Supreme Court Gets It Right

By Chris Gardner, ICBA B.C., Mike Martens, ICBA Alberta, and Catherine Brownlee, Alberta Enterprise Group

Embracing innovation, making timely decisions, and fostering investor confidence are the hallmarks of successful national economies around the world.

The Supreme Court’s decision to scrap Bill C-69, the Impact Assessment Act (IAA), is a significant positive step in creating a better investment climate for major projects and the family-supporting jobs and prosperity that come with them.

It was desperately needed.  With the Organization of Economic Cooperation and Development projecting Canada's economic growth to be dead last among 38 advanced economies over the next decade, one had to wonder: Has the nation's commitment to red tape and complexity crushed any vision for a more prosperous future?

The confusing and convoluted assessment process that became law in 2019 added layers of regulation that discouraged investment in major resource and infrastructure projects – the kinds of projects that developed the Canadian economy.

The federal government claimed that the review process ushered in by the IAA would be more efficient and effective, but as industry stakeholders know only too well, Bill C-69’s vague and subjective criteria created uncertainty that stifled investor confidence.  And investors spoke with their chequebooks – since 2014, direct investment leaving Canada has exceeded investment coming to our country.

Ottawa sheepishly acknowledged this sorry situation in its March 2023 budget and promised $25 million to “study the problem” and pledged to produce “a concrete plan to improve the efficiency of the impact assessment and permitting processes for major projects” by the end of this year.  They made this commitment at the same time as federal government lawyers were appearing before the Supreme Court, fighting to uphold Bill C-69, the very legislation that caused so much of the problem in the first place.

What the Supreme Court of Canada did in its ruling was confirm that the IAA is a significant overreach by the federal government into an area of provincial responsibility.  The Supreme Court has effectively acknowledged the division of powers stipulated in the Canadian Constitution and reinforced the jurisdiction of the provinces to manage the development of natural resources, forestry, and electrical energy.

What proponents seeking to invest in such projects in Canada had faced with this Act is navigating two project reviews – one led by the federal government, and one coordinated by the provincial government – that were often redundant and at cross purposes from each other.

ICBA joined and Alberta Enterprise Group joined forces to support the Government of Alberta in opposing the IAA.  While we acknowledge the importance of thorough environmental assessments for major projects, the complexity, confusion, and cost ushered in by the IAA review process proved to be detrimental to investment in infrastructure and natural resource projects, and put at risk the innovation, business opportunities and jobs that flow from this economic activity.

Consider the track record of projects submitted under the IAA.  According to an analysis from the Canada West Foundation, 25 proponents have submitted projects for review under the new regime since it came into force less than four years ago – and all of these projects remain enmeshed in the first two phases of a four-step process.  The speedy review process promised by Ottawa was an illusion.

When the Trudeau Government introduced the IAA in 2019, Canada had already lost $100 billion in investment in major projects between 2017 and 2018, according to a report from the CD Howe Institute.

Since then, our economic competitiveness has deteriorated further.  An analysis from the University of Calgary shows per-capita incomes of Canadians are flat-lining and declining when ranked against our neighbours in the USA.  British Columbia’s per-capita GDP ranks only #48 of the 60 Canadian provinces and U.S. states.  Canada’s best performing province, Alberta, at #14, does not even make it into the top 10.

Other countries are speeding ahead with responsible resource development.  In Washington, DC, Democratic Senator Joe Manchin has proposed new energy security legislation that contains several innovative features – a single review agency, a two-year time limit for the review of major projects, a 150-day limit on court challenges, all with the objective to cut energy costs for consumers.  In Germany, LNG plants are being approved and built within 10 months.

Meanwhile in Canada, Ottawa has seemed focused on the exact opposite of these goals – greater complexity, endless review, no limit on costs, and leaving affordability for the consumer out of the equation.

This Supreme Court decision is the first step in reversing course and focusing on attracting investment, creating opportunities, and capitalizing on the potential of Canada.