The News Rundown
- Canada is in a weird place right now. Our national infrastructure is getting shut down, major projects cannot be built, manufacturing is increasingly less profitable, oil investment is fleeing Canada, the timber industry has been largely shut down, inflation is spiking, prices are going up, wages are stagnating, household debt is climbing, housing is increasingly unaffordable, and more people than ever are having to work second jobs to stay afloat.
- Politics in Canada also seem more polarized and people are more unsupportive of politicians of all stripes than ever before. It seems that when Canadians sent the message to the dwellers of the House of Commons in last October's election that there was a national unity crisis, lots of people ignored that as simple grumbling from Alberta. But not even half a year later and lots of people from all over the country are questioning what it means to be a Canadian in 2020.
- A headline in the National Post blares "Canada is broken", citing a poll by Dart&Maru/Blue taken in the aftermath of the Coastal Gaslink blockade and subsequent protests and infrastructure paralyzing blockades around the country. The survey was conducted among 1,511 randomly selected Canadian adults who are members of Maru/Blue’s Online panel on February 24th, 2020. Underlying all of the sentiment is that a clear majority of people surveyed believe that the Trudeau government doesn’t know what it’s doing.
- The Dart&Maru/Blue poll release ominously starts with keywords like “Fractured Leadership, Broken Country, Unfulfilled Promises, Lying Governments, Money for Necessities, Swift Consequences,” underscoring the different questions that Canadians in the survey agree with.
- 69% of Canadians perceive that, right now, Canada is broken, 82% of people believe that politicians care more about their own partisanship interests than working on behalf of Canadians, 63% of Canadians do not think Prime Minister Trudeau is governing well, and a plurality of people (42%) blame the federal government the most for the current situation.
- Long-time pollster John Wright, a partner with DART, says that he's been polling for 30 years and he's been astonished by the numbers in the latest poll, "but not surprised" by them.
- The poll spells bad news for Justin Trudeau with a majority of people believing that the country is not headed in the right direction and that the prime minister is not governing well. The Liberals also get most of the blame for the rail blockades. And on Trudeau’s signature promise to help Indigenous people, two-thirds of Canadians don’t believe he has delivered on that pledge.
- Daniel Béland, the director of the McGill Institute for the Study of Canada said the trouble started for Trudeau early on, because the blockades began while he was out of the country, campaigning for a seat on the United Nations Security Council.
- “There was some form of void. The government left the impression — at least many people came to the conclusion — that there was no one really in charge of the situation,” said Béland.
- On Indigenous matters, Canadians believe that there should be a swift response to people blocking rail systems. 69% of Canadians indicate that if any group blocks rail service for whatever cause or reason, the provincial police and the RCMP have their permission to clear them and arrest them immediately.
- Half the Canadian public indicates that they may not agree with their methods, but they would stand with the Indigenous people in solidarity to give them a voice to solve their issues. This compares the direct other half who, of course, take the opposite point of view.
- All the while, a new report was released yesterday that shows that Canada's economic growth slowed to an annual rate of a paltry 0.3% in the fourth quarter, the worst performance in almost four years. The Bank of Canada’s next interest rate decision is on Wednesday, and market expectations of a cut have jumped as the economy faces challenges from a coronavirus outbreak and rail blockades. The central bank has left rates unchanged since October 2018.
- The fourth quarter growth figure was the worst since a 2.0 per cent drop in the second quarter of 2016, when wildfires hit Fort McMurray. Statscan cited pipeline shutdowns, bad harvest conditions, an eight-day railway strike in Canada, the spillover effect of a U.S. auto workers’ strike and global trade tensions as reasons for the slowdown. This is even before fears of coronavirus and the latest blockades have taken place. Once all of this bears its head, it seems inevitable that our economy is headed for a recession.
- While Alberta’s economy and the economy of Canada were dealt a blow by the cancellation of the Teck Frontier oil sands mine, Alberta was pioneering to be different than the rest of Canada.
- The Alberta appeal court sided with the province and ruled that the federal carbon tax is unconstitutional in a 4-1 decision.
- Justice Minister Doug Schweitzer called on Trudeau to remove the federal carbon tax on individuals after this decision. They won’t but Alberta will be taking the case to the Supreme Court.
- “The act is a constitutional Trojan Horse” and “Almost every aspect of the provinces’ development and management of their natural resources … would be subject to federal regulation.”
- This is just a portion of the 273 page ruling and opinion of the majority judges.
- While responding to this ruling Premier Kenney laid out what would be the governments Bill 1 of the new legislative session, the Critical Infrastructure Defence Act.
- This Bill mirrors pieces of legislation that we see in US jurisdictions like Texas and Louisiana that fine protestors who blockade infrastructure like pipelines, highways, refineries, telephone lines, water utilities, dams, railroads, roads, and bridges.
- Fines could start at $1,000 and go up to $25,000 as early as day 2 of a blockade. Corporations would also be fined up to $200,00 for aiding, counselling, or directing blockades.
- A repeat protester could be jailed for up to 6 months max.
- These would not be felonies as only the federal government can make criminal law and amend the criminal code. In Louisiana the maximum is a federal felony and 5 years in prison.
- The Justice Minister called on other provinces and the federal government to enact similar legislation in response to the blockades which have been served with injunctions but rarely acted upon.
- The Throne speech outlined the government's priorities for the upcoming session. They included in addition to Bill 1:
- The government “do[ing] whatever it takes to develop our resources responsibly and get them to global markets to compete with and displace energy from some of the world’s worst regimes.”
- Getting Albertans back to work, stimulating jobs and growth, and reducing unemployment.
- All of these have been central themes for the UCP but the Throne Speech promises the biggest changes in a generation (or more) to democracy in Alberta. In particular:
- A citizen initiative act that will allow Albertans to put important issues to a referendum. When asked, Kenney said he’d prefer to not see it used this way but Albertans could put secession on the ballot.
- Recall legislation to remove MLAs, municipal councillors, mayors, and school board trustees.
- Fixed dates for provincial elections and budgets doing away with the election season.
- Statutory provisions to get big money out of Alberta politics by introducing donor contribution limits to so-called political action committees, while prohibiting party-affiliated groups from circumventing donation limits. (This is the so-called dark money the NDP says helped UCP, there was too much PAC activity in 2019 and it was thought Jason Kenney would not curtail PACs as he had used one to help create the UCP);
- Amendments banning foreign money from Alberta politics by making it illegal for foreign entities to contribute to third party advertisers; and
- Amendments to the Alberta Taxpayer Protection Act requiring a referendum before a consumer carbon tax can be imposed.
- The province also doesn’t shut the door to tabling more bills to implement suggestions from the Fair Deal panel.
- Fair Deal panel survey until March 15 online in show notes.
- The UCP’s second budget was also tabled this week.
- Of note since this segment is already running long, the budget deficit is $1.2b better than expected. The budget deficit for 2020-21 is forecast to be $6.8b dropping to $2.7b in 2021-22, and a surplus of $700m in 2022-23.
- This is contingent on a rise in the price of WTI oil at $58/bbl in 2020-21 rising to $63/bbl in 2022-23. New pipelines and more crude by rail will help in reaching these targets.
- Health spending is set to receive $5m more money in this budget compared to last year, but in reality for 2019-20 Health is forecast to cost $217m more than budgeted.
- Education is set to receive $100m more than last year.
- These numbers here are highlighted because the NDP and their paid union allies will say that health and education are receiving deep cuts.
- But in reality Health actually received more money than budgeted and education is set to receive an additional $100m this year.
- Alberta will also go from rank 36 at 27% of all the provinces and 50 US states in terms of combined corporate income tax to rank 7 in 2022 at 23%. The lowest being jurisdictions like Texas, Washington, South Dakota, and Ohio at 21%.
- Albertans and Alberta businesses also have at least a $14.4b tax advantage over any province in Canada. The closest being Ontario at $14.4b and the furthest away being Newfoundland at $25.5b.
- The carbon tax appeal, Bill 1, the throne speech, and the budget all illustrate what Alberta would look like with less federal oversight (or even just a different federal government) and how the province is doing everything it can to make itself competitive. But as we’ll see in our Firing Line, it’s not enough.
- The BC Liberals are calling on John Horgan and the NDP to condemn the actions of foreign organizations funnelling millions of dollars into groups intent on creating economic chaos in British Columbia.
- Andrew Wilkinson, BC Liberal Leader in a statement said: “Our province has seen at least $4.2 million in U.S. funds funnelled to just six organizations that are promoting the current protests and blockades to obstruct B.C. energy projects. The serious issue of foreign interference in politics and elections has been making headlines for years now. John Horgan needs to show leadership, condemn foreign-funded political interference, and take action to ensure that our democratic institutions and values are respected.”
- The BC Liberals have pointed to U.S. tax documents that reveal that a collection of five American-based organizations, including the Tides Foundation, have funnelled at least $4,218,311 to six Canadian groups. In addition to organizing campaigns to disrupt B.C. energy projects, each of these groups has also been supportive of the current blockades, including West Coast Environmental Law, which is raising money to support a legal fund to support blockade protesters. Also funded by American interests is The Wilderness Committee, a group which earlier this month led a public campaign to shut down the B.C. government, as well as Sierra Club B.C., Dogwood B.C. and Stand.Earth (formerly ForestEthics).
- As the Coastal Gaslink protest camp continued to grow in front of the B.C. legislature Wednesday, Skeena MLA Ellis Ross called on the NDP government to end a “coordinated assault on the Canadian economy” funded primarily by foreign money which hijacks aboriginal issues and seeks to freeze B.C. out of the global energy market with no concern for the tension and adversity they create in First Nations communities.
- Ross says “My chief and council of the Haisla Nation have worked hard to bring an end to the poverty, suicide, and hopelessness that plague not only our own band but bands all across B.C. and Canada. We’ve been successful over the last 15 years. Through hard work, we now have jobs. We have training programs. And we have taken the real first steps 15 years ago to break the cycle of poverty. But now foreign interests are telling my people they are ignorant and don’t know what’s best for them.”
- NDP Public Safety Minister Mike Farnworth, whose government created tax incentives to proceed with Coastal GasLink and LNG Canada, said all NDP MLAs oppose illegal protests, such as the blocking of tracks that has paralyzed rail traffic across the country. Farnworth said: “We completely reject foreign interference in the affairs of British Columbia, whether it be through money or otherwise.”
- As we mentioned in last week's episode, many of the protests in BC have been supported by Extinction Rebellion, an advocacy group based out of the UK with donors from celebrities like Radiohead, but also US oil magnates like the Gettys.
- With so much foreign money being brought in to paralyze our infrastructure, it's clear that the only people who benefit from these ongoing protests are not indigenous people or even Canadians in general, it's foreign oil producers like Saudia Arabia, Russia, Venezuela, and even the US. It's time to get foreign influence out of our country.
- Last Sunday the province (and perhaps the rest of Canada should take note) that the Teck Frontier oil sands mine would no longer go forward.
- The mine worth $20b in construction costs and worth billions more in natural resources revenue that had the potential to flow into the the economy of Alberta and by extension Canada won’t happen.
- Dave Lindsay, President and CEO of Teck Resources wrote, “However, global capital markets are changing rapidly and investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products. This does not yet exist here today and, unfortunately, the growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved. In that context, it is now evident that there is no constructive path forward for the project.“
- The political opponents of the project and some in the media pointed this to a discussion regarding Alberta’s stance on climate change.
- Recall in the last weeks Premier Kenney has doubled down on talking about the importance of a shift to a green economy and how Alberta factors into that.
- The Teck Mine would have fallen under Alberta’s TIER (Technology Innovation and Emissions Reduction) program. TIER was given the blessing by the Trudeau government to be acceptable for industrial emitters in such an authoritative way that industry in Alberta is exempt from Trudeau’s carbon tax and the Alberta levy applies instead!
- Alberta also was open to legislating the 100MT emissions cap which was brought in by the former NDP government, yes, the UCP were going to legislate an emissions cap.
- Lindsay also told Jason Kenney that the company has concerns with public safety and in the letter he wrote, “Questions about the societal implications of energy development, climate change and Indigenous rights are critically important ones for Canada, its provinces and Indigenous governments to work through.”
- This is a square shout out to the continuing protests that have blockaded roads, ports, and railways in the recent weeks and the government's inability to even admit there’s an issue to our economy.
- What this means at face value without any spin from either government is that there needs to be a good climate policy but there also has to be a good plan allowing resource development to continue.
- It also means that politicization of the approval process is a death sentence for projects going forward, no matter the colour of government.
- When you have projects being held up in court, protestors stopping construction, and the potential to lose millions per day, that is no good.
- Let’s look at the approval process for the Frontier Mine.
- The regulatory process began in 2008, in 2009 engineering studies began, in 2011 an application was submitted to the Alberta Energy Regulator. 9 years later and multiple governments and the company learns the fate of the project.
- The project was designed to be one of the cleanest mine operations attaining net zero carbon emissions by 2050. The project also had substantial buy in from surrounding communities including indigenous communities.
- Perrin Beatty, president and CEO of the Canadian Chamber of Commerce said that the cancellation will “send a terrible message to global investors” and the sentiment was mirrored by the Business Council of Alberta President Adam Legge who said “the reality remains Canada [is] still far too difficult a country to get things done.”
- This follows a list of projects that were cancelled or abandoned including Malaysia’s Petronas which abandoned a $36b LNG project in 2017, TransCanada’s Energy East pipeline terminating in New Brunswick which was opposed largely by Quebec, and Justin Trudeau’s government cancelled the Northern Gateway pipeline in 2016.
- Processes need to change, our regulatory regime needs to be modernized for the economy of the future, and governments across the board need to stop sending signals of hostility to the energy industry and foreign investment.
- After all, in economics signals are often more important than actual policy.
Word of the Week
Trojan Horse - originally a hollow wooden statue of a horse in which the Greeks concealed themselves in order to enter Troy. Nowadays, it’s a person or thing intended secretly to undermine or bring about the downfall of an enemy or opponent.
How to Find Us
Episode Title: The Economic Trojan Horse
Teaser: A Dart poll shows overwhelming blame for Trudeau’s government, Alberta’s budget shows a return to competitiveness, and the BC Liberals blame foreign money for the blockades. Also, the Teck Frontier Mine is cancelled while Trudeau is nowhere to be found.
Recorded Date: February 29, 2020
Release Date: March 1, 2020
Edit Notes: None
Podcast Summary Notes