Resource World Magazine

70 www.resourceworld.com O C T O B E R / N O V E M B E R 2 0 1 8 Epilogue by David Duval I t's a simple fact that Canada's close trading ties with the United States – whose economy has recorded record growth and historically low unemploy- ment levels – has provided Canadians with the standard of living they enjoy today. Driven by historically low real inter- est rates, housing prices in both countries have reached record levels and stock markets – especially in the US – have responded to strong economic fundamen- tals with its benchmark S&P 500 achieving record highs. In 2018, the S&P equaled its longest-ever bull-market run as US stocks climbed on positive earnings reports despite trade disputes between the US and China and its NAFTA partners. In the meantime, Canada's S&P/TSX Composite has performed poorly in com - parison with shares of energy companies weighing heavily on the market. The rea- son is simple: Canada is forced to sell its oil at a hefty discount to global prices because the nation lacks pipeline capacity to the US and to tidewater on both coasts. Despite their strong economies, the broader inflation rate for consumer goods in both Canada and the US has remained relatively low although a recent uptick is certain to encourage the US Federal Reserve to continue raising interest rates. In my opinion, Canadians have become far too complacent about the country's economic prospects, with increasingly sys - temic opposition to all forms of resource development which has underpinned the Canadian economy for generations. The recent Federal Court of Appeal decision to halt construction of the Kinder Morgan pipeline expansion project is virtually guaranteed to cast Canada as an uncertain destination for global investment capital. The court ruled that the pipeline's expansion "is likely to result in signifi - cant adverse effects on Aboriginal cultural uses" of resident killer whales and it faulted the National Energy Board for "unjustifiably excluding project-related marine shipping from the project's defini - tion." (Every year, the Port of Vancouver has more than 3,000 ships moving in and out and Kinder Morgan's pipeline expan- sion would add a grand total of one extra ship per day). "Canada failed to engage and dialogue meaningfully and grapple with the con- cerns expressed to it in good faith by the Indigenous applicants so as to explore pos- sible accommodation of these concerns," said the court. Perhaps to placate pipeline supporters, including Canada's Federal government which recently bought the Kinder Morgan pipeline for $4.5 billion – along with a $9.3 billion construction liability, the court recommended the government refer the project back to the National Energy Board for reconsideration, taking into account the issue of increased tanker traffic on marine safety and species at risk, particularly the orca population. The court noted how the cabinet could "direct the board to conduct that reconsideration taking into account any factor specified by the cabinet." The recommendation is almost laugh - able given the fact the Trudeau government has effectively scrapped the NEB in order to overhaul the environmental assessment process for major projects. Under its new mandate, the NEB would not just assess the environmental considerations but also health, social and economic impacts, as well as effects on Indigenous peoples over the longer term. Environment Minister Catherine McKenna has stated that the legislation "aims to restore public trust in how the federal government approves major projects like mines, pipelines and hydro dams." "These better rules are designed to pro - tect our environment, while improving investor confidence…they will also make the Canadian energy and resource sectors more competitive," she claimed. Canadian Association of Petroleum Producers president and CEO Tim McMillan insists that Canadians have a regulatory system "that is so complex that not even the government or the regula - tor understands it." The government bill C-69 to overhaul the NEB (now before the Senate) first gained attention when it was introduced in February because of an eye-catching clause that will require new resource projects to be analyzed according to (my favourite!): "the intersection of sex and gender with other identity factors." According to Vancouver Sun columnist, David Williams, "Every major economy in the world ranks ahead of Canada on major project approvals. And our permitting times are four times longer than Denmark, three times longer than the US and one- third longer than France." Yet with Canada seemingly governed by ideologues rather than free market propo - nents, the future of its resource industries is at great risk. Australia's largely resource- based economy hasn't had a recession in almost three decades which hardly seems likely to repeat in Canada. Perhaps it's because our younger genera - tion has never suffered the pain of a major recession. However, with interest rates on the rise and house-related debt at record levels they many find out soon enough. Seniors are also at risk. In March 2016, 42% of the Canada Pension's equity hold - ings were in depressed natural resource companies and the fund was not adequate enough to support 19 million Canadians in old age. n Canada's resource industries face doomsday scenario following Federal Court ruling

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