KEEP BC GROWING THROUGH RESPONSIBLE RESOURCE DEVELOPMENT (2022)
Resource industries are vital to Canada’s provincial and national economies. After more than two years of the COVID-19 pandemic, the Canadian economy is recovering. Governments have established strong climate action goals, and resource industries are taking significant measures to reduce emissions. Lack of clarity about how governments plan to balance recovery and climate goals is creating uncertainty and is also contributing to inflationary pressures in the economy. Governments must act now to support responsible resource industries by attracting the investment necessary to create family and community supporting jobs for all Canadians and to provide revenue to support social services across the country.
Background
Don Wright, former Deputy Minister to Premier John Horgan, said it best in a 2021 publication: “Natural resource-based industries account for more than half of Canada’s economic base. These industries tend to pay higher-than-average wages and generate higher-than-average direct government revenue per employee.”[1]
Research from the Business Council of British Columbia (BCBC) underscores how important natural resources are for our economic and social well-being. For every hour worked in the natural resource sector in 2018, Canada generated $304 of real income. That is considerably more than utilities ($183 per hour), real estate ($135), information and cultural industries ($99), finance and insurance ($76) and manufacturing ($65). The high levels of income generated from Canada’s most productive sectors create demand for other goods and services across the rest of the economy. Energy – including oil and gas, coal, nuclear fuel, electricity, and refined petroleum products – is easily the largest generator of basic export income. The sector contributes around one-fifth or $140 billion of Canada’s export earnings, twice as much as the next largest sectors.[2]
Numerous international agencies suggest resource sectors like natural gas and oil are vital to keeping inflation in check.[3][4][5] Yet, recent reports by the Canadian Association of Petroleum Producers (CAPP) found that while investment in British Columbia is up, the ongoing royalty review and the permitting delays stalled investment in 2021. Investment in the province fell approximately $600 million short of last year’s previous forecast of $3.9 billion, or $3.4 billion in 2021. In 2022, upstream investment in B.C. is forecast to grow to $4.1 billion.[6] Canada is also continuing to lose market share to other jurisdictions—down to six per cent in 2022 from 10 per cent in 2014, representing over $21 billion in lost potential investment.
According to BCBC the growth outlook for the province has been downgraded to five per cent from a previous forecast of 5.8 per cent because of lingering COVID-19 related economic headwinds and “mismatches” in labour demand.[7] The OECD predicts Canada’s productivity – measured as real per capita – will average 0.7 per cent per annum over 2020-2030. This places us dead last among advanced industrialized countries.[8]
Other studies indicate the highest paying jobs for Indigenous people are found in the natural resource sector. According to Dale Swampy, president of the National Coalition of Chiefs and a member of the Samson Cree Nation “The extractive sector hires twice as many Indigenous employees and pays on average twice as much in wages as other sectors.” Indigenous people account for 12 per cent of the upstream mining industry's labour force, making it the second-largest private sector employer[9] while forestry was seven per cent and Natural Gas and Oil contributed six per cent in 2019.[10][11] Advancing economic reconciliation with Indigenous people will only happen close to their communities and responsible resource development will provide employment and contracting opportunities in pursuit of this broad societal objective.
THE CHAMBER RECOMMENDS
That the Provincial Government:
- Work with industry, communities, and Indigenous groups to reduce costs imposed by government on industries (e.g. taxation, licenses, royalties and fees) and regulatory burdens to ensure the province is a globally competitive natural resource producer and exporter.
- Supporting Indigenous communities to advance their participation in responsible resource development.
- Expand the existing CleanBC Industrial Carbon Incentive to accelerate the adoption of low carbon technologies and private investments in sustainability and help enhance BC based industry’s competitiveness.
[1] https://ppforum.ca/publications/don-wright-middle-class/
[2] https://bcbc.com/insights-and-opinions/which-industries-pay-canadas-bills
[3] https://www.ft.com/content/80cbd05f-d722-411f-9bbe-155cd8c06f7e
[4] https://financialpost.com/pmn/business-pmn/goldman-says-carbon-net-zero-shift-will-likely-boost-inflation
[5] https://www.bloomberg.com/news/articles/2022-01-17/dalio-says-thank-god-oil-is-still-pumping-amid-inflation-scare
[6] https://www.capp.ca/news-releases/capp-projects-investment-in-canadas-natural-gas-and-oil-sector-will-rise-to-32-8-billion-in-2022/
[7] https://biv.com/article/2021/12/floods-sick-pay-labour-issues-dampening-bcs-growth-prospects-business-council
[8] https://www.oecd.org/economy/growth/scenarios-for-the-world-economy-to-2060.htm
[9] https://www.nrcan.gc.ca/our-natural-resources/minerals-mining/minerals-metals-facts/minerals-and-the-economy/20529
[10] https://www.nrcan.gc.ca/our-natural-resources/forests/state-canadas-forests-report/how-do-forests-benefit-canadians/indicator-employment/16554
[11] https://www.capp.ca/wp-content/uploads/2021/11/Indigenous-Engagement-and-ESG-Report-397763.