June 12, 2014

Commercial Corridors to Support Economic Growth in B.C. and Canada

Good afternoon and thank you for the opportunity to speak here today.

It is always a pleasure to visit one of the most beautiful cities in the world. I think sometimes it helps to hear it from an outsider. Vancouver truly is spectacular. And I feel especially fortunate because it’s just an hour airplane flight from home.

Alberta and British Columbia have been in the news a lot lately. Often in the same story. And the stories seem to appear daily. They rarely contain good news. They are about pipelines and market access. Alberta wants to sell oil to Asia and other international markets.

The best way to get it there is to transport it to the west coast and load it on ocean-going tankers. B.C. has the ports and most of the real estate in-between.

For two adjacent provinces in the same country that are for the most part in the same business – primary resource development – the divergence of views between our two provinces is striking.

In Alberta we produce the oil the world needs to the great economic benefit of many and believe it should be transported to international markets by pipeline and tanker, absolutely the safest and most reliable methods of moving crude oil that we have today.

The Pacific Ocean is a mere 1,100 kilometres away – a straight line from Edmonton to Prince Rupert. The route, while rugged, doesn’t cross any international borders and cuts through a jurisdiction with a similar economy and history to ours.

To the rest of the world, this must come across as a little strange. It should be a no-brainer: Build transportation links. Sell resources. And create wealth and prosperity. For everybody.

B.C., on the other hand, can hardly be described as enthusiastic about this opportunity. At least that’s how it looks from the eastern side of the Rockies.

The breadth and intensity of the opposition appears, at least to us, daunting, edging on hopeless.

But let’s be clear: Neither Alberta nor British Columbia would be where they are today – booming economies, healthy populations and bright futures – without developing and selling our resources. Economic growth matters and the greater good for all will be best served if Alberta and B.C. cooperate on resource development.

The opposition to oil pipelines and tankers in particular and industrial development in general are not unique to B.C. In today’s world, it seems as though somebody is opposed to pretty well anything that turns a profit.

Award winning business author and Financial Post columnist Peter Foster has just released a book called Why We Bite the Invisible Hand – The Psychology of Anti-Capitalism.

In it, Foster analyzes over 300 years of economic history to try to understand the dichotomy of why, one the one hand, so many take for granted all the conveniences and advantages of modern life while, on the other hand, remaining steadfastly opposed to their advancement.

By world standards, we’re rich. But people don’t seem to understand why that is, how it came to be, and what we must do to maintain this privileged position in the world.

About economic progress, Foster cites steady progress including, “an ongoing revolution in agricultural production, mass-produced cotton clothing, railways, the telegraph, electric light, indoor plumbing, a phalanx of domestic appliances, flushing toilets, sewage systems, the telephone, radio, television, automobiles, 100-storey buildings, stunning advances in pharmaceuticals and medical technology, plastics, refrigeration, air travel, air conditioning, space flight, supermarkets with 50,000 products, computers, the internet, the Blackberry, the iPod, the iPad, Google, Facebook, etcetera.”

The intangible benefits have been declining hunger and poverty and vastly reduced child mortality rates.

Due to advances in nutrition, health care and safety, people are living longer than ever before.

Every one of these improvements is to some degree powered by energy. Today’s society is utterly dependent upon energy. This includes oil, the world’s primary transportation fuel. Most people could not conceive of life without a car or without airplanes. Those who don’t have either want both. See why we’re scratching our heads on the other side of the continental divide?

B.C. has a remarkable history in energy development that even predates Alberta’s.

The first drilling for natural gas took place in the late 1800s in the Fraser Valley.

Early oil exploration in the Flathead Valley of southeast B.C. in the early 1900s, before Alberta’s Turner Valley discovery of 1914.

Natural gas was discovered at Pouce Coupe in 1948 and oil at Fort St. John in 1951.

Commercializing these discoveries required – you guessed it – pipelines. In 1953, the Trans-Mountain oil pipeline was completed bringing Alberta crude oil to B.C. lower’s mainland.

Refineries to supply retail fuels like gasoline and diesel emerged in Vancouver and Prince George. In 1957, the Westcoast Transmission natural gas pipeline was completed to Vancouver and beyond, exporting natural gas from northeast B.C. and northwest Alberta to the United States. This was big.

Residents no longer had to burn wood or coal for cooking or heat.

Every day in 2013, B.C. produced nearly 20,000 barrels of oil and 4.3 billion cubic feet of natural gas. Some 26% of all Canadian gas production originates in B.C., with pipelines carrying it south to the U.S. and east through Alberta, that's through Alberta, to domestic and U.S. markets.

B.C.’s first hydro-electric dam was built in 1907 with a dozen more added from 1911 to 1932. Today there are 94 hydro dams in B.C. In 2012, Canada produced 592 terawatts of electrical power, 11% of it in B.C.

This of course requires a myriad of transmission lines running from the source to consumers. Every structure that matters is on the electricity grid in B.C. Many have natural gas plumbed into their basements.

When you break it right down, pipelines and power lines really are transportation links just like railways and highways. B.C. obviously has and needs these as well.

It was the promise of the railroad that brought B.C. into Confederation in 1871.

The last spike was driven at Craigellachie in 1885. The predecessor of B.C. Rail was incorporated in 1912. This network is now part of Canadian National Railways that links the Port of Prince Rupert to the rest of North America. The TransCanada highway through Rogers Pass was completed in 1962.

These transportation links are the foundation of B.C.’s economic success, from exporting provincial resources through Alberta, again through Alberta, and on to the rest of Canada, to the marine import and export businesses that thrive on B.C.’s coast.

The transportation of imported goods from B.C. ports through Alberta to the rest of North America is enormous.

Check out the rail lines and highways. Calgary and Edmonton are on both routes. The economic activity and prosperity created by access to tidewater at B.C. ports using transportation links through B.C. is a major economic contributor to the entire Canadian economy.

They have been fundamental and binding building blocks of our nation for 129 years.

This simply must continue. These links should grow with our population and our opportunities.

And it is up to producers and markets to decide what resources and products they will carry. This is the world’s decision, not ours.

Building anything in B.C. has never been easy. I’m talking geography here, not politics. That’s because what makes B.C. so beautiful is precisely what makes it nearly impossible to build. Outside of the northeast portion of the province and the flat lands of the Fraser River delta, travelling any meaningful distance in a straight line is all but impossible because of all the forests, trees, hills, rivers, canyons and mountains.

This has greatly affected where people live and how goods are moved.

Essentially, it means both funnel into the same spots. British Columbians can only live where transportation is the simplest and least costly, like inlets, river valleys or lakes.

This is where all the permanent communities are established. So if a commercial developer wants to build something – anything – new in transportation infrastructure in B.C., they are going to encounter living, breathing souls no matter what.

This is not the case for much of the rest of North America, where often the most direct transportation route at the lowest cost impacts very few people.

The unpopulated regions of B.C., which are in fact enormous, consist primarily of steep hillsides and rocky mountain tops so remote that virtually nobody would ever need or want to build there.

The other problem is that the existing transportation routes like railways and highways, out of necessity, follow waterways. Take the river valley. Steep hills on highways aren’t acceptable because of big trucks and snow.

Think of Rogers Pass and the Coquihalla Highway. These transportation right-of-ways are always very narrow, often blasted into the side of a cliff or tunnelled through mountains if need be.

So sticking a pipeline or power line in the ditch beside an existing rail line or highway so you won’t bother anybody is rarely feasible. If it is, the power lines are usually already there.

The other more recent phenomenon, besides where people settled in B.C., is the changing attitudes of the people themselves. I go back to Peter Foster’s conundrum. What future does a society so utterly dependent on energy and economic growth have when it is increasingly opposed to both?

When you want to build, you have to ask. But today, that answer is increasingly “no”.

No pipelines. Too dangerous.

No plants. Too toxic.

No ports. Too big.

No roads. Too noisy.

No power lines. Too ugly.

No shopping centres. Too much traffic.

No cell phone towers. Too many signals.

No tall buildings. Just too tall.

It’s almost reflexive. Growth has somehow become inherently bad.

And as a pro-growth optimist who believes in the power of progress, this really does trouble me.

They say all politics is local. Everything in modern Canada has become a conflict between the macro-benefit of economic development – like developing the oilsands and selling the product to Asia – versus the micro-inconvenience of having this or any industrial commercial activity occurring anywhere near my house. Or your house. Or Dave and Sheila's house. This is a big problem, one that we must address sooner than later.

The rise in this kind of grassroots opposition has happened a lot quicker than political leaders have adapted to.

Historically, such matters have been dealt with by planning boards or government agencies. Politicians like this. They don’t have to take sides which can cost votes. They turn the process over to “expert panels” then abide by their decision.

Take the National Energy Board, for example. Because new pipelines cross inter-provincial boundaries, the hearings to adjudicate such activities are held by the NEB. They are public, as they should be.

But because politicians are so far behind on this file, regulators are forced to deal with issues not in their mandate.

Much of the opposition to Northern Gateway, for example, is rooted in a belief that we should no longer use oil as an energy source.

The City of Vancouver has recently requested that the hearings into the expansion of Kinder Morgan’s Trans-Mountain pipeline explain the economic impact of future climate change caused by increased oil production that will result from the completion of this transportation link.

Econometric modeling is tough enough, but I wouldn't want to be the person assigned with trying to model that.

The NEB is clearly frustrated.

In a rare interview with the Financial Post on April 21, outgoing NEB chair Gaetan Caron spoke candidly about the role of the NEB in the new era of energy development activism.

In conditionally approving Northern Gateway – the sole purpose of which is to carry bitumen to export markets – the NEB did not pass comment on the merits of whether or not oilsands should or should not be developed. This is beyond the NEB’s mandate, according to Mr. Caron.

Unlike the U.S. State Department which has connected the approval of Keystone XL to growth in oilsands production and carbon emissions, the NEB has not ventured into this arena.

Mr. Caron said, “It would become a trial of modern society’s reliance on hydrocarbons, and that’s clearly way beyond the mandate (of the NEB). It’s clearly a policy question. That belongs to the world of policy-making and politics, in which we are not involved at all.”

Well, I am involved in the world of policy-making and politics. I plan on being Premier of Alberta and I’m here to tell you this:

We are going to have to step up to the plate and do something here.

You know all those times politicians talk about leadership? Well, this calls for it. Desperately.

I believe we should start discussing a national market access strategy that creates dedicated commercial corridors for transportation and industrial activity.

Imagine this: A nationally negotiated transportation, commercial and utility right of way essentially cutting through northwest Canada from Northern Ontario and Manitoba to the West Coast.

These would be major pre-planned routes in which commercial ventures would not only be permitted but actively encouraged.

Rather than have industry come up with a multitude of ideas, proposals and routes that would ultimately wind up in a series of endless hearings, politicians would take the lead and settle as many issues as possible in advance.

But we don’t need six or eight or twenty routes. We probably only need one, providing that commercial corridor is wide enough to accommodate what we know will happen in the next ten years and hopefully what may take place in the following twenty or fifty years.

Instead of being 100 metres wide like a typical pipeline right-of-way – or even less, like a railroad hugging a cliff in a canyon – this corridor could and should be a kilometre wide.

The distance from the U.S. border to the North West Territories is 1,224 kilometres. I'm willing to wager that Western Canadian provinces would be glad to use 1/1200th of their real estate for this kind of certainty.

So assuming that B.C. is about the same length from north to south, politicians would be asking British Columbians to set aside less than one tenth of one percent of its land mass in a more or less lateral direction which would contain the bulk of the transportation infrastructure from the Pacific Ocean to the rest of Canada.

Imagine the potential. A swath of land dedicated to the movement of our most precious and valuable natural resources.

This could be the most exciting employment and industrial development in B.C. history.

But it needs to happen in more than just B.C. Some Manitoba-based or Northern Ontario-based resource of the future shouldn’t be held hostage and prevented from reaching international markets by political intransigence in Alberta or in Saskatchewan.

This is a national project. It requires national leadership.

Now some may accuse me of being naive. As I said before, I am an optimist and occasionally that does lead to some idealistic endeavours.

Certainly – given the intersecting interests of powerful activists across the spectrum – a kilometre-wide right-of-way stretching across four provinces could fall into that category of being excessively idealistic.

The federal government would almost certainly have to do the heavy lifting because the bulk of the negotiations would have to involve agreement and buy in from our First Nations as a starting point.

It would deal with river crossings and protecting environmentally sensitive habitat. It would not be for the faint of heart or weak in spirit.

But where would we be without ideas?

These kinds of large-scale, nation-building enterprises are exactly why the provinces of British North America agreed to confederation.

The government of Canada was originally created to make all provinces richer through the benefits of a transcontinental railway.

In the 1950s, the Government of Canada embarked on a similar project when it developed the St. Lawrence Seaway with Ontario, Quebec and the United States.

Now, Sir John A. Macdonald never had to contend with the 24-hour news cycle and MacKenzie-King surely didn’t have misinformed Hollywood celebrities campaigning against him on Twitter – but now is the time to act. The time to lead.

A trans-national commercial corridor through the north of western Canada will be for this century what the St. Lawrence Seaway Project was for the previous one and maybe even what the Canadian Pacific Railway was for the one before that:

A unifying venture that will define a generation and lay out the foundation of our economic prosperity for decades, even centuries to come.

The ideal route of this commercial corridor would be identified almost entirely by the absence of objection. In other words, pretty much the exact opposite of the process today.

Nobody lives there? Perfect! That’s where it will go.

And once it exists and is clearly defined, people who don’t want anything industrial occurring in their neighborhood - whether it's a new TransCanada northern highway, or a new rail line, or a pipeline, or a transmission line or a cell phone tower or a refinery - would know where not to live.

Or if they want a good paying job, they would know exactly where to move.

Would the route be a straight line? Probably not. But ask everyone trying to build a pipeline today if they wouldn’t gladly reroute north or south by a few hundred kilometres if they could be assured of progress and a positive outcome.

And then there’s the process improvements. One set of aboriginal land claim negotiations. One set of hearings. One set of community impact statements. All up front. Sure, it would be lengthy and arduous and at times frustrating. But once it’s done, it’s done.

The only losers would be the lawyers and lobbyists. I’m sure they’ll find work elsewhere.

In today’s world – where the process for creating jobs, wealth and tax revenue is becoming burdensome to the point of unworkable – it is time for those of us elected to lead to actually lead. From the front, with courage and resolve.

Macdonald did it. King did it. Why can’t we do it? Why can’t we do something great that the next generation will thank us for?

As I said before, the word ‘no’ is becoming all too commonplace when we talk about such things.

‘No’ doesn’t get us to where we need to go. ‘No’ doesn’t build. It doesn’t accomplish. It doesn’t achieve.

I know all of the reasons why this idea is difficult. But to be honest, the time for excuses about why it can't be done is past.

Let’s talk about all the reasons why this idea is necessary. And then let’s see where we go from there.


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