OTTAWA — In the scramble for affordable ideas to protect Canada from economic turmoil, former Tory cabinet minister Jim Prentice says he has the answer: energy mega-projects.
Rather than looking at stimulus, tax measures or interest rates to spur the economy, governments should be unleashing the potential of hydroelectricity, oil and gas, and pipelines, he says.
They need to do it now, he adds, and move quickly.
“If we are smart about the continued development of our country, we have the capacity to come through some very difficult economic times, by creating jobs that are permanent, in the long term, and sustainable,” Prentice said in an interview.
“We need to have a pro-development philosophy in that sense.”
Prentice is now senior executive vice-president and vice-chairman of CIBC, which stands to profit handsomely from financing the mega-projects he has in mind. His interview was in advance of a speech in Halifax where he is speaking out in favour of the Muskrat Falls hydroelectric project in Labrador.
But beyond profit, Prentice argues that Canada would benefit from job creation across the country, a surge in export potential, and a reputation for being a clean-energy power — all without running up the government debt.
“We think it’s a wise way to deal with the economic circumstances that we face. We think it’s wiser to create employment through this way than through stimulus spending,” he said.
“We think Canada has really a unique opportunity because of our natural resource blessings to be able to this.”
But it won’t happen automatically, he says.
Government approvals and environmental assessments are taking way too long, and often don’t consider the political and economic climate, he said.
Instead, the process needs to be more efficient, and decisions need to be made by politicians, not panel members, he recommended.
“I respect the independence and integrity of our country’s review process for mega-projects like this,” Prentice said in his speech, referring to Muskrat Falls. “But in trying economic times, these must be decisions that ultimately reside with the people we elect.”
He pointed out that the federal-provincial panel for the $6.2-billion Muskrat Falls plan disputed the decisions by both the federal government and the government of Newfoundland and Labrador that the project was in the public interest.
That kind of call should be made by elected representatives, he added.
Newfoundland and Labrador is heading into an October 11 election, and the funding of hydroelectricity is a central theme in the campaign.
CIBC’s economics team backed up Prentice’s speech with new research showing that private-sector investment in energy — oilsands, pipelines, power generation, and transmission — could mean more than a million jobs over the next 20 years.
A job is considered one full year of employment for one person.
But in order for that kind of job creation to be realized, regulators need to accelerate their decisions, and changes made to the treatment of crown assets so that pension funds, with their billions of dollars, invest here rather than abroad, the research paper says.
Plus, governments need to stand by with loan guarantees if need be, Prentice added.
He noted that while some critics say a mega-project should not proceed unless it can be supported solely by the private sector, Canada has a history of leveraging government support for long-term benefit.
Energy development “is precisely what Canadian governments have and should continue to support,” he said.
Prime Minister Stephen Harper has been brainstorming about how best to prepare the country for another nasty global downturn, if it sideswipes Canada. He lamented last week that corporations were sitting on trillions of dollars of extra capital, holding back on investment because they had no confidence in markets or the future of the economy.
Harper and Finance Minister Jim Flaherty have said they would be “flexible” in their approach, but will continue to cut government expenses and are reluctant to talk about another multibillion-dollar stimulus plan.
The unemployment rate in Canada edged up slightly in September to 7.3 per cent amid signs of global financial turmoil and a stalling Canadian economy.