory’s, said the new government could speed up the approvals process by telling the Impact Assessment Agency to narrow the focus of its reviews, involve participants earlier in the process and implement an overall time limit, rather than only having time limits for specific stages of the review process.
To actually get the timeline down to two years, however, will likely require bigger legislative changes, Mr. Fortier said. “The practical experience is that nobody’s getting through it currently even in four or five years. So, the idea that you just shorten the time frames and tell everyone, ‘good luck,’ … isn’t likely to be successful here,” he said.
Cracking open the legislation could be tricky in a minority Parliament, said Michael Dobner, PwC Canada’s national leader of economics and policy practice. The NDP and Bloc Québécois – the Liberals’ most likely dance partners – aren’t likely to support changes that appear to water down environmental legislation, Mr. Dobner said.
“You don’t just pull out a wand and you get the results. You need a strong government for that.”
Changes to regulation or legislation are only one part of the equation. There also needs to be a cultural shift in Ottawa, said Jay Khosla, executive director of economic and energy policy at the Public Policy Forum, and a former assistant deputy minister with several federal departments, including Natural Resources Canada.
The civil service is overly risk averse, Mr. Khosla said. There’s also an enormous amount of overlap in the regulatory process. Once companies make it through the impact-assessment process, for instance, they often need to apply for additional permits from Environment Canada, Transport Canada, the Department of Fisheries and Oceans, among others.
“We’ve got too many agencies doing similar things, trying to get similar pieces of information from everybody,” said Mr. Khosla, who is working on a forthcoming PPF paper on how to attract capital and speed up project approvals. “That needs to be fused. They can talk to each other.”
The same is true on the project financing side, where Ottawa has an “alphabet soup” of financing tools, housed across a range of agencies. “We need to pull those capital stacks together,” Mr. Khosla said.
A crucial part of getting more projects built, and faster, will be getting buy-in from Indigenous groups, which have a constitutional right to be consulted.
Here, the country appears to be making progress, said Mark Podlasly, chief executive of the First Nations Major Projects Coalition. A growing number of companies are partnering with Indigenous groups early on in the financing and approvals process, offering them a direct stake in the project.
“What you’re seeing now is that there are examples in the country where those projects have been approved with First Nations involved, and they will generally go faster because there will not be the opposition,” Mr. Podlasly said.
The Liberal government is trying to boost Indigenous involvement in projects by doubling the size of a loan-guarantee program, from $5-billion to $10-billion.
“That gives the ability for the nations to get into the game, into the project. Without those guarantees, it’s very difficult for nations,” Mr. Podlasly said.
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The crucial test of Mr. Carney’s “build, baby, build” agenda will happen in the oil and gas sector, where companies complain that the Impact Assessment Act, planned emissions cap and industrial carbon tax inhibit growth and investment.
The first thing to sort out will be the exact design of the emissions cap, said Andrew Leach, an energy economist at the University of Alberta. Changes to the industrial carbon price will also be on the table, he said. Then, there are the energy corridors promised by Mr. Carney during the campaign.
“You need to figure out, ‘Okay, how do we do this? Do we need to change regulation under the Canada Energy Regulator Act? What sort of structure are you looking at for these energy corridors?’ ” Prof. Leach said.
Pipelines will take a little longer to sort out, he said.
No company has a new pipeline project on the table waiting for approval. Regulatory uncertainty, market economics and the nixing of the Keystone XL, Northern Gateway and Energy East pipelines over the past decade has made energy investors gun-shy on the multibillion-dollar projects.
The heads of 38 large Canadian energy companies wrote to Mr. Carney this week, urging the government to speed up the regulatory process, clarify jurisdiction with provinces and scrap the emissions cap.
“What we really need to see with this Liberal government is less philosophy, less ideology, and more practical action,” Rich Kruger, CEO of Suncor Energy Inc., said in an interview.
“If something’s not working – it’s true in business, it’s true in politics, it’s true in life – you have to sit back and say, ‘All right, what we’ve been doing isn’t working. What are we going to do differently?’
“And if there’s a willingness to do that, then I would feel quite good,” he said.