Energy projects: Ottawa must revise Bill C-69
October 14, 2018
In order to slow the exodus of investments from Canada and improve the competitiveness of Canadian companies, governments should eliminate the discretionary power of politicians to block a project once it has received all necessary approvals, and agencies that do not respect the deadlines prescribed by law should face budgetary sanctions, states a publication launched today by the MEI.
"Just in the past year, two major projects with a combined value of $23 billion were abandoned because of the ineffectiveness of the approval process or a political decision, while another remains stuck in limbo," notes Alexandre Moreau, Public Policy Analyst at the MEI and author of the publication.
The case of the expansion of the Trans Mountain pipeline, the most recent example, is eloquent: "Kinder Morgan respected 157 conditions and won its first 17 legal battles, but this wasn't enough to satisfy everyone. What message are we sending to investors?" adds Germain Belzile, Senior Associate Researcher at the MEI and co-author of the publication.
This situation, already alarming, could get even worse. Indeed, most observers believe the new provisions of Bill C‑69 would have the effect of further lengthening and complicating the approval process. Meanwhile, in the United States, they're simplifying things.
"Our American neighbours have implemented a series of reforms aimed at reducing the regulatory burden for businesses, while here, we're getting ready to increase it again," explains Mr. Moreau. "It's no surprise, then, that Canadian investment is stagnating. Political arbitrariness and uncertainty discourage investors, for whom risk-taking has its limits, after all."
An exodus of investments is not inevitable. Ottawa can still change course in order to reduce uncertainty and the associated costs, by including in Bill C-69 the following elements:
- Impose budgetary sanctions on agencies that do not respect the time limits prescribed by law, as our neighbours do;
- Eliminate the discretionary power of politicians to block a project once it has received all the necessary approvals;
- Prohibit the changing of the rules for assessing a project once the process has begun;
- Compensate companies for losses incurred due to missed deadlines.
"When individuals and companies do not respect deadlines prescribed by the law, the government does not hesitate to penalize them. The same logic should apply to the government when it does not respect its own deadlines and regulations," concludes Germain Belzile.
The Economic Note entitled "Energy Projects: Boosting Investment by Reducing Uncertainty" was prepared by Alexandre Moreau, Public Policy Analyst at the MEI, and Germain Belzile, Senior Associate Researcher at the MEI. This publication is available on our website.
The MEI is an independent public policy think tank. Through its publications and media appearances, the MEI stimulates debate on public policies in Quebec and across Canada by proposing reforms based on market principles and entrepreneurship.
Montreal Economic Institute