Ottawa's decision to oppose Northern Gateway is worrisome
November 30, 2016
Ottawa's approval of new pipelines for transporting Western Canada's oil to new foreign markets is good news for the Canadian economy, says the MEI. However, it is worrisome to see the federal government ask the National Energy Board (NEB) to reject the Northern Gateway pipeline project.
The NEB should instead make its decision independent of any political interference, in the case of Northern Gateway and for all pipeline projects. "The federal government has the power not to approve a project, but it is not the role of the NEB to reject it in its place," says Youri Chassin, Research Director at the MEI.
Northern Gateway, approved in 2014, is facing a surprising rejection from the federal government, which claims that the project is not in the interest of Canadians, including First Nations. "The question needs to be asked: Why is it not in the interest of Canadians? What justifies the rejection of Northern Gateway?" asks Youri Chassin.
The justification offered by Prime Minister Justin Trudeau is essentially that Great Bear Rainforest is not a suitable place for a pipeline. "The government is blowing hot and cold. The Prime Minister rejects a project and recognizes in the same breath that new pipelines, on the cutting edge of technology, are the safest way to transport oil, in order to protect the environment among other things."
And when it comes to stimulating the economy, these projects are clearly preferable to public spending, adds Youri Chassin. "The effectiveness of public spending on infrastructure to stimulate the economy is debatable, as shown by many studies and empirical data. But in this case, we're talking about private investment, which represents substantial economic benefits without burdening Canadians with more debt or raising their taxes."
From this perspective, the government is making the right decision by giving a green light to the expansion of Kinder Morgan's Trans Mountain pipeline, which connects Edmonton to Burnaby in the Vancouver region, and to the project to replace Enbridge's Line 3 between Hardisty, Alberta and Superior, Wisconsin.
Justin Trudeau rightly reaffirmed that no country in the world leaves its resources buried in the ground when there's a market for them. He has also consistently argued that ensuring market access for Canadian resources is one of the most important jobs for a prime minister. These are important messages for anyone concerned about the strength of the Canadian economy.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
Montreal Economic Institute