I am writing you today to implore you to stop Bill C-69. As a Senator you have the power to apply sober second thought to this legislation and do what is right for Canada.
I have been involved in the energy sector over the past 25 years in a variety of facets, from the raising of capital (Managing Director of Institutional Research) through to the deployment of that capital (Chief Financial Officer of a private oil and gas producer). Over those years I have come to understand that much of the flow of capital is related to the transparency of legislation and the competitiveness of the fiscal regime. As such, I have witnessed that activity can move from one jurisdiction to another as various regions compete for a finite pool of capital. Historically, Canada was viewed as a safe harbor for companies, as the potential for modestly lower returns was offset by the perceived stability in terms of government policy and fiscal regimes. All that has changed, quickly.
During the past few years, governments have tried to adjust fiscal policies to extract their “fair share” and have modified other policies, making the framework more challenging for both producers and any external sources of capital. However, the broader idea of Canada being viewed as a “safe” jurisdiction remained intact as the theme of Canada being a supplier to the world remained, and the framework to meet those ambitions was in place. Alas, that too has become unhinged.
Today we find ourselves in a position where Canada has one of the largest resource bases in the world yet lacks the ability to get that product to market. As a result, that product is being sold at a significant discount to what it normally would fetch, and the impact is felt by all Canadians. Some estimates peg the annual loss in revenue at $15 Billion per year, and with the recent challenges being faced by Trans Mountain, I suspect this deficit has expanded to something closer to $20 Billion per year. That not only results in lower taxes and royalties to various layers of government, but also impacts spending and employment in the business and reduced economic multipliers as that reduced spending cascades throughout the economy.
The implementation of Bill C-69 does not create the stability that investors are seeking. Rather than having a framework that is clear and transparent, it introduces tremendous uncertainty into the approval process. Let me be clear on this – there will never be 100% agreement on any major capital project, and the concept of “the greater good” must always be taken into consideration. Further, though the discussion today may be about the approval of pipelines, this is about whether Canada is somewhere where capital can be deployed by investors, and whether that investment is competitive versus other jurisdictions around the globe. Capital is mobile, and today it is choosing to leave. This is your opportunity to say to the world that Canada want’s new investment, and that approving Bill C-69 is not the way to achieve this.
Should you wish to talk to me you can contact me via phone or email at your convenience.
William Lacey is the Chief Financial Officer of Steelhead Petroleum