The Canadian Imperial Bank of Commerce is urging the federal government to fast-track energy mega-projects to provide a much-needed boost to job creation in a sluggish economy.
Canada’s potential for energy development would allow governments to forego deficit-financed stimulus spending that would drive the federal and provincial governments deeper into debt, CIBC vice-chairman Jim Prentice said in an interview Wednesday.
“If we’re smart about this, we can continue to build out the country, we can create very significant amount of jobs and we can still maintain one of the lowest debt to GDP ratios of any industrial democracy in the world,” Mr. Prentice said.
“We don’t need to rely on short-term stimulus spending, we need support for economic infrastructure that creates wealth.”
He urged Ottawa to be innovative in offering financing such as loan guarantees for major power projects, to work with the United States and China to ensure favourable trading relations, and to continue to streamline its regulatory process.
In a report released Wednesday, CIBC economists estimate that the country could generate 50,000 jobs per year, on average, over the next 20 years as a result of development in the oil sands, pipelines, power generating stations and transmission lines. Investment in the next decade could top $180-billion in the oil sands and $50-billion in the power sector.
The CIBC report also described a yawning deficit in municipal infrastructure – roads, water treatment and so on – that could benefit from public-private partnerships in which investors finance development on a for-profit basis.
Mr. Prentice served as cabinet minister in the Conservative government – in Indian and Northern Affairs, in Industry and in Environment – before moving to the bank last year. He delivered a speech to the Atlantic Provinces Economic Council in Halifax, in which he defended Newfoundland and Labrador’s planned Lower Churchill hydro project as a key component in Canada’s “nation building” infrastructure expansion.
Critics have argued the $6.2-billion hydroelectric is a white elephant that requires federal loan guarantees to make it viable. But Mr. Prentice said government support is often needed to prime the pump for megaprojects, and loan guarantees are a preferred way to go because they do not drive up federal spending.
He said there are numerous megaprojects proposed across the country that require government attention to ensure they are quickly developed – from Lower Churchill, to Manitoba’s Conawapa hydro project, to the Northern Gateway oil sands pipeline through Alberta and British Columbia.
“We need to be pro-development and we need to move these projects forward,” he said. “We’ve always been a country that was distinguished by building out the nation and developing it. And we need to continue to do so.”
Environmental groups are increasingly worried that the Conservative government is so pro-development that it will overrule legitimate environmental and social concerns posed by massive projects such as the $6-billion Northern Gateway pipeline, which would deliver 500,000 barrels per day of bitumen to the B.C. Coast for export in supertankers to Asia.
He said governments – and project proponents – will also have to take care to work with first nations to ensure they are properly consulted on developments affecting their traditional territories.
“I think it is a collective responsibility on the part of the proponents of the projects, the federal government and first nations to approach these projects in a way which is a pro-development, building-out-the-country kind of philosophy,” he said.